Enterprise Strategy and ERP– Where’s the Fit?

Many of the
manufacturing and distribution groups we communicate with begin a technology
choice project by asking the customers what they want in a brand new
system.  But is that the best place to
begin? As an ERP consulting agency, we really feel fairly strongly that there’s
a greater approach

If
your staff is contemplating an enterprise technology project, simply assessing
ERP user necessities alone isn’t a greatest follow.  That strategy will miss key necessities
wanted for the enterprise to succeed with its marketing strategy.

Instead,
the corporate must be positive the enterprise strategy and ERP are tightly
linked to drive enterprise efficiency enchancment.

Looking Deeper at Enterprise
Strategy and ERP

A brand new ERP system is
among the parts of an
organization’s info know-how technique, and the knowledge know-how technique ought
to help the
corporate’s enterprise technique. The firm enterprise technique must
be one of many inputs to the ERP necessities.

When planning the wants of the longer term system, the corporate and the division plans should present enter to the definition of the brand new system. That’s the
primary part of aligning enterprise technique and ERP.

The business
plan can then
drive vital necessities for the brand new system.

At Apagen, we help the ERP choice staff with the event of a Business Goal Driver Framework. This Framework will hyperlink vital ERP software program necessities to the enterprise objectives. The framework has the next linkage:

• Business objectives are
  linked to methods
• Strategies are linked to processes
• Processes are linked vital software
  program operate

The growth of this framework
depicts how the
corporate marketing strategy is linked to the longer term ERP system.

An Example of Linking Enterprise Strategy and ERP

Consider the next instance:

Business purpose – the corporate has determined it wants to cut back stock. It has in contrast its stock ranges to friends and greatest in class corporations. The comparability has proven administration that their stock levels are larger than different corporations. Management has set a purpose to cut back stock ranges.

Strategy – the corporate has determined to make use of a “pull” technique to cut back stock ranges. During their evaluation of peer and “best in class” corporations, administration has discovered using a “pull” technique can facilitate the reduction of stock.

Process – the “pull” strategy might be implemented for the replenishment strategy of sure parts and completed items. The strategy is linked to the replenishment course of. During their assessment of part and completed items replenishment they have recognized the elements that may match right into a “pull” technique. They have designed a “pull” course of chart and decided the Kanban portions for the elements.

ERP
Software Requirements – In order to implement a “pull”
replenishment process, the staff has decided the brand new ERP system will need
to have Kanban functionality. This functionality wants to incorporate digital
Kanban notification, digital Kanban visibility, and Kanban amount calculations.

The ERP staff builds
a framework that exhibits the
connection of the:

• Goal to Strategy
• Strategy to Process
• Process to ERP Requirement

By
analyzing the enterprise purpose, and linking it to a enterprise technique,
that links to a enterprise process, and ERP requirement, the staff has
recognized and outlined a vital requirement that might be used to judge
software program and head into ERP choice.

This
framework communicates to everybody concerned within the mission the
significance of the software program requirement. It additionally establishes a
transparent goal and ROI for administration within the implementation of a
brand new ERP system.

First Steps to
Align Enterprise Strategy and ERP

We’ve made the case {that a} new or upgraded ERP system is one
part of an organization’s info technology technique. And for a profitable
mission,   the info technology technique
ought to help the corporate’s enterprise technique.

As an instance, we’ve spoken with groups who want to drive the
next enhancements:

• Increase On-Time Delivery
• Improve Overall Equipment
  Effectiveness
• Realize Improved Raw Material Yield.
• Standardize Exception Handling
  Processes Across Manufacturing Operations.
• Enable Continuous enhancements Teams with Analytics and
  Real Time Visibility.

These
drivers had been assembled after the corporate requested for enter from the
enterprise departmental managers to develop enterprise plans to help the
corporate plan.

This
process concerned rather more than asking users what they needed out of a brand
new system.  This process links the
enterprise choice mission to total enterprise technique.

By
making the hyperlink between enterprise technique and ERP, the staff has a
greater probability of choosing the best system that helps the corporate’s
total priorities.

Enterprise Strategy and ERP:
Lessons Learned

One of the most vital classes realized I’ve seen within the area
is that almost all ERP initiatives don't hyperlink enterprise technique and
ERP.

In some initiatives
I’ve been conscious of over the past decade or so, I’ve heard groups say their
legacy system is dangerous, and my response is that it won't be the case. It’s
not the answer that’s dangerous, it’s simply doubtless a foul match and never
the best one to assist an organization enhance their enterprise efficiency.

Not specializing in
the general enterprise causes that drive points is a missed opportunity. It’s
not sufficient for an ERP implementation to be an IT project, it have to be a
enterprise transformation opportunity.

We’ve supported many ERP restoration effort initiatives, and perceive that corporations can spend vital assets on enterprise techniques, but when the project isn't tied to enterprise technique, these assets are  wasted with marginal advantages realized

Without Apagen
concerned throughout and after implementation, project groups not often give
attention to enterprise enchancment. Instead, they focus merely on getting the
system “installed and live.”  But what
follows is a startling realization:  the
advantages don't come till AFTER going reside. Without the transformation
(supported by figuring out objectives, 
measuring and performing on metrics, mapping the present state towards
the specified future state), nothing actually modified besides the technology
instrument that's getting used.

Instead, when an
enterprise technology mission places enterprise course of enchancment as the
very best precedence, success and diminished time to profit follows.

Contact the Apagen team to debate your present mission necessities.