When companies buy a new ERP system as part of their digital transformation, they generally realize that some system-specific training will be required. But, beyond that, they should also recognize that some consultancy may well be necessary to ensure that they pick the right system (for them) and gain the maximum benefit from that system. Even when they have good consultancy and training, success is still not guaranteed.
Many find that, shortly after go-live, things start to go wrong. Some problems show up quite quickly, and one is data accuracy. Knowing exactly how much stock they have on hand is fundamental whether a company uses MRP (Materials Requirements Planning) or some variant of ROP (Re-order point control). When inaccurate Purchase, Sales, and Works orders are a factor, things worsen because there is no accurate picture of current supply and demand.
Partially delivered orders that should have been called complete are instead left open. Although human beings might recognize that they are no longer living, many ERP systems are not given the rules to decide.
The primary reason for this steady data accuracy degradation is that people find shortcuts to make their lives easier and sometimes because they genuinely think that they are helping and benefiting the company. For example, when issuing materials to production, most systems allow materials to allocate, pick lists to be raised and printed, and then that leads to an issue to a transaction.
Many systems also have a 'miscellaneous issue' option that doesn't require a pick list to be raised and printed, so some users will want to save time using this option. It will certainly remove the items from stock; however, the works orders will continue to show shortages until they are closed out. There is a danger, at that point, that these false shortages will then be backflushed, or costs of the items manufactured will be understood.
Turning to purchase orders and the supply side, it may seem unimportant that some have small residual quantities of items that will never be delivered, but, over a period, these quantities add up. If the supplier's delivery note fails to quote a valid purchase order number, people will enter the items to stock using a 'miscellaneous receipt' option; thus, leaving the order open.
Attempts to find shortcuts are not limited to production in warehouse management. For example, people can be tempted to raise sales invoices within the Accounts Receivable module not to wait for dispatches to be transacted in the Sales Order Processing module. In addition, purchase invoices are sometimes entered directly to Accounts Payable if the purchase order number cannot be quickly and easily identified.
People generally don't use inappropriate shortcuts to damage the company deliberately. The problem is usually that the company brought in consultants to decide which tasks need to be performed, and then users were trained how to perform those tasks. However, they were not educated on the importance of carrying out those tasks.
In the end, they think that it doesn't matter how the stock is or how long it is transacted, and it doesn't matter how invoices get onto the system, as long as they do get onto the system. To ensure success, people don't just need consultancy and training, they also need education. They need to know how ERP systems work and what they need to work well.
The understanding then comes with an integrated approach, where a single piece of data can have multiple uses needed to understand the consequences of what they do and what they fail to do. Unfortunately, some companies invest in education but limit it to the core implementation team and so fail to gain the full benefit of their new system.
The question, then, is who should provide this education? In a large organization, there may already be some people who have extensive experience of ERP (remembering that they will need to have a comprehensive understanding of the use of ERP in all the departments in which it will be implemented). Such people can first pass on that knowledge to the implementation team.
If a company does not have the necessary expertise in-house, they can get the help of specialist ERP consultants to provide the essential knowledge. Either way, once the implementation team has acquired the required knowledge, they are the ideal people to disseminate it within their departments because they will be able to put everything into context for their colleagues. As a result, they will be seen as knowledgeable, and those colleagues will find it much easier to follow their advice and direction when the project gets underway.
Remember this: If they invest in consultancy, training, and education, companies can confidently approach their projects at a high and confident level.
Sam Graham is a guest blogger for Third Stage. If you have questions regarding this content, please feel free to reach out to us.