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About ERP Systems

But Your Duck is STILL DEAD

Michael Roman - Tuesday, May 19, 2015

There is a page on the Manufacturing Practices website that has been there for about five years. It tells the story of a company that called asking for an opinion about interfacing their "Job Management Tool" to an ERP System. Their goal was to use the accounting piece of that system. Here is the link: I'm Sorry But Your Duck Is Dead.

I won't drag out the issues involved, but suffice it to say that they contracted for remote custom education to help them better understand what an ERP System is and is not and what the ERP System will do for them and TO THEM. The effort was a success. The son and the feisty business owner who thought the proposal was "outrageous since I did not EVEN know their business" (his words, not mine) signed the note.

During the education, we explained why KPIs were more than Key Performance Indicators and why we refer to them as “Keeping People Involved®.” Many benefits were automatic outcomes of that education including, proper Forecasting, Forecast Error measurements, Cycle Counting efforts, On Time Shipments, Throughput Improvements, Project Management considerations, and Leadership requirements during and after the ERP Implementation. You know, those things that make manufacturing companies competitive in the marketplace instead of, “oh yes, by the way, we also make things.”

The thank you letter did not come immediately after the class; it was months after they started using that ERP System that the letter came. By sending the letter, they were saying that we truly helped make them successful.

I remember my first argument about the role of education; it came when I was a programmer at Control Data, writing an MRPII System for mini-computers. The education effort involved having other peers (programmers) review the LOGIC, produced before the code writing. What a stupid idea, I rationalized, I’ve been programming for more than 6 years, why should I have to think about what I am about to do before I do it. The ANSWER came when management asked us to write a program to put a Bill-of-Materials and put all the parts in a table arranged by Low-Level-Code.

Half of the group just wrote code for the request and half the group did it the “new way.” My program was 100+ lines of code long, which was about half way between the upper and lower number of lines of code for others in the first group. The ‘other group’, as a team, wrote the program in ten lines of code after creating the proper logic to deploy to write the code.

The real shocker really came with our tests. Where our group did not have a “successful” first run attempt with test data, the other group did. With that, both groups saw the reasoning behind management’s desire for us to think first, and only after that, act. Our “ready, fire, aim,” quickly became, “ready.., aim.., fire.” When Manufacturing Practices, suggests that companies understand what ERP is before they look for, implement or re-implement an ERP System, we teach them the lesson of “ready.., aim.., fire.”

Here is a take away. Business owners and C-Suites must constantly monitor the expense of education against an investment in their people. Businesses have no way to measure the accumulative costs of remaining complacent. However, by failing to invest in people, leaders assume absolute business risk and at best, the possible loss of any competitive advantages. As Ralph Waldo Emerson said, "The mind, once stretched by a new idea, never returns to its original dimensions." 


Q and A with Mike and Jerry

Michael Roman - Thursday, March 19, 2015

A few weeks ago, Jerry Tiarsmith, VP of Operations at Manufacturing Practices, Inc. and I sat down for a Q&A session.

Q. Mike, Manufacturing Practices, Inc. (MPI) recently had its 10th anniversary. What were the reasons for initially forming the company?

I saw a number of fundamental flaws in the manner that ERP Software companies sold their products. Their strength is that they explain what ERP Systems will do FOR companies. The major flaw is that ERP Software companies do not explain what ERP Systems will do TO companies. Manufacturing Practices, Inc. (MPI) explains to companies what ERP software will do both FOR and TO a company, how to use the ERP tool to manage the organization, and helps clients integrate their ERP System INTO the business. A recent client found success with our efforts and in gratitude, wrote the Preface to our book, The Turnaround.

Q. We often learn from our mistakes – what do you consider to be your biggest mistake and what did you learn from it?

I have made several mistakes, some from ignorance, some from omissions, and some for being unable to “reach” clients. It is hard NOT to make mistakes from ignorance but those are rectifiable. It is forgivable to make mistakes from omissions and those too are rectifiable. Nevertheless, I take being unable to reach people as a weakness in me. To counter that short-coming, I stay current with the consulting industry, with the Supply Chain and Operations Management Body of Knowledge, and have weekly conferences with clients to assess progress, address issues, and to ensure we are all in agreement with the course we are taking.

Q. On the other hand, what do you consider to be your greatest success and why?

This might sound strange, but the greatest pride comes, not from the successes that the owners or the C-Level teams achieve, but from the people that do the grunt work for these clients, their employees. Walking through a plant, seeing the benefits of everyone’s hard work, and hearing those machine operators, inventory people, production people, planners, buyers, and supervisors, say, “Mike we really did something wonderful, didn’t we?”, fills me with pride. A great satisfaction is that they helped their organization improve, and they now know how to create a project and continue to improve the company’s profits and reduce the stresses associated with performing their day-to-day activities.

Q. How long have you been involved with APICS, in what capacity and why should that be important to your clients?

I have been ‘involved’ with APICS since 1981. I have been a member of APICS since 1984. In those 30+ years, I served as a chapter member, a member of the chapter’s management team, as President of the Chapter (Atlanta), and as an instructor for the Body-of-Knowledge (BOK). I also served as a member of the team that helped create the ‘awareness’ of a missing piece of the BOK, the Basics of Supply Chain Management. I now serve as a writer of the test questions used on the certification exams (my second committee). I feel honored to have been able to serve this group of professionals. More importantly, I am thankful for being able to sit at the feet of the founders and BOK developers like George Plossl, Hank Jordan, Don Frank, James Cox, and Eliyahu M. Goldratt and the Oli Wight organization. It is said that you only get out of an organization what you put into it. That is not a correct statement. The opportunities I received from my association with these giants and the APICS organization pale in comparison to what I have learned and can share with my clients.

Q. How have your relationships with such industry giants as Oliver Wight organization, George Plossl, and Eliyahu (Eli) M. Goldratt, among others helped shape your approaches to consulting?

Though I never met Oli Wight, who died in 1983, I have had dealings with his organization. In my opinion, they are probably the best education company with whom, I have ever had the pleasure of doing business. They are superb at creating an understanding of what business management systems are all about. I model my classes along their successful approach path.

My relationship with George Plossl was very different. George was a consultant’s consultant. George was a contributor to the APICS BOK and to the development of the APICS Society as well. I was fortunate to have George as a mentor for a number of years. During tenure and as President of the Atlanta APICS Chapter, we did a roast of George, recorder the experience for them, and George and his wife Marion both told me it was the “highlight” of George’s career. A comedian and double-talker presented himself as a protégé of George from early in his career. Attendees at the event were actually rolling on the floor with laughter. George helped me to understand that the APICS BOK is what is created in ERP Software. George also helped me with my first “successful” implementation, in 1989. His business partner, Don Frank started that mentoring process and introduced me to George.  Don and I were developing a textbook and an ERP Seminar when he died, in 2004. I am still unable to finish the book and the seminar. Regardless, Don was one of those mentors that saw more promise in me than I did.

Dr. Goldratt (Eli) was a challenger. It seemed that he took delight in making me feel uncomfortable and comfortable at the same time. In one sentence, he could both challenge and complement me and he did several times. A sentence he said, drove me to write the ERP book, The Turnaround. He said to me, to paraphrase, ‘you have a lot of knowledge in you. Just when are you going to get off your lazy butt and show someone what you got?’ Unfortunately, I missed completing the book before he died. Now, procrastination is a pet peeve, something that, at times, puts a sharp edge to my dealings with customers who also procrastinate. 

Hank Jordan taught the art of Inventory Management and tempted me to become a consultant before I thought I was ready. Neville May, worked with me to understand MAPICS, an IBM mrp system. There were also mentors who taught operations and supply chain management when I worked in their facilities, early in my career.

I am fortunate to also have had family-member mentors. My father and his father (both Ford Motor Company employees) were my earliest mentors. Both taught the art of question asking, a very necessary characteristic for a consultant.

These mentors formed me into what is necessary helps others succeed. They paved the road to help me understand what I know. I believe this is my strength as a consultant. By the way, I hate the word consultant. It implies something that is not true. People think that consultants are ‘experts’ that have the right answers. These giants taught me that that is a fallacy. These hero/mentors taught that consultants have the right questions. That is why my title is “Business Capabilities Architect.” 

I Think I Can

Michael Roman - Wednesday, February 18, 2015

Blog by Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

The old maxim, “Whether you think you can, or you think you can’t, you will be proven right,” reflects the importance of one’s mindset to future outcomes, good or bad.  The children’s story of The Little Train That Could taught us that perseverance and determination contribute to success.  Athletic team coaches know the value of a “warrior mindset;” the difference between winning and losing more often reflects the mental preparedness of the players rather than the relative physicality and athleticism of the opposing teams. Military combat leaders know that victory (and failure) begins in the mind!

Manufacturers must possess a positive mindset toward successful outcomes. Clearly, the stakes are high; people’s livelihoods are at risk and we are not here to discuss children’s stories or motivational platitudes. Whenever businesses fail, reputations as well as many individuals, families, and communities suffer great consequences. “Failure is not an option!” Yes, the company organization, at all levels, must exhibit perseverance and develop a fierce determination to succeed in the arena of competition, but that may not be enough. Sometimes, companies require outside expertise, particularly when they lack the internal experience and resources required to initiate major change.

That fact proves especially true for many manufacturers in relation to the selection and implementation of the company’s Enterprise Resource Planning (ERP) system.  Improper ERP implementations result in cost overruns, take too long, and prove too disruptive, even if considered “successful.” Companies that lack the necessary internal experience to manage the selection and implementation processes experience significant problems. Executives may strive to develop a thorough plan in anticipation, but their project management and process objectives fail to align adequately with reality. Poorly defined processes or an insufficient understanding of needed resources required for a timely and cost-efficient implementation may be the culprits, but many companies simply do not know what questions to ask of the vendor/sales rep or how to interpret the (often obfuscated and sometimes inadequate) answers they receive from the vendor’s implementation team. Poor ERP deployment results from the following: insufficient system pilot testing, the failure to input needed or correct data, the inadequate knowledge transfer from vendor to company employees, and yields sunk costs in a system that never sees full implementation.

The consultants at Manufacturing Practices, Inc. possess the requisite experience, knowledge, and resource capabilities to help guide your next ERP system selection and implementation processes. Our consultants successfully implemented over 70 ERP systems in companies much like yours. We require our consultants to receive training and earn professional certifications in the APICS body of knowledge; the very same body of knowledge most often used in the architectural design of ERP systems. We are proud members of APICS; the most widely recognized professional association for supply chain and operations management in the world. Our firm abides by the code of professional ethics established by the Institution of Management Consultants. Manufacturing Practices, Inc. is a veteran-owned and veteran-staffed company that offers scalable, flexible, and cost-effective solutions to meet client needs.  

COMPLACENCY KILLS

Michael Roman - Tuesday, January 27, 2015

COMPLACENCY KILLS  by Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

Complacency kills; a simple but true statement. One writer described complacency as “the enemy of intelligence.” The typical definition of complacency (a noun) often includes words such as a feeling of satisfaction or security, unaware of some potential danger, defect, or the like. My guess is that most manufacturing executives would not describe their business using the word complacency or complacent (an adjective). They are, after all, hardworking, caring, and concerned individuals trying to do right by their employees and families. We get it, we really do!

Are some company management teams complacent? Yes! Do they recognize the fact? Not some we see. So how do companies exhibit complacent tendencies? One of the best indicators is when a CEO acknowledges the company’s process problems and then dismisses any concerns with the statement, “But, we are making a profit!” On consulting engagements, we often hear CEOs and senior managers using the term, “tribal knowledge,” and doing so proudly. That makes us cringe. “Tribal knowledge” highlights a process, or design flaw, and maybe both! It indicates a probable out of control process. The resulting variations create an inability to calculate accurate product costs. At the very least, a reliance on “tribal knowledge” exposes a company to unnecessary risk and creates a competitive advantage for “the other guy.” By allowing front-line “tribal knowledge” to persist, a CEO (and his management team) remains complacent regarding the bottom line – just because they are “still making money.”

Another form of complacency involves companies that become reliant upon the use of technology in lieu of standard Operations and Supply Chain Management training & education. Creating additional work for employees, without enriching the work (i.e., gaining user buy-in), creates a complacent and demoralized workforce. Far from empowering employees, wrongly depending upon technology helps create or reinforces the impression of distrust. If employees are smart enough to figure out how to work around incomplete or ineffective processes and design flaws, they are smart enough to train to do the job you ask of them and to do it well. Good pay and benefits are a poor substitute for increased responsibility and participatory decision-making. Those ought to exist as employee satisfaction and engagement processes.

Manufacturing Practices, Inc. consultants assist small- to mid-sized manufacturing and distribution companies to unlock unrealized value in their businesses through the effective use of their Enterprise Resource Planning (ERP) system. We also see how complacency negatively affects ERP systems. Much like any business management system, garbage in, means garbage out, and ERP systems prove no different. As an example, failure to input an accurate Bill of Materials (BOM) to the ERP system results in a system that can do little to produce meaningful reports to help management make effective procurement and production decisions. The mere installation of an ERP system does not guarantee an improved decision-making process. It takes time and commitment throughout the organization to enter complete and correct data and transaction information. Technology does not replace the human factor, judgment, nor common sense. An ERP system is not an autopilot, a plug and play app, or a default management decision-making system. It is a management decision-making support system, a very capable tool when combined with proper understanding and deployment. Successful Management Teams create it upon the groundwork of Operations and Supply Chain education and procedure based ERP training. Such a deployment almost guarantees its proper use.

Complacency kills! Root it out of your business to improve your competitiveness and bottom line. Manufacturing Practices, Inc. can show you the way! 

Manufacturing and National Security

Michael Roman - Wednesday, December 24, 2014

By Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.


I read an interesting article. It noted that for the first time China’s Gross Domestic Production (GDP) exceeded that of the United Sates. My strategic interest in China began in the mid-1970s. At that time, China ranked amongst the poorest of the world’s nations, but I believed then that China, a “sleeping dragon,” would emerge as a formidable foe in the near future.

 

China forcefully declared its interest in territorial expansion and regional dominance in 1979 when it invaded Vietnam. Despite overwhelming military superiority, the Chinese achieved little. If nothing else, the conflict highlighted problems in Chinese manufacturing: a lack of standardization, poor quality control, and little understanding of logistics, just to name a few. The Chinese worked hard to correct those problems. Since then, Chinese military technologies and capabilities have dramatically improved.

 

Today, Chinese companies account for three of the world’s top ten companies by annual revenue. In contrast, only Wal-Mart (2nd) and Exxon (5th) represent the US in that group. In 2007, GM led the list, once dominated by the likes of IBM, GM, and Ford. Apple, the technology darling, occupies the 16th position while GM slipped to number 23. Regarding trade, the US imports more than four times the goods from China than it exports. This generates a tremendous trade imbalance favoring China. China also holds more than $1.23T in US debt obligations on which it collects significant interest payments. These hard currency flows from the US help fuel China’s growth and tend to diminish US domestic growth.

 

Other reports note a slow-down in China’s growth rate from a 40-year average of 8% to 7.3%. America’s recent growth rate remains slightly above 2%. If these numbers continue, what could we expect in the next forty years? Using simple analytics (i.e.; the Rule of 72), we extrapolate trends that show China’s economy potentially doubling every ten years over the next forty years while the US economy doubles only once in that same time frame. That means that by the year 2054 the Chinese GDP could approach $240T, greatly dwarfing that of the United States at $30T.

 

While an unsavory thought for many, China already wages war against the United States. A war fought in the realm of intellectual property, on the battlefield of economics and in cyberspace, and one that the US is losing! Some wounds appear self-inflicted. American manufacturing suffers, in part, from poorly conceived governmental policies regarding taxation, trade, regulation, and education. As a result of those policies, the US hollowed out its manufacturing sector over the past forty (or more) years, businesses increased off-shoring activities, neglected the domestic development of critical skills and tradecrafts, and struggled under costly government-mandated burdens. American manufacturing became less competitive. This must change!

 

At Manufacturing Practices, Inc., we witnessed illiterate, low-wage Chinese workers taking great pride in the aesthetic quality of the work they produced. Their work ethic, enthusiasm, and dedication prove commendable. One only has to recall the mass choreographies of the Beijing Olympics; precision performances by thousands designed to impress (and, perhaps intimidate) the world. These performances proclaimed China’s arrival as a major force on the world’s stage, one that includes industrial production. China uses American universities to help educate the next generation of Chinese computer literate, techno-savvy, and highly competitive minded business leaders, the same ones who will ensure China’s global economic dominance, a position once enjoyed by the United States. Americans must relearn the lesson that a strong manufacturing base makes for a stronger, healthier economy and a wealthier, more productive middle class.

 

This is one reason why Manufacturing Practices, Inc. assists small- to mid-sized manufacturing and distribution companies. Our proprietary processes help C-level management understand and access the hidden value in their ERP systems. We help clients unlock the ability to enhance the speed and efficacy of management decision-making through better use of their ERP system. Our proven methods enable management to implement continuous improvement programs that refine processes, improve procedures, and empower employees through Lean and other methodologies. As a result, our clients gain a significant competitive advantage, leading to increased revenue growth, improved cash flow, and significant cost reductions. We believe that Operational Excellence comes first from an effective implementation and deployment of a business management system. We remain committed to our clients’ successes. This has been the hallmark of our company since its inception.


What Worries Manufacturing Executives

Michael Roman - Tuesday, October 28, 2014

Companies worry about shop floor throughput but change shop schedules before completing them.  Companies do not properly define specifications for suppliers but worry about supplier quality.  Companies miss customer shipment dates because they misunderstand shop floor loading concepts. 

All of these are disturbing events.  However, something more disturbing is happening in the majority of small and mid-sized manufacturing that is correctable with minimal disruption and chaos.  This “disturbing thing” costs companies millions of dollars annually.  This “disturbing thing” is the misunderstanding of the proper use of an ERP system. 

This misunderstanding, leads to the major issue that causes companies to fail in the ERP implementation process.  Research published by firms like KPMG, the Standish Group, and others shows that 61% of companies fail in properly facing the challenges of the work before them.  Moreover, the results are costly. 

ERP Implementations commonly fail to deliver the anticipated benefits and requested services; these projects have huge cost over runs; projects fail to meet implementation schedules, and worst of all, some companies abandon the ERP project altogether.  It takes little effort to prepare properly for the ERP system implementation.

The most important effort to thwart this problem is the commitment and leadership from the C-Level team to create necessary expectations for the company.  This means that the leadership of the company has to understand ERP, develop the implementation criteria and commitment to provide hands-on oversight of the ERP system deployment with the user community.

Education about what ERP is and what it will do both for and to an organization is necessary at both executive and user levels.  It creates a common understanding of what is necessary when companies use an ERP system. 

Something else many companies miss is the benefits and understanding of the application of Lean Thinking.  Such a philosophy assists organizations in creating processes that are clean, efficient, and self-sustaining.

The last activity to aid an implementation is a proper project management activity.  This keeps the project on track. 

Failure to follow these simple tasks costs manufacturers more in money, productivity, throughput, customer satisfaction, and worker morale than all other problems manufacturing executives spend their time in daily worries and battles.

Manufacturing Practices, Inc. is a Management Consulting firm that works with small and mid-sized manufacturing organizations.  ERP Systems that C-Level teams use confidently to make important business decisions is the product that Manufacturing Practices delivers to these organizations.   

Our proprietary processes give organizations a common understanding of ERP System capabilities.  Our proprietary processes educate C-Level and users teams independently to understand what ERP Systems will do both to and for an organization.  Our proprietary processes create users that understand why ERP data needs to be timely, accurate, and complete.  Our proprietary processes make ERP Systems key to organizations’ success.   

Make Better Decisions

Michael Roman - Sunday, August 24, 2014
Make Better Decisions 
by Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

Good leaders intuitively understand that decisions, and not their conditions, determine outcomes.  Leaders thrive on change, they relish the challenges change presents, and they respond accordingly.

Let us examine the decision-making ability of a fighter pilot engaged in aerial combat to create a common frame of reference.  It is a given that there is a more rapid pace of change in this scenario.  There is the nature of operating in a three-dimensional environment with the ultimate consequences of battle between modern aircraft probably greater than and more impactful than those made in corporate offices.  The pilot relies upon extensive flight and aerial-combat training, complex computer systems that receive a constant stream of data from on-board combat systems and flight controls, then synthesize and analyze that data to produce firing solutions to defeat an equally determined enemy.  

The evolution of these complex systems is traceable to the ideas and theories of Colonel John R. Boyd, USAF (Ret.), as both a Korean and Vietnam War veteran.  Boyd first developed the Energy-Maneuverability Theory (or E-M Theory) that allowed for the quantitative comparison of existing and planned aircraft with respect to all factors affecting performance (i.e.; weight, thrust, lift, etc.).  The upshot of Boyd’s work is that he rescued a flailing production program for the F-15 fighter and generated interest in the development of a lightweight fighter, the Air Force’s F-16 and the Navy/Marine Corps’ F-18 Hornet. 

Boyd developed a decision-time cycle logic bearing the odd name of “OODA" loop based on his fighter pilot experience in the Korean conflict and his interest in E-M Theory.  E-M Theory considers time as the ultimate parameter and that an entity, from the simplest to the most complex human organizations, operates in an environment of continuous change to which it must respond.  OODA loop decision cycle consists of Observation-Orientation-Decision-Action steps. Boyd hypothesized that the pilot who cycled faster than his opponent did gained the advantage and defeated his opponent.  Over the last fifty or so years, Boyd’s theory became ingrained in military strategy, business strategy (the Shewhart cycle of Plan-Do-Check-Act), and used by courtroom litigators with the addition of game theory and cognitive science.

Yes, this is interesting, but how does it relate to you?

A properly implemented ERP System does for a company what both the OODA Loop and E-M Theory do for a fighter pilot. At Manufacturing Practices, Inc., we assist Manufacturing companies select, implement and properly deploy Enterprise Resource Planning (ERP) systems as a holistic management decision-making support system. Such systems enable those business entities to process business data faster and provide a distinct competitive advantage in the complex and fast-paced environment of change.  With our approach, no fighter pilot experience, OODA Loop training, or E-M Theory education is necessary. Our proven approach focuses teams on what works and how to make it better.



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.    

Ready to convert your legacy data?

Michael Roman - Tuesday, July 08, 2014

Ok.  You educated the company about what an ERP System is and is not.  Everyone now knows the difference between a Master Schedule and a Master Production Schedule.  They have reviewed and addressed the non-value added activities in their processes.  They used those processes to define a set of vendor scripts and the company found the best fit for those new processes from a list of potential ERP vendors.  The contracts are signed the kick-off meeting is over and user training is finished.  Now you can convert your legacy data.  Is that correct?  Well, maybe not.

Have you cleaned up that legacy data?  How many part numbers do you have for a 12” by ½” Standard Thread Bolt?  You hope that there is only one per material type.  Nevertheless, there is also Part 11205 - 12” by 0.5” Standard Thread Bolt.  There is also Part 1205 - 12” x 0.5” Bolt with Standard Threads and also Part 112005 -  twelve inch x ½ inch standard thread steel bolt.  You also looked at your vendor list and you see Jones Plumbing and Supply, Jones Plumbing, Jones Plumbing Supplies, and Jones Supplies.  Strangely, they all have very similar addresses like 1225 Oak, 1225 Oak Street, and 1225 Oak St.  You find some of the same problems in your vendors.  You check the AP Terms and see a Net 10, a Net 10%.  Do you still think it is time to convert your data?  Where else should you look?

You can ignore those problems and choose the one Part, Vendor, or Customer most often used, but what happens if there are balances for some of those abandoned items?  Say Part 1205 has 12000 on hand, Part 11205 has 400 on hand, and Part 112005 has 400000 on hand.  You must not forget you are you are using last cost, and each of those Parts has a different inventory value.  What if there is an AR balance for a customer with three names but the same entity?  Alternatively, what if there are open balances for the same Supplier with three different names?  Do you still think it is time to convert data?  How will you be able to compare inventory values after the conversion to insure data integrity?

That is not an easy question to address and if you ask an accountant they will likely say compare the inventory value between the old and new systems.  So are you going to bring those problems into the new ERP System?  That may be ill advised.  What do you do?  Currently there are not a lot of tools available to remove data duplication for these types of problems.  Often times, companies accomplish control through a set of manual standards. 

We had this problem at a company and quickly addressed the problem for the parts file by creating a description definition template.  The client had 30 Engineers in the company and each was responsible for product development.  Our implementation time line did not allow time to spend attempting to reach consensus in that effort, so the VP of Manufacturing made a command decision.  He defined by material type for our source materials (steel, titanium, aluminum, etc.) and by function, bolt, screw, washer, nuts, etc.

We also created a set of database rules that looked at how we defined supplier and vendor addresses and applied processing rules to not allow ST, St, ST, St., Ave, AVE, etc, etc., ETC, ETC.  We spent a good portion of the conversion effort creating those database rules and new screens.  Continuity moving forward was our goal and besides, we had a huge number of Bills-of-Material that needed changing to remove the old parts and use only one version of those parts moving forward.  This whole effort required much more time on the schedule than the original implementation plan had.  Nevertheless, the company management felt that it was time well spent.

How has your organization addressed this issue?  What have you done to clean-up legacy data during the conversion process?

Consulting 101

Michael Roman - Friday, May 02, 2014

This past week, a potential client called and asked for a review of their business.  Truthfully, prior to our visit, we did not understand their operation; however, we were able to determine from that initial conversation, the business owner is “making money in spite of the manner in which the company does business” and not “because of the manner in which it does business” (his words).  This led us to believe this company could be the perfect client for our business consultation firm.

Our initial survey uncovered that their Enterprise Resource Planning (ERP) system was “not an effective tool for providing business and financial information” (his words).   During our conversation, the owner was candid about his dissatisfaction with their inability to get the proper information necessary to manage the business from their ERP System in a concise fashion.  Our discussions also identified at least one area that required prompt attention. 

At the client site once our observations were complete, we confirmed the business owner’s determination of the problem was in line with our initial assessment.  This generated a deep degree of excitement and anticipation at the prospect of working with this client.  The business owner understands the real problem.

During the next few visits, as the teams interact, the energy and chemistry between each reveals itself. That is an important ingredient in performing management consulting.  Regardless of how flawless the methodology, regardless of how skilled the consulting team, unless the chemistry between the two work teams is correct, there will be resistance  to the changes we (our company, and the business owners) need to accomplish.  If we cannot get the client teams to “buy-in” to the project, it will not progress successfully without major problems arising.

There is a trinity of groups at work at a client site.  One group is comprised of the consulting team and the business owner.  The second team is the consulting team and the client user teams.  The third group is the business owner and the client teams.  Consistently, we work with the business owner to help bring the system users to a necessary level of competency.  Twenty plus years of management consulting has taught us this secret. 

Our experience has given us the understanding that there is an Art and a Science involved in working with clients.  Process certification goes a long way to ensure that consultants have the science part down.  APICS, (http://www.apics.org/) is the leading provider of Operations and Supply Chain Management, and our senior consultants have that certification.  The art of consulting comes from understanding people; more importantly, how to help the individual team members understand “what’s in it for them”.   

This business owner is ahead of the curve for most of our clients.  Some business owners do not understand the benefits of using an ERP System to acquire the information necessary to manage a business effectively.   These business owners drive their business by reviewing the effectiveness of actions that already have taken place (in some cases, what they review is from several weeks in the past).  A better and more effective approach is to understand where the business is today (inventory, margins, customer service, BOM Accuracy, Routing Accuracy, P&L, etc.).  Otherwise, business owners are driving the business by looking in the rear view mirror and seeing where they were instead of where they are going. 

In the real world, it can lead to a fatal accident by driving in reverse or by staring in the rear view mirror.  Business schools should teach their students the folly of driving a business by looking in the rear view mirror.  It can lead to a fatality for automobile drives as well as business leaders. Teaching students to be open to the where the business is today and planning based on current data will help keep the company healthy.