All organizations want to become world class, and all should want to get the most out of their enterprise resource planning (ERP) investment.  Something to consider during this tough economic period is how to get more value out of an existing ERP system through a process improvement project.  Consider these scenarios that might fit your situation.

Scenario 1:

You have completed an ERP installation within the past 12 to 36 months.  You probably did not implement all of the available functionality during the initial implementation project—this is usually because of lack of time, money or resources:

• Project cost.  The largest cost component of implementing an ERP system is usually in consulting.  If you ran out of money during your implementation, you may have had to reduce your original scope.
• Scheduling.  Maybe you simply ran out of time to get all of the modules or functionality implemented before the busy season hit, or maybe you had to stop making changes because of audit constraints.
• Resources.  Sometimes your employees are overworked or too busy.  They also may need additional training to take on more.

The system is now stable, users have adapted and you are no longer experiencing the rush of enhancement requests you saw during the transition.  Still, you’re not getting the full benefit you planned on when the initial ROI was computed for your capital request.  Worse, you are paying for functionality that isn’t being used.

Scenario 2:

Your ERP solution is in the middle or late stage of its life cycle (and still supported), and you don’t intend to replace it for at least the next three to four years.  All of the modules you initially purchased have been implemented, but your business has evolved since then and so has the software.  You are at least two or more versions behind the current version, and new modules are available now that either weren’t available during your implementation or that you were not ready to take on.  In addition, your business has sprouted several disparate databases (typically these are stand-alone Microsoft Access or Excel files) that have become critical to operations.  These are user-born tools that probably are not backed up properly and require extra effort to maintain, since there is no integration with your ERP system.

Modules Worth Considering

So, which areas of your business warrant a process improvement project?  Below are some examples of ERP functionality that can provide great value but that are typically pushed to phase 2 or are never implemented at all.

Quality Management related functionality.  This typically involves capturing information on nonconformances in the manufacturing processes, which often falls outside the ERP system.  By bringing this process inside, however, you will be able to tie your nonconformance reports (NCRs) to your supplier and production operations data, which will improve the referential integrity of the data.  You will also increase the visibility to the data across the business, which usually puts more focus on root cause and analysis.  Do you really know what the true cost of nonconformance is?  This data will most likely feed other improvement projects. 

Customer Relationship Management (CRM) related functionality.  This has been around for a while now, but many manufacturing firms are just starting to warm up to this tool.  At the core is functionality for managing prospect and customer data through the sales life cycle, but the more advanced CRM modules offer other, more elaborate possibilities for leveraging sales and marketing data.  The data captured during the lead generation process will (with luck) eventually become core customer data, so there are some productivity benefits here too as a result of reduced data entry.  The huge upside, however, is the visibility to data for those who need it, including your customer service and field service personnel.

Workflow related functionality.  This comes in different flavors, but these two are the most popular:

• Purchase requisition (PR) management.  Using your ERP PR module provides better control than paper-based processes.  If you don’t have clearly defined purchasing processes for indirect items to begin with, implementing this will force you to clean up your act (fewer things to worry about during the next audit).  The other big benefit here is increased visibility on your indirect spend, which, in turn, will feed your sourcing teams and help you prioritize your sourcing projects.
• Expense management.  How many times are different people keying the same data with your current expense process?  Less data entry and faster process cycle times will make employees happier (in theory, they should be able to get reimbursed more quickly).  Even if you have automated the import of an Excel template, the data validation does not occur until import; if you have spent a lot of time creating a template, they too are easily corrupted by well-intentioned users.  Better controls and visibility of indirect spend data are other benefits to the organization.

Balanced scorecards (Data dashboards).  Maybe you already have a set of key business metrics you track in Excel.  If so, good, you are on the way.  However, using your ERP system to generate a scorecard or dashboard reduces the rekeying and distribution of the data and also ensures you are seeing the real picture versus a sanitized one.  In addition, using the ERP as the engine usually will allow access to real-time data versus dated information.  Some ERP systems, such as Microsoft Dynamics AX 2009, even support role-tailored dashboards so users see information important to their job.

Why Now?

All of this is good, but many organizations wait until business is strong before making process improvements.  Here are some reasons for moving forward with a process improvement project now:

• Resource availability.  The downturn will not last forever, and you have been lucky enough to avoid layoffs so far.  Things are a little slow, and you have the capacity to devote resources to process improvement projects.  Once things really start to pick up, it will cost more, e.g., overtime, contract resources, new hires, to get the same work done.  Be proactive and do the extras during the downturn.
• Productivity improvements.You need them.  If your competitors are standing still, you will come out ahead.  If they are moving forward too, you will only keep pace.  Your workforce—likely leaner now and more stressed out—needs relief from busy work.  The plus side is you will be able to stay leaner on the back side of the recovery; your bottom line will hopefully benefit from a slingshot effect.
• Better insight into business.There is no bad time to build better tools and processes for running your business.  The more you can eliminate disparate, disconnected databases, the better off you’ll be down the road when you may be focused on other strategic initiatives (acquisitions or spin-offs, for example) where having your house in order will pay off in the form of reduced chaos or a better sale price.

Moving Forward

You have the resources to move forward, there is clear value for the project and you have the support of top management.  Here are some other thoughts as you put together the project team:

• Identify a project champion—someone who feels strongly about the project’s success.  Consider making this person the project manager if his or her skill set allows.  This person should at least be part of the project team.  You will still need a project sponsor, i.e., someone from management who has the bulldozer role, but the person we are talking about here has a personal stake in making the project successful.
• Determine what roles and special skills you will need on the project team.  Define the roles and required skill set first, and then choose the players from your organization to fill those roles. 
• Consider supplementing the project team with at least one or two high potential players who may not yet have the experience or knowledge of your varsity players.  Projects of this sort can be engines for driving personal growth in your employees.  Giving them more experience and exposure now should pay dividends downstream.

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