Live from APICS '99

Once a year, people gather for the APICS conference to network and learn more about deploying ERP solutions.  I spent my time at the conference conducting informal interviews to understand how manufacturers are using technology.  While my results are not scientific, you may be surprised by the consistency of the responses. 

I found that most manufactures are:

• Not very high tech or integrated
• Not aggressively implementing e-commerce
• Balanced between PC and AS/400
• Unhappy with their software
• Part of larger organization
• Multi-site (many are struggling to coordinate, but some are managing it)

Here are my interview notes from the APICS conference (name and vendors have been intentionally omitted):

Case 1: Seeking Consolidation

This pharmaceutical manufacturer is looking for a common platform for planning.  Their senior planner wants to build forecasts and plans that incorporate all operations, but they have to wait until each month closes to get data from other sites.  Since they are international, this presents a substantial delay.  They are looking for a system to act as a “central repository” to speed consolidations. 

Case 2: Not Employed

This metal processing company is running an established mid-tier package, but describes their operations as “no ERP, mostly manual.”  They are seeking an advanced planning package to help manage their operations. 

Case 3: High Hopes

This medical devices manufacturer is looking for a single vendor solution to trace their entire product flow from leads to field service.  Their ideal product would support service contracts and product data management (PDM).  Eventually they want e-Commerce, but it is not a burning issue.  They are a $45M company with one location.

Case 4: Automotive Supplier is moving

This tier 1 automotive supplier is 6 months into their implementation of an AS/400 based ERP package with vertical support for automotive.  They seemed happy, but not enthusiastic about the implementation.  They are heavy users of EDI and consequently not as interested in the Internet for e-Commerce.  They expect 80% of their transactions to be handled by EDI in 2000 and 100% in 2001.

Case 5: Paper cuts

This gift-wrap and greeting card manufacturer is downsizing to the AS/400 to replace their Honeywell mainframe system.  Their business is highly seasonal with a low dollar average order.  This translates into high peak loads on their software of up to 30,000 orders per day.  Part of the challenge for this manufacturer is their software history: their previous vendor went out of business.  They were able to get the source code and keep the system running, but support for the program has become a major issue.  Consequently, they are moving cautiously through the transition to a new vendor and platform.

Case 6: Back to the Books

This $30M school supply manufacturer also deals with a seasonal product but adds the burden of a customized product and indirect sales.  They are looking to expand their presence with direct marketing and want a new software solution to support their operations.  They struggle to reduce backorders and improve forecasts and planning.  Currently, MRP is only used for raw materials planning and their scheduling operations are not working well.  They have too much on their plate to work on e-Commerce right now.

Case 7: In Control

This automotive manufacturer has been running an AS/400 based ERP package for over two years.  Their previous ERP system was a legacy/custom-developed application.  Now they run multiple sites (sales, assembly, and warehouse) from the same AS/400 using frame relay for communications.  Since everyone uses the same server, all sites stay in tight communication.  Their major issue is finding the right application to supply e-Commerce capabilities that will help them sell direct in the automotive aftermarket so they can be taking orders electronically by June 2000.  Their e-Commerce push has accelerated their business’ cycle for continuous improvement.

Case 8: No where to go (but up)

This $150M manufacturer was hoping to upgrade their sagging AS/400 ERP application, but could not get enough support to make the change work.  They describe their current software as a “patchwork” and hope to consolidate their work processes with new software.  They would like to move to a PC platform for ease of use, but there is management opposition to change and they have been burned in the past.  Whatever solution they select must be able to support multiple sites.

Case 9: No Multiple Choice

This standardized test manufacturer is part of a larger company that selected a tier 1 ERP solution.  While parts of the implementation (HR, Purchasing, and Financials) are going fine, the manufacturing plant is not as good a match.  The people I spoke to believe their plant has the autonomy to resist the cookie cutter implementation plan, but final decision has not been made yet.

Case 10: It’s not gravy to them

This packaged foods maker is struggling to find the right solution in the midst of corporate consolidations and booming orders.  They are not happy with their current software because it focuses mainly on maintenance.  They hope that a new ERP solution will help them manage a wide range of business issues.  The most important software issues are better planning to relieve their overloaded infrastructure and communicating between multiple sites.  They will have to squeeze the selection and implementation of a new system in during a high growth phase.  Luckily, oversight from their corporate parent is not an issue.

Case 12: Unraveling flows

This textile maker is struggling to coordinate inventory flows between multiple locations using different systems.  Their current patchwork system is error prone and causes problems that are difficult to trace and correct.  Even though coordinate is poor, their individual warehousing functions are working fine.

Case 13: A Good Prognosis

This medical devices manufacturer is growing rapidly and expanding from 3 to 4 sites.  They are using a PC based ERP system that is “adequate for now” but they plan to replace in about 18 months.  They have solved their multi-site issues by using Citrix Terminal Server (read more about this in the March 2000 Technology Corner).  Citrix allows this manufacturer to coordinate activities for about 20 users between remote sites without any issues.  They also use Citrix and dial-up modems to give sales personnel direct access to production data.

Case 14: Splinters

This $250M furniture manufacturer has 11 sites sharing access to an AS/400 based ERP solution.  Their corporate parent dictates their choice of application.  They gave me the impression that they have very little choice in the matter even though the software is either over subscribed or not meeting their needs.

Case 15: A Paper Tale

This government contractor is “waiting for the dust to settle” on their selection process.  They are seeking a package that will work the government’s requirements for proposals and reporting.  They are a relatively independent part of a larger organization and the decision process is very slow.  They have begun to realize some benefits of being part of a large organization: they now have a web based procurement system that makes it much easier to get office supplies. 

So what does this mean?

I believe that businesses, software vendors, and consultants underestimate the effort required to deploy ERP technology.  Even the most successful cases in my survey felt they were behind the curve.  The common denominator for software success is fit.  Businesses that felt they had the right software seemed willing to work within its limitations and got value from their investment while the perception of poor fit limited the software’s utility.

Improving fit does not require throwing out your ERP software.  Small changes can make big differences towards improving fit.  These changes usually take the form of minor improvements like adding or improving integration between software, automating data collection, installing a delayed module or upgrade, or simplifying a business process.  Be prepared, it may take an outside perspective from a consultant to identify these changes, but consulting time is cheap compared to lost productivity or a software implementation.

What about you?

If you think your company is doing better, worse, or even right on target with my fifteen samples then you are invited to tell me your story.  You can email me at techcorner@h-consulting.com or submit comments from http://www.h-consulting.com/comments.htm.  Issues uncovered from interviews and reader comments will be incorporated into future Technology Corners.