Enterprise Strategy and ERP– Where’s the Fit?

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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.

Apagen’s methodology & orientation can invariably add value to your organization’s IT Structure. Our Innovative Process can help you evaluate your ERP insights.

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