ERP Implementation: The Final Mile

The spectacular rise of internet sales — typically called ​“E‑tail” by the enterprise world and omnichannel on the planet of provide chain and distribution — has provided nice alternatives and equally putting challenges as firms search for methods to effectively handle new and totally different ordering and delivery challenges. The biggest challenge will be the so-called final mile of delivery. Distribution could be very efficient to the final warehouse or stocking location but getting the package from there to its final destination — the client’s home in this case –is the least efficient part of achievement and the biggest challenge for E‑tailers trying to keep costs down and make a profit.

Implementing a system also involves a “last mile” of sorts as well. Like E‑tail delivery, it’s about getting the product (the ERP system) into the hands of the customer (the user). In this case, it prices little or no but is a vital link within the process of getting the system truly embedded into your organization’s processes and environment.

What Actually Happens on the Production Floor?

Why do employees do what they do? Because it’s their job to do what they have been employed to do and what their supervisor says they need to do, and they’re rewarded for doing so. That reward would possibly take the type of an increase or promotion, or just continued employment, a ​“well done” from the supervisor, or the satisfaction of assembly expectations or a quota of some type. These are all kinds of measurements. These measurements are sometimes constructed into the worker’s job description and compensation plan.

For example let’s have a look at Robert, a 10-year employee who runs a machining center on the manufacturing floor. Robert’s compensation package consists of incentive pay for assembly production quotas expressed as models produced per shift worked. This plant is a three-shift operation and a new worklist is produced early every morning with a record of open jobs scheduled for that day and maybe the next. Robert, as the primary shift operator, is handed the new worklist as he arrives at 8 am and his first task is to select a job from the list and get started. He is motivated to select the job that gives him the perfect chance of meeting his major goal of producing a sure number of units on his shift which, by the way, generates the perfect throughput, effectivity, and utilization numbers and that pleases the managers and accountants on up the line.

Robert’s company embarks on a process enhancement program that features a swap to a new planning and scheduling system. Robert still will get a day-by-day work record but the new record features a priority code assigned to each job on the list and Robert is instructed to work the roles in a priority sequence. Doing so will enhance on-time completion and timely shipments to clients. Robert has been educated on how the new system works and what the priorities mean.

The next day, however, the primary (highest priority) job on Robert’s worklist is one that’s significantly difficult to run; it won’t generate good numbers for Robert’s daily manufacturing report. The third job on the record, however, is a dream. It always runs easily and produces good numbers. Robert will run the third priority job and let the second shift operator fear the robust one. Who can blame him? That’s how it’s being judged (measured and rewarded).

At the top of the month when all the reports are distributed, the management team wonders why the new system has not delivered the gains in on-time completions and improved shipment efficiency that they anticipated. Investigations reveal that the manufacturing team, generally, isn’t following the priorities that the system has developed causing late completion of the important work whereas less important work is usually completed early increasing on-hand inventory.

ERP Implementation’s Final Step

Implementation of ERP software has not addressed that last critical step. The workers haven’t been tied into the system’s suggestions with appropriate measurements and incentives — the last mile of ERP system implementation.

How are manufacturing employees measured and rewarded? Do they have actual incentives to completely utilize the plans and controls your organization put in place once they implemented the ERP system or is there a disconnect between plans and actions?

This article was written by ERP Advisory Board member, Apagen solutions.