erp making it happen
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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