Enterprise Resource Planning Systems

Who needs them, what they do and how they benefit manufacturing, warehousing and distribution businesses.

Is your business at a tipping point in its evolution?

  • Do you have an Enterprise Resource Planning (ERP), Warehouse Management System (WMS) or Customer Relationship Management (CRM) system that is no longer being supported?
  • Are you dependent on a large number of spreadsheets for operational numbers?
  • Are those numbers conflicting and slow to produce?
  • Are manual processes limiting your manufacturing or distribution operations?
  • Are you hesitating over the purchase of a new ERP or WMS system because you’re not sure if all the effort and expense is going to be worth it?

If the answers to any or all of these questions is yes, then it might be time to assess how you’re going to continue reaching your business goals.

If an ERP, WMS or CRM system is part of the solution for your business, then it’s worth talking to an experienced ERP Consultant before you commit to a major investment.

What is Enterprise Resource Planning (ERP)?

The origins of ERP go way back to the mid 1960s when a software application was written to help the US Polaris Program with the management of their inventory and production program in what was then called MRP (Material Requirements Planning). In 1964 the first commercial organisation to use MRP was Black & Decker.

As the concept for manufacturing grew there was an increasing need to incorporate other planning requirements into the system, such as shop floor control and capacity planning. This gave birth to MRPII (pronounced MRP2 which stands for Manufacturing Resource Planning) and was developed by Oliver Wight in 1983. 

As the need for one system to provide more control over an ever broadening list of corporate functions, the concept of Enterprise Resource Planning (ERP) was born in the late 1980s and early 1990s.

Thanks to the ever developing capability of computing power, today’s ERP systems have a very broad range of functionality available to a company and MRP is simply one of the many modules available within an ERP. An ERP provides a fully integrated suite of functions that help control the activities within a business. Broadly speaking the functional areas covered by most ERP systems are: Finance, Inventory, Production, Warehousing, Transportation, Human Resources and more.

Each ERP system has different strengths and weaknesses and no two are exactly the same.

How the ERP landscape around the world is changing

ERP is often sold as providing “one source of the truth” because all of a company’s data is sitting in one database. But a single system may not be what is in the best interests of the company. Over the years there has been a strong tug of war between the choice of using a single ERP system or an integration of “best of breed” systems. There is no one definitive best way to answer this question. The right answer is “it depends”. It depends on what is best for your business.

While in the 1980s and 1990s there was a severe functional war between software vendors around what functionality should be provided in their systems, today’s ERP environment has moved on from the functional war. If your selection advisor is still providing a long list of redundant functional requirements (many of which are downloaded from the internet or available from organisations like TEC), then they are out of touch and using a methodology that has proven not to work.

Why this change is necessary

I believe very much in Einstein’s definition of insanity.

The ERP industry has had a long history of failure and it is my belief that this failure starts at the selection methodology used by executives and their advisors. The old way simply does not work – the methodology is broken and a new way is badly needed. So rather than continue to use a way that has a history of failure - I have developed a new way, named "Sure Select"

ERP vendors have mentioned that using my methodology reduces the time of their sales cycle by over two thirds. The benefit to my clients in this is they are able to proceed with a better fit much earlier, thereby delivering benefits to the business much quicker than otherwise would have been.

Improvements in technology clouding the waters

Both academic and commercial research, surveys and experience have shown that organisations are implementing new ERP solutions for the following reasons:

  • To replace out-of-date and unsupported ERP software (49%)
  • To replace homegrown systems (16%)
  • To replace accounting software (15%)
  • To replace other non-ERP systems / had no system (20%)

The technology that was considered cutting edge when many of the ERP applications still in use were created would no longer be described that way.

On-premises, capital intensive applications have evolved into more flexible, SAAS cloud-based offerings with the potential for advanced functionality like machine learning and artificial intelligence (AI). These have become the norm at a rate that is quicker than the speed at which many organisations have been able to respond and this differential has left many feeling left behind in what are increasingly unchartered waters.

Advanced functionality made available through what is commonly being referred to as digital transformation requires a well implemented ERP system to provide reliable data to the machine learning algorithims. Without it, the exercise is pointless.

The question is not whether a business could upgrade their business-critical ERP software, it’s whether and when it should.

The changing face of business

It’s not only technology that’s evolving, the way we do business has changed in many ways too. Businesses have to be more agile and customer-centred than ever before and in ways that many don’t fully understand yet.

While the words of world renowned management author and CEO coach Marshall Goldsmith “what got you here won’t get you there” have never been more true, navigating the minefield of options can be overwhelming.

Objective, impartial assessment is difficult for executives to undertake on their own because they’re so close to the business that it can be hard to see the wood for the trees. It also requires a level of expertise across a range of skillsets that are unlikely to be found within existing operational staff.

The way to plan for such massive change on what probably feels like shifting sands is with a comprehensive independent strategic business review. ERP strategy is a critical component to getting the ERP puzzle right. It provides visibility into where management wants to take the business from where it is now to where it needs or they want it to be. 

This strategic review outlines what process the ERP software has to support in the next chapter of the evolution of the business. Selection is then based on future business needs rather than on how closely a particular piece of software can match historical or current demands. Basing the selection on current demands limits the development of future competitive advantages.

If you’ve reached the point where you need answers about your business’s profitability or future viability, can you afford to rely on the advice of a software vendor with a vested interest in the outcome?

"I have no hesitation in recommending David's services and as further and perhaps the highest recommendation, we will shortly be re-engaging him."

Find out how you can take your business to the next level

DOWNLOAD my ebooklet entitled “The 14 Deadly Sins of ERP”. and we’ll let you know when there’s a new article to read.
David Ogilvie

PO Box 1931
New Farm QLD 4005

About David
Experienced independent business consultant with a speciality in ERP to manufacturing, warehousing and distribution businesses in Australia, New Zealand and the United States, with a turnover of $20 million+.
Services
  • Business Strategy Facilitation
  • ERP, WMS & CRM System Evaluation & Selection
  • System Implementation Support
  • Supply Chain & Inventory Optimisation
  • Process Enhancement
  • Project Governance & Advice

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