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Posted on October 1, 2022
Enterprise Resource Planning (ERP) Systems connect all functions of a business so that information is entered only once, everyone has the information they need when they need it, and calculations and many simple operations, and much of the accounting, are performed automatically. They are big systems and can improve organizational productivity greatly. Most of them now are in the cloud.
ERPs include Material Resource Planning (MRP) Systems, which manage your purchasing and inventory, and time purchases so that you have what you need when you need it.
Recently, a lot of power has been put in the hands of users. Users can customize reports and write work flows (which make the system do what you want it to do) without knowing programming. They can also connect to outside Application Programming Interfaces (APIs) which can automate interactions with vendors, customers, and delivery services.
In Part 1 we covered how to choose an ERP, the idea being that you need to first decide how you want to run your business and what features you’ll need before even talking with vendors. Now, having chosen a vendor, we’ll talk about implementation.
To begin with, you’ll need a project plan. Many vendors supply theirs, but you’ll need to modify it. It should state all the steps, who is responsible, what help they’ll need, and due dates. Plan on roughly six months to cutover. There will easily be 300+ tasks.
You will also need an internal project manager. This person doesn’t need to know programming, but does need to learn the capabilities of the whole system and how actions in one module affect the others. They also need to be highly organized, good communicators, willing to pester people, and have the full support of the President. Most important, they need to have a good background in business in general, and in yours specifically.
The major steps are:
It’s a long process which will consume much of an organization’s time, and there can be other big challenges—for instance, you may want to put bar-code labels on all of your inventory to facilitate system transactions. But the rewards in productivity, reduced errors, less time looking for information, and customer service are huge.
Josh Chernin is a Partner with Business Improvement Group, LLC, Consultants to Manufacturers, and has more than 30 years of manufacturing and operations leadership experience in the US and Europe. He’s had P&L responsibilities in printing, metals, converting, contract manufacturing of medical devices and aerospace modules, and textiles, built three plants, consulted to many manufacturers, performed several turnarounds, and visited over 300 manufacturing plants. Josh is an expert project manager. Josh has a BA in Economics from the University of Massachusetts, Amherst, and an MBA from the Harvard Business School. He can be reached at Josh.Chernin@bizimprovementgroup.com.