Data is the King
Efficiency and profitability of any enterprise depends on their ability to access the “Right data” on “Real-time” from “Anywhere” importantly “Without any human intervention”. This cannot be achieved without an ERP system. But a proper approach with a right ERP blueprint is very important. Many of the ERP projects fails due to lack of ERP blueprint & Right approach.
Manufacturing ERP is complex
But when it comes to manufacturing Industries, the ERP system has many many business scenarios. Increasing the complexity each business use case has many variations. To put it in simple terms, ERP is a game of Adults and not for Kids.
The ERP blueprint is not only for the implementation. The ERP blueprint has to start right from the stage when the enterprise is thinking to adopt for an ERP system. This article can be fully digested by the management, HODs and the users teams. Also it will be a good idea that you can prepare your Enterprise specific ERP blueprint and start the process.
Bad ERP experiences – Customisation looks nice, but dangerous.
There are many ERP vendor who have started their developmental journey with MSMEs by developing features as per their requirements. So for every customer the same functionality would have got modified in various methods. So the systems gets more and more complex. Beyond a point they system will go out of maintenance and the customers go high and dry.
Many enterprises thinks that customised ERP will be good for their business. But the truth is the other way around. Since a manufacturing ERP has large code base, it is always a good idea to go with a standard product that covers all the functionality.
There connecting point between standard ERP and the Customised ERP is the cost. Unless the ERP vendor sells the same code base for many customers, the cost of further development and maintenance will become a big question mark.
Let’s see the following examples:
- Standard car Vs Customised Car.
- Standard plate meals Vs Meals cooked and served as per our need.
The same analogy goes with the ERP system too. Unless the enterprise goes with the standard off-the-shelf ERP, it will be a loss of cost and very extended time for the project.
With limited budget & resource and time-line, going for a product approach will give better results.
Decide Cloud or On-premise:
It is important to decide if the enterprise wishes to go on cloud or planning for an on-premise ERP implementation. Accordingly the budget and manpower has to be planned.
Set aside the funds for the ERP system:
Proper budget has to be allocated for the ERP system, Training and Implementation and necessary Hardware and Software and upgrade for the present Hardware and software has to be planned properly.
Setup of ERP project team – Stake Holders.
This is one important step. The enterprise need to pay close attention to this process. The top team has to explain at length about the importance of the ERP project for the organisation also tell as to how each and every one has to stay committed to this project.
- Management representative : This person has to be from the promoters / Directors.
- ERP champion : One of the senior managers who is head of operation having a broad understanding of all business processes. Also very appreciative & knowledgeable about implementation of technology and its benefits.
- System Administrator : He or she will be handling the login and other configuration features.
- HODs : All department heads who will be monitoring the reports and handling the Master Data.
- Users : End-users who will be entering the transactions.
Evaluation of the ERP
Before shopping for an ERP system, it is important to get the internal system study and keep the requirements ready.
This is a critical step. It is easy if done rightly. This exercise has to be done by the users and HODs along with the project champion, who will list our all the business use cases for each transaction from start to end. The following are some examples:
- Purchase to Pay
- Domestic PO
- Imports PO
- Sale to Cash
- Domestic SO
- Exports SO
- Sales through Production
- Material Requirement Plan
- Production with Process
- Job Order for sub contracts (for process)
- Job Order for sub contracts (for repair)
- Purchase returns
- Sales returns
- Job work order (manufacturing with customer material)
- Job work order (manufacturing with both customer and own materials)
- Incoming through QC
- Production through QC
- Sub contract through QC
Under the supervision of the Champion all the user groups has to evaluate each of the use cases. It is better to follow the flow of the ERP system and the standard reports. It is not worth customising all the reports. As long as the data that needs is captured and populated in the report with adequate filters.
The users can prepare a gap report for each use case for the ERP vendor to address the same. The gaps has to be further divided into Must-to-have and Nice-to-have. The Must to haves has to ready before going for implementation. Strictly speaking there will not be any Must-to-have gaps in a vertical specific ERP system.
Without this step going for implementation will be suicidal.
The ERP solution that you shortlist has to meet the following criteria:
- Readiness of the solution for your business use cases.
- Check if the product is working at similar companies and how the support is being given. How the new year generations are handled. DOes the solution have multi company and multi location capabilities from the scale-ability perspective.
- Expertise of the consultants.
- Cost which includes the cost of ERP, Training and Implementation and AMC cost Etc.,
ERP implementation has to go like a live symphony at one shot.
After the thorough evaluation, the ERP project gets into the next phase that is the Implementation. The ERP implementation has the following phases:
- Training and Implementation schedule: Both ERP vendor and the End-user team to sit together and arrive at the schedule. Based on this the full team has to work together.
- Master data collection : This has to be done with enough care to ensure that there are no duplicate data gets in to the system. This has to be given in the format given by the ERP vendor.
- Data migration : Based on the above data will be migrated by the ERP vendor tech team. After migration, the users have to check the accuracy of the data in the ERP System.
- User Training : The respective users need to enter a minimum of 15 – 20 entries in each transaction. They should get comfortable with the system process flow.
- Cut-off date identification : Cut-off date is the date from which the ERP system will be capturing live data. There should not be too much of gap between the user training and cut-off date, failing which the users will forget all training. This may lead to re-training of the users.
- Opening balance data (as on cut-off date) : The users need to provide the opening balance of Inventory and Accounts balances in the prescribed format given by the ERP vendor.
- Opening Balance migration : The same will be migrated by the ERP vendor. After migration the users have to check the accuracy of the data in the ERP system.
- Open entries (as on cut-off date) : All open entries as on the cut-off date like pending Purchase order, Sales order etc.has to be entered in the ERP system.
- Live entry : Live entries can be started from the cut-off date and the users have to take the system live. On a daily basis the Users and the HODs need to check all the reports.
- Parallel run: The users and HODs need to check the data accuracy of the ERP system Vs the legacy system to ensure data accuracy. If there are any mismatch, it has to be verified as to which data is right. If the ERP data is inaccurate, this has to be reported to the ERP vendor team to fix the issue.
- Stop Legacy: Once the ERP data is validated, the legacy system can be stopped.
ERP project review and ownership:
The ERP project has to be monitored on a daily basis to ensure that there are no deviation form the time lines committed. All stake holders are to be involved. Also of there are any differences with inter-departments or with the ERP vendors team, the same has be ironed-out quickly to take the project progress smooth. Since too many people are involved, the Ego clashes are quite common on a ERP project. But it is important to see that the final goal is kept in mind. The final goal is “Data is King” the growth & profitability of the enterprise is dependent upon that.
The ownership is like buying a car. Ownership means understanding how the car works and the Dos and Don’ts. The responsibility of the manufacturer is make a good car and provide service support. But the buyer has to take the ownership of the car, drive well, clean daily, check the oil levels, fill petrol (not diesel in a petrol car), take it for periodic maintenance. Similarly the ERP system has to be owned by all the stake holders of the Enterprise.
Implementation of and ERP system will be a cultural shift for the organisation. Many of the places individuals may feel that their importance will be lost. So there are every likely chance of difference of opinions, ego clashes, blood sheds. ERP project very similar to making the highway. We have to cut the trees and grab the lands. But the team has to make up their minds for all the eventualities keeping in mind the long-term benefits of the organisation in mind.
Following this EPR blueprint will certainly result in successful ERP implementation.