Wednesday, June 17, 2009

Mining Enterprise Resource Planning (ERP)

Mining ERP solutions are designed to manage all aspects of the mining business, from product extraction and maintenance of machinery, to project management for concurrent projects. Like all ERP software, mining ERP applications aim at full integration of management, staff, and equipment.
Mining ERP Business Benefits and Drivers

* ability to focus on diverse operational requirements (e.g., mineral extraction versus oil drilling)
* ability to handle laws and standards for regulatory compliance, multinationally and across all operations
* accurate billing procedures for all aspects of mining, resources, labor, time, and machines

Mining ERP Risks

Organizations without effective mining ERP software run the risk of company-wide inefficiencies:

* inability to track costs within mining activities
* inefficient processing of extracted materials
* violation of multinational environment, health, and safety (EH&S) regulations, which can impede your ability to operate

Why Use the Mining ERP Evaluation Center?

* Compare the extent to which different ERP mining solutions can effectively control the movement of extracted product to distributors, refineries, or customers.
* Determine which mining ERP solutions provide efficient cost control for equipment and vehicles in different plants.
* Evaluate the ability of ERP mining solutions to handle maintenance, repair, and overhaul (MRO) scenarios.

Mixed-mode Enterprise Resource Planning (ERP)

Mixed-mode ERP systems are suitable for manufacturing processes that combine both discrete and process manufacturing environments. This would include products such as sporting apparel, where the materials are the result of process manufacturing, and the garment assembly the result of a discrete process. Mixed-mode ERP applications, like all ERP software, aim at full integration of management, staff, and equipment.
ERP Mixed-mode Business Drivers and Benefits

Mixed-mode ERP systems aid in the control and communication of manufacturing business activities, such as

* automation capabilities for purchasing, sourcing, and order entry for different types of materials and manufacturing operations
* synchronization of dual methods of production
* materials allocation within the manufacturing facility

Mixed-mode ERP Risks

* production mismanagement when dealing with multiple materials
* increased likelihood of violating compliance with governmental regulations
* increased wastage of resources

Why Use the Mixed-mode ERP Evaluation Center?

* Evaluate which mixed-mode software systems allow you to acquire and handle multiple types of materials.
* Decide which mixed-mode ERP software will give you maximum flexibility to accommodate demand fluctuation within a specific industry.
* Examine how each solution addresses your particular management and combined manufacturing requirements.

Enterprise Resource Planning (ERP) for Services

What Is ERP for Services?

Enterprise resource planning (ERP) for services software groups all traditional company management functions (finance, sales, project management, service delivery, human resources, etc.) into a coherent, integrated system. ERP for services thus refers to a central system that includes the back office and industry-specific functionality, such as service delivery, resource management, project management, project portfolio management, time management, and expense management for service organizations providing billable services to their clients.
ERP for Services Business Drivers and Benefits

* streamline project decisions across the entire organization
* prioritize all projects in the organization’s pipeline
* consolidate project and operations data
* synchronize activities within departments (such as human resources or finance) with the needs and output from project or service delivery teams
* synchronize order entry, quote processing, and reporting
* allocate resources effectively for client projects
* automate the complete service cycle, bridging project information with back-office operations
* obtain a complete view of the entire project pipeline for all stakeholders

ERP for Services Risks

Selecting an ERP for services application that is a poor fit for your organization can have severe operational consequences, including

* incapacity to manage project portfolios enterprise-wide
* failure to meet governmental compliance standards
* inability to monitor and control processes

Why Use the ERP for Services Evaluation Center?

* Review the ERP applications that will ensure your projects are driven by available competencies and resources (as opposed to misallocation of capital).
* Evaluate which ERP for services applications will provide you with the ability to deliver higher quality services.
* Compare the ERP for services systems that allow you to align client projects with business strategy.

Surviving Amid “ERP Sharks” as a “Visionary Vendor for the Pragmatic User” (Part I)

Maybe just for the sake of change (or some fun), let me start this blog post as a quiz question. It could go like this:

Can anyone name the mid-market incumbent manufacturing and distribution-oriented enterprise resource planning (ERP) vendor that has a global presence (through regional territory distribution centers and a global reseller network in the United States [US], Canada, Africa, Asia-Pacific, Australia and the United Kingdom [UK]), an install base of 12,000 companies in over 60 countries, and the channel consisting of a few hundred value added resellers (VARs) that contribute to about 85 percent of its revenues?

As some helping tips, the privately-held vendor was incorporated in 1978 in South Africa, and has since grown organically (with no major acquisitions thus far) to about $60 million in revenues. Well, for those (rare few I suspect) that have guessed we are talking here about SYSPRO, may I boldly suggest an audition for the “Jeopardy” (or like) quiz show?

In any case, for nearly 30 years, SYSPRO has been offering a broad range of extended-ERP solutions for small and mid-sized manufacturing and distribution organizations (the sweet spot being the companies with US$10 million to US$250 million in revenues).

I believe that SYSPRO has survived largely unscathed through all the mayhem and carnage in its market via the right combination of product and technologies, plus a successful “partner-dominant” go-to-market strategy that can (and should) be leveraged more aggressively going forward.

Recently, SYSPRO has founded and has been targeting a new information technology (IT) buyer category. For such buyers, it has espoused a strategy called PragmaVision –- a “chasm-crossing” bridge that provides a visionary, yet feasible enterprise applications roadmap for mid-market technology buyers.

As described well in Goeffrey A. Moore’s “Crossing the Chasm” bestseller book, there is a typical gap between early adopters (i.e., visionary buyers, which are somewhat keen to try out new technologies, appreciate product’s potential for competitive advantage and have more influence than innovators, but are also a small market segment) and the early majority (i.e., pragmatists that are a large percentage of the market, and that buy into new technologies only after there is a clear, easy understanding of the benefits by all peers).

SYSPRO believes strongly that these buyers demand a unique combination of robust and scalable yet current technologies that provide near-zero risk and high return on investment (ROI). “PragmaVists,” as SYSPRO calls them, buy into new technologies only after there is a clear, easy understanding of the benefits. They also happen to make “the bulk” of all IT purchases, but they do not love technology for technology’s sake and require an evolutionary and stable strategy to control their “mission critical” systems. They also desire a proven track record from their vendor and demand strong references from people they trust.

In other words, a pragmatic prospective customer wants from its vendor:

1. a vertical market expertise;
2. a strong and integrated product suite;
3. broad but tried-and-true technology options; and
4. a large and satisfied customer base (of peer companies).

While the last criterion is easily met via the above figure of 12,000 installations, to the end of the verticalization demand SYSPRO targets four vertical manufacturing and distribution sectors (and their sub-sectors or micro-verticals):

1. Food;
2. Medical Devices:
3. Electronics/Hi-Tech; and
4. Industrial Machinery/Equipment.

As an example of vertically-oriented functionality, for Medical Device manufacturers, the vendor offers the following capabilities:

* The US Food & Drug Administration (FDA) and other regulatory compliance;
* Lot and serial number traceability;
* Digital signatures;
* Multi level Bills of Material (BOMs) with Routings and Structures;
* Asset utilization; and
* Integrated service and customer relationship management (CRM).

Generally speaking, SYSPRO provides quite a well-rounded enterprise applications choice for mixed-mode manufacturers and distributors. For distribution companies [evaluate this product], SYSPRO offers a strong 24/7, 360-degree view of order and inventory, serial number and lot tracking, order fulfillment, sales analysis and customer service.

For discrete manufacturing companies [evaluate this product], SYSPRO offers real-time, finite production scheduling, shop floor controls and choices of engineer-to-order (ETO) [evaluate this product], assemble-to-order (ATO), made-to-order (MTO) and/or mixed mode manufacturing [evaluate this product]. The product is also applicable for both discrete and process manufacturing [evaluate this product] environments.

The namesake SYSPRO suite is a role- and Web-based, with solutions in the following 11 categories:

1. Financial Management [evaluate this product];
2. Distribution;
3. Manufacturing;
4. Analytics;
5. CRM [evaluate this product];
6. E-Commerce;
7. Advanced Factory Scheduling;
8. Reporting;
9. Regulatory Compliance;
10. Technology Solutions (i.e., to develop custom SYSPRO e.net extension solutions based on a service-oriented and open architecture); and
11. Lean Operations.

SYSPRO also offers a number of vertically-oriented and differentiating capabilities that are not typically found in traditional ERP systems. Such so-called “killer applications” would be:

* Embedded electronic data interchange (EDI);
* Trade Promotion Management;
* Material Yield System (for Cut-to-Size/Shape industries);
* Integrated Forecasting & Inventory Optimization; and
* Visibility & Tracking Functionality (pervasive across the entire suite).

Part II of this blog topic will analyze SYSPRO’s response to the remaining demands of pragmatic buyers as well as potential challenges for the vendor’s vision. Your views, comments, opinions, etc. about SYSPRO’s newly minted strategy and/or its moves (and your experiences) within any particular sector are customarily welcome in the meantime.

Engineer-to-order (ETO) Enterprise Resource Planning (ERP)

Engineer-to-order (ETO) enterprise resource planning (ERP) supports the requirements of companies that manufacture products based on their customers' unique engineering designs. ETO ERP thus assists companies that create products requiring special processes for estimates, purchasing materials, engineering changes, cost allocation and tracking, and ongoing work with customers. A key component of an ETO ERP system is its ability to handle project start and stop dates. ETO ERP applications, like all ERP software, aim at full integration of management, staff, and equipment.
ETO ERP Business Drivers and Benefits

* ability to control all factors of project-based manufacturing, including inputs, sourcing, and resources for time, labor, and machinery
* ability to respect project deadlines
* reduction in the costs of carrying project-based inventory, along with reduction of production costs and record-keeping errors
* capacity to leverage a corporate view of all projects within the manufacturing base

ETO ERP Software Risks

Engineer-to-order manufacturers with inadequate ETO ERP systems can run into both strategic and operational difficulties:

* mismanagement of the manufacturing process for one-time complex goods
* inability to accurately manage project deadlines
* difficulties in tracking and costing of specific engineered components

Why Use the ETO ERP Evaluation Center?

* Evaluate which ETO ERP systems allow you to handle complex projects having variable costs per item.
* Decide which ETO ERP software will give maximum management visibility into different stages of each engineering project.
* Find the ETO ERP application that integrates the most recent compliance standards according to specialized manufacturing sectors.

Using An RFP Template To Compare ERP Software Solutions

An ERP RFP template, simply put, is a list of ERP software functions and features.

You can think of it as a menu from which you choose—and rank—the criteria essential to the way an ERP application will fit into your organization.

Using an ERP RFP template allows you to save up to 85% of time and money you'd spend gathering information on your own to compare ERP software systems.

No other RFP technical requirements template gives you more than 3,690 criteria to compare ERP software systems.

Compare ERP on Technology

The technology category defines the technical architecture of the ERP system, and the technological environment in which the product can successfully run. Criteria include product and application architecture, software usability and administration, platform and database support, application standards support, communications and protocol support and integration capabilities. Relative to the other evaluation criteria, best practice selections place a lower relative importance, on the product technology category.

However, this apparently lower importance is deceptive, because the product technology category usually houses the majority of the selecting organization's mandatory criteria, which usually include server, client, protocol, and database support, application scalability and other architectural capabilities. The definition of mandatory criteria within this set often allows the client to quickly narrow the long list of potential vendors to a short list of applicable solutions that pass muster relative to the most basic mandatory selection criteria.

During the process of ERP software selection, a great deal of attention is given to the functional capabilities of the software being evaluated. While this aspect is obviously important, ignoring the technical mechanisms by which the ERP software actually operates can be fatal to the ERP software solution selection project.

How to compare ERP software on technology? Simple. Compare ERP software on the following technology criteria:

  1. Architecture
  2. User Interface
  3. Client and Server Platforms
  4. Application Tools
  5. Workflow and Document Management
  6. Reporting

Compare ERP on Sales Management

Sales management encompasses a group of applications that automates the data entry process of customer orders and keeps track of the status of orders.

It involves order entry, order tracing and status reporting, pricing, invoicing, etc. It also provides a basic functionality for lead tracking, customer information, quote processing, pricing & rebates, etc.

How to compare ERP software on sales management? Simple. Compare ERP software on the following sales management criteria:

  1. On-line Sales Management Requirements
  2. Reporting and Interfacing requirements
  3. Available-to-Promise (ATP)
  4. Pricing and Discounting
  5. Customer Service and Returned Goods Handling
  6. Customer Relationship Management (CRM) and E-commerce Requirements

Compare ERP on Quality Management

Quality management encompasses applications for operational techniques and activities used to fulfill requirements for quality control, inspection plan creation, and management, defective item control and processing and inspection procedure collection planning.

How to compare ERP software on quality management? Simple. Compare ERP software on the following quality management criteria:

  1. Defective or excess material return processing must update on-hand
  2. Customer return file: awaiting disposition
  3. Damaged material—corrective action and failure analysis available to vendor on-line
  4. Inspection required indicator by supplier and by item
  5. Pre-inspection receipts registered as "inventory on hold"
  6. On-line inquiry of inspection and material review board (MRB) queue
  7. Validation against automated inspection criteria
  8. Inspection disposition with audit trail
  9. Disposition delinquency report
  10. Quantity rejected
  11. Reject reason codes

Compare ERP on Purchasing Management

Purchasing management encompasses a group of applications that controls purchasing of raw materials needed to build products and that manages inventory stocks.

It also involves creating purchase orders/contracts, supplier tracking, goods receipt and payment, and regulatory compliance analysis and reporting.

How to compare ERP software on purchasing management? Simple. Compare ERP software on the following purchasing management criteria:

  1. Vendor and Supplier Profile
  2. Supplier Rating and Profile
  3. Requisitions and Quotations
  4. Purchase Orders
  5. Prices and Discounts
  6. Vendor Contracts and Agreements
  7. Purchase Order Management
  8. Procurement Reporting, On-line Reporting Capability
  9. Repetitive Vendor Procurement
  10. Procurement Receipts
  11. Repetitive Vendor Procurement
  12. Reporting

Compare ERP on Inventory Management

Inventory management (IM) encompasses a group of applications for maintaining records of warehoused goods and processes movement of products to, through and from warehouses.

How to compare ERP software on inventory management? Simple. Compare ERP software on the following inventory management criteria:

  1. Inventory Management On-line Requirements
  2. Processing Requirements
  3. Data Requirements
  4. Reporting and Interfacing Requirements (Inventory Management)
  5. Locations and Lot Control
  6. Forecasting
  7. Reservations and Allocations
  8. Inventory Adjustments

Compare ERP on Manufacturing Management (Discrete and Process)

Manufacturing management (for both discrete and process manufacturing) encompasses a group of applications for planning production, taking orders, and delivering products to the customer.

How to compare ERP software on manufacturing management? Simple. Compare ERP software on the following manufacturing management criteria.

Because we want to compare ERP software systems on an apple-to-apple basis, we need to make a difference between discrete manufacturing and process manufacturing.

Discrete ERP
  1. Product Costing
  2. Shop Floor Control
  3. Production Planning
  4. Field Service and Repairs
  5. Project Management
  6. Product Data Management (PDM)
  7. Product/Item Configurator
Process ERP
  1. Product Costing
  2. Shop Floor Control
  3. Production Planning
  4. Formulas/Recipes
  5. Process Model (Formulas + Routings)
  6. Process Batch Control and Reporting
  7. Conformance Reporting
  8. Process Manufacturing Costing
  9. Material Management

Compare ERP on Human Resources Management (HRM)

The section dedicated to human resources management (HRM) encompasses all the applications necessary for handling personnel-related tasks for corporate managers and individual employees.

Modules will include personnel management, benefit management, payroll management, employee self service, data warehousing, and health and safety.

How to compare ERP software on human resources management? Simple. Compare ERP software on the following HRMS criteria:

  1. Personnel Management
  2. Benefits
  3. Payroll
  4. Employee Self-Service
  5. Data Warehousing
  6. Health and Safety

Compare ERP on Financial Criteria

The finance section encompasses modules for bookkeeping and making sure the accounts are paid or received on time.

How to compare ERP software on finance? Simple. Compare ERP software on the following financial criteria:

1. General Ledger
2. Accounts Payable (A/P)
3. Accounts Receivable (A/R)
4. Fixed Assets
5. Cost Accounting
6. Cash Management
7. Budgeting
8. Financial Reporting
9. Project Accounting

TurtleSpice ERP! (Week 1)

Welcome to TurtleSpice ERP, our new series on software selection!

We’ll follow one company’s software selection process, from beginning to end—with your help.

In fact, the fate of the company’s software selection project is in your hands.

Cast your vote at the bottom of the post, and next week I’ll move the scenario forward based on the winning answer.

turtlespice_logo.png

Here’s the scenario:

In just six years, Westchester, California (US)-based TurtleSpice has grown from a single-kitchen weekend project to a multi-million dollar manufacturer.

The secret of its success: TurtleSpice Sauce, an innovative condiment that can be used as a dressing for everything from fish, poultry, and red meat, to pasta and pizza, to iceberg lettuce and carrot sticks.

TurtleSpice is now a major supplier of sauce packets to airlines, and during busy periods ships upwards of 5,000 orders a day in various configurations, including single-serving packets, bulk containers, and jars.

turtlespice_logo.png

Today is a Friday like any other at TurtleSpice.

Except that today, Mike Chelonia, TurtleSpice’s comptroller, is struggling to wrap his head around the latest action item to hit his desk.

He knew it was coming, but that doesn’t make it any easier.

Mike’s CFO has mandated him to select an ERP system for TurtleSpice in order to overcome its current lack of manufacturing and reporting abilities, to enhance the overall operational efficiency of the company, and to better handle compliance issues.

In fact, compliance is becoming nearly unmanageable thanks to an expanding product line (although current product expansion is a debacle, Mike thinks, with its proposed new product—TurtleSpice Juice—being possibly one of the most disgusting beverages ever conceived).

Unfortunately, Mike has no idea where to start with the task at hand. As far as he can tell, he’s been landed with this action item for no better reason than that he’s “Mr. Efficiency,” and that he’s a good “numbers guy.”

But right now he’s not feeling so efficient. He’s heard horror stories about ERP selections, and he’s not thrilled with the prospect of being yet another.

turtlespice_logo.png

About TurtleSpice:

* Currently, TurtleSpice’s traceability system is paper-based, with data being handwritten onto batch sheets. TurtleSpice is also using Excel for financials, and an in-house-developed order entry system that’s showing its age.
* TurtleSpice faces a number of compliance issues, including FDA regulations, facility inspections (HACCP compliance), labeling language requirements for Canada and Mexico, multi-currency billing and invoice capabilities, and occupational health and safety requirements.
* Since 2004, TurtleSpice has outsourced its distribution to a third-party logistics (3PL) provider for logistics and freight, having made the change when its delivery volume started to exceed the capacity of its single delivery truck.

Useful TurtleSpice stats:

* manufacturing, warehouse, and corporate HQ facilities all located on one site
* $50 million in revenues for FY 2007
* 120 employees, 85 system users
* budget for licenses, implementation, and maintenance: $500,000-$750,000
* seeking training, support, and yearly maintenance
* implementation time frame: 6-12 months

Back-of-napkin business requirements (in no particular order):

* automate financial processes
* tracking of compliance issues
* manage employee records and payroll
* track maintenance and repair for equipment and fixed assets
* warehouse and inventory management
* improve e-commerce capabilities
* better tracking of customer service and support
* record and track sales orders
* manufacturing management
* manage recipes for new products

What Is ERP, Anyway?

We get asked this question a lot, so I thought I’d provide a brief overview.

Enterprise resource planning (ERP) software unifies traditional management functions within a coherent, integrated system. These management functions may vary from product to product, but comprehensive ERP software applications encompass the following areas:

• sales
• marketing
• human resources
• customer care
• finance
• manufacturing
• supply chain management
• IT management

The integration of so many management aspects means that sophisticated planning is required for ERP evaluation and implementation. An ERP evaluation process for a small to medium business (SMB) can be planned and delivered within three months; however, a complex implementation for a large company can take years.

While many ERP systems are applied to non-manufacturing environments, many others provide the specialized functionality required by different manufacturing industries.

Discrete ERP systems, for example, typically address the manufacturing of distinct items, such as auto parts or chairs. Process ERP systems, on the other hand, address issues for mixing, separating, forming, or performing chemical reactions (as for paint manufacturers or refineries).

Why An Effective ERP Evaluation Process is Vital
ERP systems can boost your bottom line. But an ineffective ERP evaluation and implementation can bring a company to its knees.

• Due to problems with an ERP module rollout, medical care product manufacturer Invacare reported a $30 million (USD) shortfall for the fourth quarter of 2005.
• Grainger, a Fortune 500 distributor of manufacturing supplies and spare parts, lost $19 million (USD) in sales and $23 million (USD) in earnings during the second and third quarters of 1999. The culprit: Grainger’s new ERP system, which was counting more products than were actually on hand in the company’s warehouses.
• In 1999, Hershey launched a $112 million (USD) dollar ERP system. Because of various implementation snafus, Hershey was unable to effectively ship its products to retailers for Halloween and Christmas of 1999. The result: a 19 percent drop in 1999 Halloween candy sales, and a 12 percent drop in 1999 revenue overall.

Benefits of ERP
Selecting the right ERP system can help get you on the right track:

• efficient handling of order processing and production scheduling
• management and analysis of business processes within an interactive environment
• synchronization of activity within departments
• the ability to monitor, share, and track information throughout the organization
• accurate records of warehoused goods
• dynamic control of raw materials purchasing
• data entry process automation
• harmonization of order entry, quote processing, and reporting
• reduction of assembly-line downtime, inventory carrying costs, and production costs
• maximum value from company resources and equipment

Want to find out more about selecting the right ERP solution for your organization? Visit our ERP Evaluation Center for more information, as well as an overview of the ERP products currently available on the market.