Are you familiar with the Channel 4 series Scrapheap Challenge?
Two teams gather in a yard filled with scrap cars, white goods, girders, sheet metal, tyres, engines and the like. They then have 10 hours to use all their ingenuity and lots of power tools to create something outlandish from the materials at the disposal – like a missile launcher, snowmobile or a golf-ball Gatling gun.The winning team is the one who designs and builds the most effective creation from the materials available. Losers often make a fatal mistake, using the wrong material or components only to see their creation collapse, sink or go up in flames.
Efficient design applies to ERP too
Because I’m interested in both manufacturing and ERP software, I can’t help but see parallels between the two. For me, the scrapyard itself is like an ERP package like Epicor – it gives you the potential to achieve a huge number of things, but only a few of them are relevant to what you want to achieve. Each team is like a group of ERP experts, trying to implement the right functionality for their given brief. And the final inventions are like using Epicor for your business – the better the design and the more efficient the processes used, the more you achieve your goals. A successful ERP implementation for profitability requires meticulous planning, efficient resource allocation, and continuous performance monitoring.
Unfortunately, many manufacturing businesses don’t make the step from acquiring ERP software like Epicor to implementing in a way that reflects their actual business processes. Often this is because a firm will buy their ERP from a reseller, who then employs people without a deep understanding of the manufacturing sector to implement it, instead of an experienced ERP consultant. ERP implementation for profitability also involves not only technological integration but also a cultural shift towards data-driven efficiency and value creation.
So instead of matching the software to your processes, they will teach you many different ways of using Epicor to achieve a broadly comparable objective. It’s a bit like getting a Scrapheap Challenge team to design dozens of different water cannons – and then asking them to build every single one, rather than just the one that does the best possible job with the most efficient use of materials.
ERP and manufacturing sector knowledge
CBO’s ERP experts are experienced in the manufacturing sector and they take a very different approach. By using a proven methodology, they not only match your business processes to Epicor, but they also review the processes themselves. Where there is a gap between an existing process and your business objectives, they align the two. Organisations embarking on ERP implementation for profitability must analyse existing workflows, identify bottlenecks, and optimize processes to drive financial gains.
To give a real-world example, we rescued a poor ERP implementation for Ritchey Ltd, a firm that manufactures and supplies ear tags and other animal identification products. We found the system had been implemented in silos, meaning the information flow through the business wasn’t efficient. Returning to our scrapyard analogy, it was as though different teams had designed a different part of their water cannon with only very loose reference to each other’s work. The wheels, the chassis, the barrel and the firing mechanism may have been good examples of isolated design, but when the time came to put them together the job needed a lot of botching and bridging to make it function at all.
To cure Ritchey’s problem, we researched the company’s business objectives in depth, created new ERP processes that aligned with them and brought the different silos together in a unified design. As a result, inventory was reduced, On Time in Full deliveries were improved and production planning finally met demand. Ritchie also gained better visibility of its data and could exert full control over marketing spend and revenue – the Epicor implementation ensured the software and Ritchey’s business processes worked together in tandem, making the company more efficient and profitable. (Ritchey are now rolling out their re-designed processes across another 4 companies in the group as they consolidate on the Epicor platform).
So, if your manufacturing business is under pressure perhaps, like Ritchey, it’s time to look at how well your ERP system is performing. Whether you use Epicor or another platform, it’s very likely there’s a gap between your business processes and how your ERP software has been implemented – not that the system itself is due for the scrapheap.