Enterprise Resource Planning (ERP): Making It Happen

“Many major companies are having difficulty achieving effective enterprise resource planning even after a full year of implementation,” according to a report issued by The Conference Board.

The report goes on to state that “some 40% of participants in The Conference Board survey failed to achieve their business case even a year after having implemented enterprise resource planning (ERP).”

----(The Conference Board)

Role of ERP Has Changed

20th Century ERP Role Today

• Enterprise Optimization • Supply Chain Optimization

• Tactical Cost of Doing Business

• Strategic Investment

•Reengineered processes for Survival

• Reengineered processes for Efficiency

•Computing in the “Cloud” • ERP is the Next Wave

SummaryERP and e-Business

Manufacturing

Distribution

HumanResources

Finance

Sales andMarketing

ERP

Internet

Third PartyLogistics

Providers (3PL)

Distributors

BusinessPartners

Customers

SuppliersVirtualManufacturers

KnowledgeManagement

ERP, e-Business and Data Base Accuracy

• Item Master/Bill of Material/Routing

• Customer and Vendor Masters

• Financial Account Coding

• Inventory Accuracy

Data Accuracy at a Medical Products Distributor

• $40+ billion health care supply management company

• 30+ North American distribution centers

• One million order lines every work day

• Short filled order can be a life threatening event

Data Accuracy

Recognized the impact of accurate records on both

Customer service

Financial reporting

Transformed the Enterprise by

Deploying a proprietary warehouse management system

Redesigning business processes to achieve high levels of data accuracy

Medical Products Distributor

Data Accuracy: Positive Change

Early 90’s Today

70 to 90% inventory accuracy 99.8+% inventory accuracy

90% of physical inventories eliminated

Two physical inventories per year at each distribution center

Use of more efficient “process” cycle counting

Exclusive use of ABC cycle counting

Medical Products Distributor

Implementing ERP: The Three Elements

The New Industrial Engineering

Business ProcessInformation Technology RedesignCapabilities

How can processes be redesigned using IT?

Business Process Redesign

•Receipt is authority to pay

Automatic AP entry and payment

•Automatic adjustment of contract PO

Internet release to vendor

Swipe bar code to receive in stock

•Receive directly to point of use

External Kanban

Business Process Redesign at a Discrete Manufacturer---Redesigned Procurement Process

Business Process Redesign at a Discrete Manufacturer---Redesigned Procurement Process

80%+ of items under Kanban control

POs written reduced from 5,000 per month to 1,700

Self-billing invoicing routine eliminates supplier invoices

Save over $20,000 per month using the

“self-billing invoicing” routines in ERP software

Reduced delivery lead-times 67%

Increased inventory turns 2.3X to 18X

Increased revenues by 250%

Business Process Redesign at Business Process Redesign at a Discrete Manufacturera Discrete Manufacturer

Vision

Mission

ERPObjectives

ERP Project Plan

ERP Risks

ERPProjectVision

Strategic Project Management

Module Target Control Method

Annual Savings

Production Planning

1. Reduce throughput time by 25%

From 8 to 6 working days

$500,000

2. Reduce inventory by 40%

Reduce inventory $’s by 40% (value = $3 million)

$1,000,000

Improve labor utilization by 1%

Saving by better planning and scheduling system

$400,000

Finance Reduce average

payment terms by days

Reduction of days outstanding from 75 to 70 days

$580,000

Risk Management“It’s the alligators that you don’t see, that will bite

you.”

ERP Risks

Change Management

Multiple Projects, Multiple Visions, Competing Resources

Six Sigma

Collaborative Product Design

ERP

Empowerment

Vision

The Essential Elements of Change Management

The Ten Steps for a Successful ERP Project

1. Clearly defined Project Mission

2. Leadership at the Top

3. Realistic Project Schedule/Plan

4. Client Consultation

5. Personnel selection

10 ERP Success Factors

6. Technical Tasks

7. Client Acceptance

8. Monitoring & Feedback

9. Communication

10. Trouble-shooting

The Ten Steps for a Successful ERP Project

ERP: Making It Happen