|  |  - the personal approach, advises Lakeview Computers Group
As a management tool, Enterprise Resource Planning (ERP) has been around for many years and essentially seeks to integrate all data and processes of an organisation into a single unified system.
ERP originated in manufacturing, though today it has expanded to cover any basic function within organisations across many different industries. As a result, typical ERP modules replacing previously stand-alone applications will encompass a diverse range of activities, from manufacturing, supply chain and warehouse management to finance and accounting, human resources and customer relationship management.
By replacing two or more independent applications - for example, payroll and accounting - an ERP system seeks to eliminate the need for external interfaces between previously separate systems, resulting in greater standardisation, faster and more accurate information flow between departments, reduced maintenance and better reporting.
Historically, in line with larger competitors, SMEs would have had multiple software applications which did not interface with or talk to each other. ERP systems are particularly valuable therefore to staff typically involved in multiple functions and interfaces, such as managing complex bills of materials, order tracking (from acceptance to fulfillment) and matching purchase orders, inventory receipts and costing/accounting.
What's the problem?
In considering investment in an ERP system, it is all too easy to launch into an assessment of what solutions providers have to offer, based on the range of sophisticated functionalities provided by the latest technologies. Yet, as with any significant IT investment today, before any decision can be made on the relative merits of
individual vendors and their products, an owner or operator of a small business must first look much closer to home and determine precisely the business problem to be solved.
In some cases, the need for an ERP system will be clear. If, for example, the existing financial system is no longer up to the job - either because it is no longer supported by the supplier or cannot provide the growing business with timely information on a daily basis - the decision to replace with an automated solution may be relatively straightforward.
By contrast, where the cause of under-performance is less clear-cut, this must be resolved before a suitable solution can be sought. Indeed, historically many ERP installations have fallen short of expectations precisely because of a failure to determine and define detailed project goals at the outset.
ERP systems are ideally geared to address a range of business problems: in the financial arena, for example, it can be used to reduce debtor days; in the area of supply chain management, ERP can help increase stock turn or reduce delivery lead-times; in the service arena it can reduce customer returns; and for management tracking business performance it can significantly improve the quality and breadth of reporting.
An automated ERP system achieves these gains by ensuring that data is captured from across the whole business. And, critically, in contrast to the disparate range of systems or Excel spreadsheets currently in use in many smaller businesses, all this information is captured on one central database, so improving the speed and accuracy of decision-making.
Selection
Having determined the business objectives to be met, the owner/manager must then address a number of key issues around selecting an appropriate solution and vendor.
First, in terms of product, a generic response is no longer adequate, as the ERP tool must be geared to meet the needs of the individual vertical market. A tailored solution is essential in order to address sector specific business issues: and, by understanding and assimilating the particular terminology and broader commercial drivers, it can also articulate exactly how the business goals will be met.
Similarly, the solution should be designed from the ground up to meet the requirements of the smaller, growing business. Unlike a typical scaled-down enterprise solution, this will be simple to install and maintain, flexible in terms of future upgrades and modifications and also be affordable, both with regard to initial purchase and on-going maintenance costs.
Vendor selection is equally critical. By choosing to work with a vendor who authors their own ERP solution, the end-user will benefit from first-hand knowledge of the product, without the need for costly and timeconsuming third-party involvement. This is particularly valuable in ensuring that the product can be modified as necessary, both to meet the
precise requirements of the business today and any future changes needed to meet new commercial and legislative pressures.
Partnership
In determining vendor choice, any sensible business will of course undertake due diligence to ensure the viability of a provider of such a mission-critical solution. Yet in choosing an ERP supplier in a market offering wide choice, the most important element is to ensure that the business can work in true partnership with that provider. In investing what will be a long-term relationship, not only must the product be suited to the business but the
purchaser must also ensure the right vendor 'fit', from both a cultural and service perspective.
On the one hand, a vendor must be able to evidence an intimate understanding of the purchaser's business and market, in order to be able to respond rapidly and effectively as new issues and opportunities arise. In order to protect the investment, there must also be a clear road-map in order that the purchaser can have confidence in the future viability and direction of the product.
The customer support process must similarly be clearly defined and adhered to, so that the purchaser knows what to expect in terms of consistency and quality of response.
A simple call-logging system, for example, is likely to be inadequate in providing timely resolution of urgent problems regarding what is a mission-critical element of the end-user's business. By contrast, the purchaser needs the confidence that any call will be dealt with by someone with the expertise to ensure the issue is dealt with swiftly and effectively.
The need for service quality is ongoing. The business and its processes are subject to ever-more rapid change and the vendor must be able to provide proactive consultancy advice on how to reconfigure the system to meet evolving needs. All this information may be derived, to a greater or lesser degree, by issuing an Invitation to Tender and
there are templates available to help the business do this. Yet this can be a slow and cumbersome process and for the owner/manager looking for a rapid solution to a business problem, recommendation or word of mouth from an industry peer or supplier may well offer a more effective alternative in drawing up a shortlist of suitable providers.
Avoiding pitfalls
As the business grows, it is important for the business owner to consider the appropriate time to hand over the reigns of key aspects of the business such as IT to a senior manager. In determining the future backbone of the company's IT infrastructure, for example, it is essential that the business can commit sufficient internal resource and expertise in considering an appropriate ERP solution. In doing this, it is equally important to ensure that the broader objectives of the business will be met, rather than being seduced by the latest 'whizzy' technology. And, once selected, proper formal project
management processes must be put in place, in order to ensure that implementation is kept on track and that the high quality solution is delivered on time and on budget.
ERP is not 'just another business acronym'. Once the business manager has determined that such a solution is best-suited to meet their business needs, a properly-selected ERP system will provide valuable and timely information to enable more effective decision-making and greater operational efficiency. And this is much more than a 'nice to have' for, in increasingly competitive markets, it is likely to be the difference between ultimate success or failure for the broader business.
Case study: The London Fancy Box Company
For more than 100 years, The London Fancy Box Company (LFB) has been designing and manufacturing presentation packaging for the entertainment, beauty, publishing and drinks industries. The company operates from 2 sites in Dover and now produces up to 150,000 packs a day, with sales in excess of £14 million per year. LFB has been a Lakeview customer since 1990, when the company decided to replace a largely manual system.
At that time the company drew up a detailed specification covering 50 different aspects of their business. According to Matthew Lawson, finance director of LFB: "Of the many suppliers we approached, Lakeview was the only one able to match all our requirements. The Lakeview system has given us accessibility of data, consistent processing of transactions and complete control of our stocks of finished products and raw materials."
The Lakeview system installed at LFB is a mixture of standard Lakeview modules and bespoke aspects designed specifically for LFB's unique needs. "We needed a feature to enable us to control costs against specific orders." continued Lawson. "The standard system releases works orders all in one go, whereas we wanted a phased release of materials to the shop floor, as and when the manufacturing process requires them.
"Lakeview was able to construct a bespoke version of the Stock Control module to accommodate our needs, and the system continues to suit our business, enabling us to expand, coping with pretty much anything we can throw at it. The flexibility of the system combined with the company's expertise mean that it can be adapted to suit our business needs as they evolve. Critically, the support we receive from Lakeview is consistently excellent: they take our concerns seriously and work with us to resolve any issues.
"We have 50 users within the company, so training is not a trivial matter. As we have progressed from DOS to a Windows-based system through 4 iterations and upgrades, Lakeview has consistently guided us with excellent training and support, even though the way we use the system is unique." |
| |
|
