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About ERP Systems

ERP and Leadership

Michael Roman - Wednesday, August 13, 2014

By Dan Valentine, VP Sales, Manufacturing Practices, Inc.

I have been selling software for a quarter of a century and I see it over and over again. Companies buy some hot new software and expect it to miraculously fix their problems. I remind my clients that software is not a silver bullet and it is certainly not a replacement for good management decision-making. It is a tool, nothing more. To be sure, it is a tool that can enable you to do things more efficiently and effectively, but a tool, nonetheless. It can no more run a company than a power saw can build a house. It does what it is told to do and, in the hands of a skilled worker, it can accomplish great things.

Recently, I engaged with Manufacturing Practices, a management consulting firm that helps companies better leverage their Enterprise Resource Planning (ERP) software to run their manufacturing businesses. It would appear that less than one-third of all ERP users are using it effectively. This is not a big surprise because there are some key misunderstandings in the marketplace about what ERP does. True, it can help companies substantially improve production through-put, increase revenues and reduce costs but not in the way many who purchase this software think. ERP, at its core, is a data manager and an information provider. Therefore, it is a leadership tool. It gives company leaders the information they need in a timely manner to make better decisions. It allows leaders to see where production bottlenecks are and address them. It allows leaders to see how fast inventory is depleting and when the best time is to reorder. It allows to leaders to see where mistakes are being made in real-time so they can correct them. And when the leadership makes better decisions, a multitude of positive outcomes result – higher profitability, higher quality, higher morale, etc…

ERP can offer a company phenomenal benefits so long as it is used correctly. This means setting it up to properly collect the data you need, delivering that data to company leadership in a format that effectively informs and getting the leadership to use that information to make better decisions.    

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