A successful ERP implementation requires planning, customer involvement, buffer stock, and a team of knowledgeable IT personnel. An enterprise resource planning (ERP) system is the computer program companies use to run their manufacturing operation. The ERP system typically includes modules for demand management, purchasing, production scheduling and even financial activities such as accounts payable and receivable. When companies do not plan for new implementations properly, an ERP failure may cause downtime, lost revenue and an adverse impact to customer satisfaction.
Getting the entire operation ready for a successful ERP implementation often requires several months of preparation. First, the various ERP software packages should be reviewed to understand how well they would fit the company's current business structure. Factors such as cost, features, adaptability and scalability are all researched to find the best ERP to implement. Subject matter experts from each functional area should review the proposed software so any potential problems can be addressed before the transition begins.
Part of the preparation should also include customer involvement. For example, if the company sells most of its product at a certain time of year, the ERP implementation should be completed several weeks before or after the busy time to prevent any potential shortfalls to customers. By alerting the customers far enough in advance, any schedule changes or new orders can be built in so the customers are not impacted.
Another strategy many companies have used to ensure a successful ERP implementation is buffer stock. Buffer stock is additional product built over and above the current demand. This allows the factory to build ahead and get a sufficient amount of finished goods ready so during the actual ERP implementation, no customer orders get held up. By working with the customer and marketing teams, the production management group can decide which products to build ahead. This also helps control direct labor costs because the product can be built where the schedule allows without having to work overtime to make up for the downtime during the ERP implementation.
Though all of these strategies are important to a successful ERP implementation, the key requirement is a knowledgeable IT group. When the new systems are implemented, glitches often happen which may cause the systems to not work or perform differently than expected. Having an IT group that can perform ERP troubleshooting keeps the delays at a minimum. If the company does not have an IT group well versed in the new system, it should hire consultants from the ERP software company. The consultants can be present during the setup and also work with the IT group to provide the training needed to have a successful ERP implementation.
