You may have heard of the term ‘big data’ – it’s one of those technologies that some people are making a lot of noise about. It’s been written about in many publications, e.g., Harvard Business Review blog, Forbes, MIT Sloan Management Review, McKinsey Quarterly. However, as one analyst has commented, the hype about it is reaching “the levels of SOA in the early 2000’s, cloud in the late 2000’s, and social in the past few years.”
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Many organizations, regardless of industry sector or geographical location, find themselves in a comfort zone when it comes to managing their inventory. A high percentage continue to use Material Requirements Planning (MRP), and some even use spreadsheets for their planning, despite having expensive systems in place. The problem is that MRP was developed at a time when businesses could use static demand forecasts over an extended time period to allow for long production runs. In the modern world, long runs are rare and demand can be highly variable.
Ten years ago, in 2002, a law was passed in the US Congress that has had a lasting effect on business. The law was Sarbanes-Oxley (SOX) and introduced sweeping changes to financial reporting. Other countries followed suit, and now wherever you go the regulatory requirements for governance and compliance reporting have continued to grow. This includes other areas of businesses as well, including: manufacturing, supply chain, product quality and safety.
I recently upgraded my cell phone (or mobile phone, for some people). I used to have a feature phone, but the opportunity arose for me to change to a new phone that runs the Windows Phone 7.5 (aka Mango) operating system. Getting used to the physical phone, from one with real keys to one with a keyboard display, wasn’t the biggest adjustment – but getting used to the new way of doing things, actually doing everything, was an enormous challenge for me. In tech speak it’s called changing the UX (user experience). The last time I had such a challenge was moving from a DOS-based PC to one running the first version of Windows.
Whether you call them RFIs, RFPs, RFQs* or some other acronym, and whether you are a vendor or a customer, those three letters conjure up the same impression in many minds – pages and pages of detailed questions about a software product’s functionality, which takes weeks to create, days to respond, and weeks again to review.
For several decades, material requirements planning (MRP) has been the standard method for manufacturing and inventory planning. But in recent years it has come under criticism, and any manufacturing shops have adopted other approaches, such as kanban or lean manufacturing.
Part 3: Having the right approach and attitude to an ERP implementation
“Change is not made without inconvenience, even from worse to better.” Samuel Johnson
Because Word and Excel look so easy, people under-estimate how complex other standard systems, like an ERP, can be. If business users knew how complex those two Microsoft applications really are, they would be more thoughtful and careful when embarking on a complex software project.
Part 2: Changing the system as business realities change
Hands up all those who have started implementing an ERP
system and not had to deal with changes as the project progresses. No one? I am not surprised. Has anyone gone live with an ERP project and never had any changes afterwards? The reality of any ERP project is that scope changes occur during the project, and after going live it is guaranteed that there will be more requirement changes.