Written by Raja Mohan Ivaturi for the magazine “Digital Age”. I still find the article relevant to the current situation. It may not be just an ERP as narrated in the article, but is applicable to any Solution implementation. And the fact that the success of such implementations depend heavily on handling “human element” remains the same even today. The article is pubished with permission from the author.
The expertise required for a consultant working in ERP implementation and that of one in the Post implementation support will be entirely different. In the later case consultant has to provide a solution while the system is Live!
As a part of Post implementation support I went to a heavy equipment Manufacturing company along with another senior Colleague to study their system so that our support will be more systematic. But our observations resulted in identifying many serious problems and so we had to stay for more time than expected to sort out these problems. My work along with the other consultant went very well for the full satisfaction of both. We made a good combination because I had tendency to look at the roots of problems but was short tempered in communicating the client while the other has patience and convincing power to handle the communication and implementing the solutions.
Lack of Basic Knowledge
In my client’s company users were surprised to see when the System was automatically planning for the components of Phantom item even though the Sales order line was containing item which has Phantom structure. I was totally convinced about the confusion about phantom functionality because the concept is not clear even to many experienced consultants. But later we noticed that there were many fundamental problems which would not exist had there been application of basic principles.
For example all planners in my client’s Company used to generate a report for the orders to find out the possible shortages .This shortage report is generated only on the basis of existing inventory and inventory required for the Order. In turn it also RESERVES the required raw materials to the order with an assumption that the order is for immediate launching. Planners used this shortage information for generating purchase/Production orders for missing items . While this report will be useful when you are about to launch an order; it will be useless or perhaps dangerous when used for material planning. For future planned orders before confirming , the planners have to look at the Plan generated by MPS/MRP based on the various factors like end item’s demand/forecast, BOM, existing orders, existing stock etc and see whether the plan is feasible or to be modified.
We tried to convince them that the planning can not be shortage driven ,instead it must be requirement driven based on demand for the end items. In the beginning they were not convinced. It was possibly because they can understand a shortage Report which contains actual data. While looking at the future orders planner has to look at the projected data which is beyond scope for their present understanding level. And the concepts like Firm Planning ,Time fencing etc were too much for them.
Most of the companies never planned using the concepts of MPS, ATP, Time fence etc. while using their Legacy systems . It may not be anybody’s mistake because it is well known fact that the concepts of ERP can’t be put in to practice with out the help of software. At the same time the Software can be used only with thorough understanding of ERP. This is a loop and is a serious problem. I personally feel that the ERP implementation methodology may have to be changed with starting point of implementation as 2-3 week training on ERP basics.
In the presence of all the key users I made a presentation explaining how to plan under various conditions and explained the danger of Reserving Allocations ( By their shortage report). It made significant impact even though it was not sufficient and requires more efforts from the key users to understand the world class planning systems.
Accuracy of data
In my client’s Company we noticed bulk of orders planned foe delivery in their Festival vacation. If the Shop Floor calendar is not designed correctly how can the ERP software understand that?
Similarly the planning will have no meaning if the data like the quantities in Bill of Material, various operation times in Routing, Capacities of resources, Safety stocks, Scrap factors, Order Methods( like Economic order Quantity, Lot for Lot) and above all Inventory data etc are not entered accurately. In one sentence all the data that are input to Planning and the data that are considered by Planning while giving output must be accurate.
In my presentation in the presence of all Key Users I also explained the implications of how the output of Planning system becomes unreliable if the basic master data are not maintained properly. One advantage in my client’s Company was that their Technical Manager was totally co-operating with us .He noted down all my inputs and circulated to the Key users for proper actions on these issues.
Updating of data
This complements the problem of accuracy. Online Updating of the day to day facts is as important as keeping the accurate Master data required for Planning and Execution. While people expect extra ordinary results from the Software ;they don’t put the minimum efforts to keep the data in the software close to reality . Basis reason is not understanding the importance .Apparent reasons can be many which have no relation to the quality of ERP.
It is also important to register all the events. The best example which emphasises this point is here. Workers in the Servicing department are usually pressurised because most of the times they get the Order with finished date as YESTERDAY. In the urge to finish the RED HOT orders the engineers used to snatch the parts from other items that come for servicing. Even though this fact is not acceptable practice for many people; I accept it because I worked in similar environments while working with NTPC and understand the kinds of pressures we faced. But if these actions are not entered in the system , the inventory data can not be accurate. We made a procedure to register these item movements in Baan. However the Service engineer refused to track the material borrowed from the other orders by stating that he had no man power to record these events. The answer was in one way convincing because he was asked to show the results in the year end and so he and his team members were to concentrate on the Business rather than learning how to use Baan. They spent some time in learning a procedure and now were being asked to change the procedure. But in all this had he understood the implications he would not have ignored the importance of recording the inventory movements properly. However the message was understood by the other key users and they are determined to make him follow the new procedure which included registering the movement of items between orders.
Key users back to Business
This is a major Problem we faced during the stay. It can be a mistake from the Management even though I don’t dare to say that. Once the Implementation work is finished ,Key users are sent back to Business and are pressurised to show the results.[You finished Implementation. Now it is your turn to show results!]Key users are the people who have maximum understanding of the implemented ERP. If they don’t find time to try and arrive at better solutions; optimisation can never be achieved. The Planning Managers in my client’s Company, had good understanding of Baan’s Planning System and as such had good understanding of Business systems .But they hardly had time to look at any improvement. Their time was totally spent in fire fighting. With a couple of months in hand they could have solved all the problems and permanently eliminated the requirement for continuous fire fighting.
Management has to realise that making ERP Live is not the end and in fact it is beginning of real use of ERP. Everything goes very well when the system is not live and many major problems are not even identified at that stage.
In my opinion there must be a probation period for Implementation consultants and the Key users after implementation till everything is stream lined. This is in practice at many places but still not so common.
Live status
As I said it is very difficult to optimise the Business system when it is already Live. The options are limited .At this stage the Company requires solutions that should not take much time. That is; we have to give either short term solutions or long term solutions in small doses. Also some problems can’t be resolved if there were permanent wrong set-ups (I mean set-ups not really suited to the Business requirement of company) at the time of Implementation. These situations vary from Software to software but there will be some kind of settings which can not be altered due to activation of many other related transactions. Unless all those transactions are cleared it is not possible to move to a new set-up. In the Live Company it is almost impossible to suspend the transactions for a long time even if the new set-up is very useful.
Reluctance of end users continues
End users still continue to depend on the Key users for rectification of problems even after System goes LIVE. This is fine during implementation but at a certain stage they must start trying on their own and understand the system. Partly this is because Key users enjoy the importance so they never discourage the dependence on them. But in the long run they will get the stick if Management acts wise and reacts when the end users of a Key user make more mistakes or rather blunders.
Legacy system and ERP
People are tuned for Legacy systems and they have no idea on Integration of all Business activities which is one of the best features of ERP.I saw tons of reports everyday exchanged between various departments in hard copies while the information was accessible in software itself.
Most of the times legacy system keeps on changing based on user’s request and people have the tendency to make huge wish lists. They continue to do so even with ERP but most of the times they make what is available in the Software. In fact some times the available features stop working because of the dangerous customisations done as part of fulfilling the user’s wish lists. By some minor education we could eliminate the requirements for many unnecessary requests for more and more customisations and more reports for communication among departments.
Not Serious about Forecast
This was a common problem in many companies. It is true that Forecast can never be 100% accurate. But should we forget it? The most important part of Planning is to look at the Forecast and the actuals and find the reasons why there was deviation. We can improve with this approach what ever the stage our starting point may be. It requires special analysis to look at the deviations ,understand the errors, finding the reasons and preparing the strategy to how to correct the errors. For example some errors may be occasional and need not be carried to next forecast where as the others even if slightly deviated may be having a trend. So it requires a thorough analysis.
Forecast is the one which drives most of your planning activities and it can not be neglected.
In my client’s Company I emphasised this point and suggested some changes in their present way of forecasting because their present Forecast information is overwritten periodically by a Program and does not give the opportunity to check the accuracy of forecast by comparing with actuals. The Planners already know the importance of Forecast but there is no best method for all the items and some time has to be spent in analysing various Forecast methods and deciding them for different items.
Overlooked the Capacity Constraints
I think one important reason which was not often mentioned as the reason for higher inventory is overlooking the Capacity Constraints. If MPS is made with out a look on capacities than there is a chance of over loading the capacities and raw material / WIP stock will be piling up.
Some of my clients never concentrated on Capacity planning and management. Earlier I thought that they had excess capacity. But it was not true. With a close look I noticed that one of the reasons for overstock may be because of planning at higher level without looking at the capacity. However it was very difficult for them to state what are the capacities of their work centres. This is the fundamental problem. They had no practice of quantifying their working hours ,efficiency, Productivity, Machine yield etc. Everything was going on approximate[which was far from realistic] estimations.
Conclusions
There are problems after every implementation and as I explained we solved or proposed solutions on most of the cases. But the next step as per my favourite principle is to find the reasons why these problems occur and eliminate the causes.
Develop a realistic implementation methodology
I feel bored with theoretical articles like ‘7 best steps for ERP implementation’( Sorry ! I am not criticising any one and apologise if it hurts any one.) etc because they don’t discuss the practical difficulties. How many people talk about tuning the psychology of the employees before thinking about such big changes like ERP implementation? There have to be some constructive efforts from all ERP Consultants to share their experiences ,reaching the root causes of problems and exploring the solutions to make a better implementation methodology .
Over-expectations imposed by the Consultants
This is some thing I accept on behalf of Consultants community. It must be clearly informed to that client that using ERP requires tremendous discipline, deep understanding of world class procedures , Changes in the working styles , involvement of all the departments till the root level etc. Consultants shower the client with presentation of all possible benefits but they don’t clearly say that “You will get them only if …” . Consultants will have to follow some professional ethics and educate the clients before they go for ERP. Today if ERP is being termed as a magic term and as a cheating jargon we the consultants are partly responsible.
Most of the above problems like ignoring capacities etc were result of over-expectations because clients used to expect that with ERP they need not bother about many things. For the benefit of ERP let us stop it.
Dilute the “Customer is Right ” slogan
It is high time consultants have to think whether making the customer the God is right. I don’t dare to say that Customer is not important but it is not followed in right sense. If Customer is really important , some how we have to convince him/her for the best solution where as most of consultants accept what ever customer says even if they know that it is not the best solution. In some circumstances Customer and Consultant relations will have to be trainee and trainer or perhaps a patient and Doctor. If the patient accepts that he is a patient than only a doctor can cure him. Right now it does not happen in most sites even though in my client’s Company was not one of them. We had excellent support from their Technical Manager and in fact because of him we could deliver the goods.
Education
As I was always emphasising education is the key to many implementation issues but convincing the importance is the biggest problem. Only a few people must have used the principles of MRP II in their business before coming to use of ERPs. Instead of solving the petty problems of clients we must improve their knowledge and ensure they solve their problems on own. Obviously it may seem to be less profitable for consultants but a client with better knowledge will use his system better and gets good results . It is required for people to understand the benefits of ERP. In the long run it helps ERP community and it will be a win-win situation.
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