Implementing a New System in a Recovering Economy

January 1, 2011

In preparing for recovery, companies need to start to look at implementing new business systems.

But, with limited resources and capital, many companies may decide to defer this decision to a time when “things are better”. What these companies fail to recognize is that there may be no better time than right now to start the project. It has been estimated that a major Enterprise Resource Planning (ERP) system implementation will cost as much as 3% of annual sales and will take 12 to 18 months to complete. Therefore, it is critical, especially in a recovering economy, that a company use its resources efficiently and achieve their business objective on the first pass.

It is not uncommon for a company to “go live” with a new system, and find that it takes additional time and investment to “make the system work”. Many of these companies are more focused on meeting project deadlines than they are on the business objectives of the system. They are more involved in converting data for the new system than in cleaning it up. Or, they are more concerned with training the users than educating them to use the system properly.

There is a lot more involved in implementing a new ERP system than installing hardware and software, converting data and training users. Projects like cleaning up data, streamlining processes, implementing a cycle counting program, and conducting user education are critical to the success of any ERP system. If these tasks are not completed first, you will probably not get the desired results when you “go live”.

Start now by cleaning up the data in your system. Review your BOM’s and correct them to reflect the way that your products are actually built and costed. Implement a cycle counting program to assure 98% or better inventory accuracy. Educate your employees on the mechanics and effective use of an ERP system. Review your product flow and routings. Streamline your processes and procedures to shorten leadtimes and reduce inventories.

Finally, define business objectives that you expect to achieve by implementing a new system. These objectives will be the basis for determining the success of your implementation project, along with the project milestones. Look for improvements in productivity, on-time delivery, quality, reduced inventory, work flow, profitability, and new growth opportunities. Set the base line for these values so they can be measured throughout the implementation process.

All of these tasks need to be completed to assure an effective ERP system implementation; whether before “going live” or afterwards. However, consider that the cost of fixing problems after “going live” is exponentially greater than doing it up front. If possible, it is best to complete these tasks before even selecting or investing in the software.

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