ERP: From Functionality to Value in a Single Bound

ERP: From Functionality to Value in a Single Bound

Author: | Published: 20 Jul 2016

In this age of Industry-four-point-whatever, the stuff of interthings, customizable screens that can make coffee and excise bunions, massive data and so on, it can be fairly easy to forget that some ERP users may not want every bell and whistle in order for their solution to work optimally for their situation.

This is seldom more apparent than in the lean business. You know the one – even the toilet has been given the 5S makeover and every wall is festooned with brown paper and post-it notes. This is the business that made you say ‘Sensei’ for the first time since you quit karate 30 years ago as a spotty 13 year-old.

A Sales Scenario

The prospect’s requirement was simple: a solution that would allow their operations team to keep ‘interested third-parties’ (health and safety, accounts) happy with as little interference (or ‘disturbance to flow’ in lean-speak) as possible.

I remember getting the email: “How would you guys get SYSPRO to manage a two-bin Kanban?” The responses came flooding in thick and fast – minimum stock levels or safety stock driving MRP, event management firing off emails – all the way to ‘smart bins’ which would tell SYSPRO when the bin was empty and fire off a purchase order. I even threw in Inventory Optimization to decide the Kanban bin sizes.

Wonderful. Except that the physical stock would only need to be slightly out of synchronicity with SYSPRO for the stock level ideas to be branded as successful as an England football manager. Smart bins? No doubt someone will remark that they exist and are incredibly good value, but I would bet against them in a warehouse that is about as hospitable as a Russian Gulag. Inventory Optimization? Who spiked my Corn Flakes that morning?

Approximately Right or Precisely Wrong?

The reality is that if a business is embracing core lean philosophies such as visual triggers and Kanban, there is very little point trying to talk them out of it. As it turned out this customer didn’t need minute-by-minute balance sheet updates. Their BOM is accurate and their material usage and production processes run very close to standard. All that was really required was a daily update of the stock position – easily achieved by back flushes at strategic points, coordinated with the right Kanban card moves.

Before you all start agreeing with me, neither I nor my colleagues were wrong; everything we thought up was correct and completely relevant. It just wasn’t what the customer wanted. And who knows – in two years’ time they may well have barcodes on the back of the Kanbans to raise jobs or purchase orders in a single scan. They may be convinced that MRP is a powerful simulator, particularly when run on the back of Inventory Forecasting and Optimization.

But, in giving them what they want now, they can spread the lean love to the rest of the business (lean, sadly, still does not often get out of the factory floor), and they can focus on extracting goodness from the data. More importantly though, they get what they asked for, and we have a really simple implementation to boot.

Hi, My Name is Jeff and I’m a Valueholic

Even without the philosophical complexities of lean, ERP has been about functionality for so long we can all be forgiven for diving headlong into whatever ‘does the doing’. Of course, functionality is still relevant, possibly more so than ever. But, my friends, if we are to base all we do on the value proposition, we need to remember who the real judge of value is.

Academically everyone is talking about the value proposition as total cost of ownership, the delivery model (SaaS, PaaS and whatever other acronyms are out there this week) and return on investment. Nowadays there are some fantastic tools out there which help calculate ROI. This in itself is a hugely powerful sales tool. Thing is, if we are going to sell solutions on the basis of certain ROI metrics, we are at least morally obliged to help see some of those results through. I, for one, am petrified by that prospect when the very nature of my job as an Implementation Consultant is to get the solution live and then move on to the next one. But my feelings are exactly why ERP has been trapped in functionality-land since Milli Vanilli faked their way to stardom.

Having had that mini-meltdown, I’d love to see value as something that people want, not sets of aspirational numbers. You see, as individuals we are used to suppliers of stuff telling us what value is. However, as ERP vendors we need to ensure that we are not telling our customers what makes our offering such good value without asking or respecting what they hold dear.

Just saying.

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Comments (3)

  • Helen Hollick Reply

    Loved this read. Have a look our process modelling tool, this allows us as implementers to understand the customers business before applying the software.

    July 20, 2016 at 6:44 am
  • Tom Huntford Reply

    It is so easy to miss the “heart” of Lean. Which is: to not put up with problems, but instead to solve them. And, to listen to the workers for solutions. Too many companies miss the underlying attitude, even in the midst of big “Lean” implementations. They chase the example of a Japanese company with global market clout, located in a major urban manufacturing city, making semi-configurable automobiles. The solutions that work for Toyota will not be the same ones that work for a wood products manufacturer located in a tiny town in Oregon, with no global clout with suppliers, and a raw material that has high variability. Nor will the solutions that produce optimum customer satisfaction and company profitability be the same for an Engineer-To-Order company that is basically producing one prototype-on-the-fly after another! You can “kanban” bolts for the production of millions of cars…but what if you don’t know what bolts you are going to need next week? Even having a bin at all may be a bad idea. What it really boils down to is the attitude of constantly listening to the folks involved in the work, and determining to find ways to make their jobs more efficient, by eliminating whatever stands in the way of getting work done. And ERP systems are just a tool, needed when a business grows beyond the practical ability of people to manage their business on paper, or in Excel. In fact, ERP-makers need to take more of the “true Lean” approach. I have seen more than one ERP system, that is spending millions on glitzy marketing and stunning user conferences…all the while ignoring enhancement requests by users that have been sitting around for 10 years or more. Basics, like those frustrating hard-codings that make it impossible to automate a task; or missing the basics of finite scheduling like percentage completion; or not having a shortcut from one screen to another; etc. Both the consumers and makers of ERP needs to stop chasing Toyota, or trying to make their ERP into a Twitter feed, and focus on the relatively simple fixes that would truly “deliver value”, that the folks in the trenches have been requesting for years.

    July 20, 2016 at 2:50 pm
  • Jeff Gilbert Reply

    Couldn’t agree more with your thoughts on lean Tom, and to quote lean guru and ex-Toyota man John Shook: “There are three kinds of leaders. Those that tell you what to do. Those that allow you to do what you want. And Lean leaders that come down to the work and help you figure it out.”

    To your points on the ERP software, I think SYSPRO in particular has come forward to address many of your concerns with software in addressing lean with solutions, Workflow, power tailoring and Espresso. This ethos will only develop as we see the UX continue to evolve – refer Alistair Brough’s recent blog.

    The realities of life however often require a level of compromise. This is true in implementation as it is in software development. We all have to play the percentages – unless one is completely unconstrained by budget, talent and time, academic correctness and philosophical principle often have to be bent to provide the most appropriate solutions. Ultimately it boils down to a reasonable definition of technology: the interaction of the sciences with human beings.

    July 22, 2016 at 7:01 am

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