“I just spent the last three days building a report for the boss on the accept / reject rates at each inspection point. I got an order list from sales. I found paper reports on the inspections. I put it all together in a spreadsheet with beautiful colors and formatting. It was a lot of work and I am proud of the report.”
“That sounds great. Why the glum look?”
“The boss wants even more details. In addition, this report needs to be ready at the end of every month. I cannot spend that much time. I need a better way to publish this report.”
The medical device manufacturer that had a spectacular compliance failure probably made the headlines. Their story will be noted in university classes around the world for years to come. Let’s look at another outcome.
One of the primary benefits of any ERP system is decision support. We might think executives make the important decisions. In fact, people at every level of the business make important decisions throughout every day. Use your ERP to help guide every user to the choice that leads to an optimal payoff for the enterprise.
ERP workflows will help your bottom line. We link the steps we are supposed to take in our process as connected ERP transactions. Errors caused by disconnects, when one person performs a transaction and a second person makes a transaction that doesn’t fit with the first, are usually eliminated.
Workflows can be a short series of regular tasks or a lengthy annual process. Whatever form they take, they can greatly benefit a business that wants to reduce errors and cost.
ERP can be a valuable tool for communication. People throughout the enterprise use common language and understand each other. Money is always related to the financial statements. Backlog is always related to sales orders on the books.
Scheduling is an important part of that communication system because every customer order has a due date. All the material components will be on hand as needed, and the production centers all have capacity to produce the order on time.
At least that is how it should work.
Sales and operations planning is a formal exercise many businesses practice to bring their supplies into balance with demands and best utilize their capital and other resources.
To make it all work, a companys ERP system must be up to date with all transactions and the information must be accurate. Sales orders and forecasts need to be netted against each other for a true picture of demand. Purchase orders, receiving, materials inventory and work in process inventory also must be very accurate for a comparable view of supplies.
Many of us think of S&OP and think of days in meetings and unending discussions between the functional groups in the business. Many will agree it is a powerful tool. Many will also contend the benefits might not justify the tremendous cost of the exercise. Others might also look at expensive software for sale at high prices that could simplify the process but still would not yield the necessary benefit.
There are hundreds of possible metrics in the textbooks that your distribution operations could track. Having a grasp of each metric can provide some sort of value to the company. But there are a few that are critical to your business performance and goals. Those few are known as key performance indicators (KPIs). They need to relate to your goals, they should be available automatically from your ERP as transactions complete. Everyone should know how the metric is calculated and how their jobs affect those metrics.
Here are a few I like.
Your ERP is a powerful tool. You need to keep it sharp or the performance will drop away and if it really gets bad, you will have to replace the tool.
Here are some tips to keep your tool sharp. I will write these as annual events, but your maintenance might be more or less frequent.