ERP

ERP For Manufacturing - The Nine Great Benefits

2011-01-18T21:10:00.001-08:00

Synchronicity. It is something every organization hopes to achieve, but more often than not falls a bit short of attaining. When we talk about synchronicity we are speaking of principles of connection, where the parts work in total alliance with the whole. Historically, synchronicity has been of particular importance in manufacturing where the quest is always for a seamless connectivity between product planning, product development, material sourcing, and shop management. Indeed, synchronicity in manufacturing is a direct result of the knowledge (data) that any one part of the system has about the whole facility at any one moment.

To achieve synchronicity in manufacturing, enterprise resource planning systems (ERPs) have been developed to integrate all data of an organization into a unified system. Typically, ERP systems use multiple components of computer software and hardware to achieve the desired integration of a manufacturing system. A primary part of most ERP systems is the use of a real-time, connected database structure to store information for use by the various system modules.

In short, ERP systems combine hardware and software in a single functional package that covers two or more systems in the manufacturing operation. What are some of the benefits for the use of an ERP system in manufacturing? Though the list is long, here are nine great reasons for implementing ERP in a manufacturing operation:

1) Synchronicity: Again, the greatest benefit to be gained from ERP integration is having everyone in the production operation on the same page looking at the same real-time data.

2) Data Input Only Once: When data is input in one part of the system, the whole system has access to it. From estimates to work orders, from payroll to shipping, any input data is available to everyone. This, then, leads to the next point of...

3) Less Spreadsheets: Since all data is in the single-source system, production information does not have to be reproduced on traveling (and often out-of-date) spreadsheets.

4) Orderliness: When ERP is used to replace two or more independent applications, it eliminates the need for the external interfaces that used to be required between systems in non-ERP operations.

5) Shortened Cycle Times: ERP works well with just-in-time pull-production, increasing inventory turnover and reducing inventory cycle times.

6) Efficient Direct Labor: Direct labor costs are reduced through more precise and real-time production data. For example, routers might give clear and concise production instructions. As well, clocking on and off a job is made easier through the use of integrated recording systems such as Graphic User Interfaces (GUI).

7) Less In-Direct Labor: Through integrated GUI time clocks, in-direct and non-productive labor time is accounted for by employees, and production is measured in terms of output relative to time spent.

8) Reduced Set-Up Times: In ERP, scheduling is tailored to build production around standardization, repetitive processes, and other lean manufacturing principles to reduce machine set-up and break-down times.

9) On-Time Delivery: Ultimately, the primary goal of on-time delivery is achieved through the efficiencies gained in ERP system unification. Production contingencies are anticipated and built into the scheduling system as a result of continuous data flow.

In conclusion, these nine great benefits realized through ERP integration are the result of one thing-synchronicity in the total operation. Manufacturers who chose to utilize ERP principles, as well as robust software and hardware within the system, can expect greater productivity through enhanced efficiencies, as well as better bottom-line profits.

Increase the Productivity and Profitability Through ERP

2011-01-18T21:09:00.001-08:00

Enterprise resource planning (ERP) is an enterprise level information system that is designed to coordinate all the resources, information, and activities required to complete business processes. It can be consider as an integrated management of business which covers the techniques and concepts required.

Traditional stand-alone applications were designed for specific needs, with limited functionality, and isolated from other departments. On the other hand, ERP is a concept to consider many departments and combining their unique systems into a single unit, enabling seamless communication between these departments, clients and management.

Initially ERP package was consider a costly affair, so it was only possible for very large Multi National Companies to implement it. Today many companies over the world have gone in for implementation of ERP and it is expected in the near future that 60% of the companies will be implementing one or the other ERP packages since this will become a must for gaining competitive advantage.

Modern ERP Solutions are highly customized, covers almost everything that you need to run your organization whether it may be small enterprise or a full fledged multinational firm. It includes the system starting from the employee's entry inside the gate to final product to customer for a product manufacturing company. All facilities like customer complaints, accounting & finance, HR, sales & marketing, purchase, inventory, tax details like excise, sales tax etc including export & VAT documentation will also be handled by the system. To maintain all this it has high degree of security/access control. Ultimate result is that it helps in increasing productivity and better profits.

Benefits of ERP

* ERP ensures timely completion of all business activities and increases customer service satisfaction. Helps you to analyze, plan and forecast the business activities by giving you clear view from any angle.

* ERP facilitates information flow across different departments or sections of the organization. It can connect your every business premises and give you consolidated and complete view.

* ERP bridges the gap between business partners, suppliers and customers allowing ongoing collaboration.

* It helps you efficiently and cost-effectively manage Man Power, Money flow, Stock and Machinery.

* With ERP, achieve high security and privacy protection along with the sharing of data by proper access rights and roles definition for users.

* ERP also provides important user friendly information to the company. When changes occur the system will update accordingly, also allowing individuals to work more effectively and decrease redundant data.

* ERP also provides some high-end business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) to enable for better decisions and hence improve business processes.

In today's dynamic business environment there is a strong need for the business to become globally competitive. The key for success lies in customer satisfaction, through understanding customer needs, and providing quality goods and services in the shortest time possible. ERP is now proved to be a better solution for project management.

ERP and SAP ERP Understanding the Basic Concept

2011-01-18T21:07:00.004-08:00

Historical Background
Around 1860, during the first wave of the Industrial Revolution of the late 18th century, companies around the world became interested in improving operations as a response to market changes. In the early 19th century, companies operated in a supplier's market (vendors would produce and clients would buy this production)., Later,mid-1800s, as companies became more numerous, larger and increasingly complex, competition increased, turning the marketplace into one in which the consumer had more power (clients determine more what the companies need to produce). This new, consumer-oriented market demanded productivity, cost controls and marketing strategies. In this new environment, productivity became the new focal point as companies attempted to improve on their core manufacturing processes to gain an edge over their competitors.

IT Background
On the other hand, in the late 1950s, information technology appeared in a material way in the workplace. The term software engineering was used to describe that era's initial programming-development efforts, while the concepts off databases and applications started to mature rapidly. Software engineers and hardware manufacturers started to integrate IT within businesses the business. One of the pioneer software applications built to assist businesses' needs was the manufacturing control systems, which reached a mature stage in 1975 when material requirements planning (MRP) software entered the marketplace. MRP systems were designed to support control on the shop floor and overall manufacturing operations as well as production planning based on sales forecasts. Later, a more complete version, MRP2, was delivered, which including capacity planning functionalities. Both versions focused on manufacturing, albeit with poor integration of other areas like human resources, finance and marketing.

Business and IT
When integration was identified as a key success factor in business-support software, ERP systems were developed to fulfill this key requirement. ERP systems now attempt to integrate all the basic functions of an enterprise, regardless of the organization's business or industrial sector. ERP systems can be built in-house or acquired from such world-class software companies as SAP and Oracle as well as from smaller, lesser known ones.

Why Would Organizations be Inclined toward ERP?
In the our data-centered economy, information is considered a competitive advantage, and, therefore, the issue of obtaining reliable and timely information is absolutely critical to a company's success. Consequently, organizations need to base there operations on information systems like ERP. By implementing this kind of tool, a company will obtain different benefits in terms of processes, people and technology. Specifically,

Control: Automation, monitoring alarms.
Integration: All information is integrated so processes are cross-company instead of isolated activities.
Opportunity: Timely reports and data analysis.
Productivity: As an integrated tool, it decreases rework and errors.
Security: User Administration, profiles and authorization.
Scalability: Having a solid base that can grow with the incorporation of new, compatible software solutions.

The issue of implementing ERP can be broken into different stages according to methodologies of software projects. The first stage is to find a consulting partner to guide the company in the project phases listed below:

Planning: Project plan and project charter definition.
Blueprint: Technical and process design based on business needs.
Testing: Individual and integrated testing of processes and data.
Training: Plan and execute training and knowledge transfer sessions.
Cut-over and Production: Data load and operation of the new system.

The key factor for successful implementation is to understand that ERP is the integration of all areas in the company and not as an isolated IT initiative.

This means that the implementation project should include three dimensions: People, Technology and Processes, all of them aligned to the business strategy.

How will Implementations Vary between Older Businesses and Start-ups?

As explained before, an ERP implementation project is a combined effort between IT and the business as a whole. It starts and ends with the business' needs. The business needs from a new company differ a lot from those of one firmly established in the marketplace. Relevant differences in terms of ERP implementations can be summarized as follows:

Business Process Design: Older businesses normally have already defined processes; while new businesses need to identify them. This will represent much more complex scenario higher complexity for new business implementations because it will take longer to develop the process blueprint and detailed specifications.

Master Data: For a newly formed company, data cleaning activities, which normally are highly complex, are not required. Data load for new businesses is simpler, lowering the risks for the project as well as costs and implementation time.

Testing: Since new businesses have not operated for a long time under real conditions, special scenarios are difficult to foresee affecting the quality of testing. Special circumstances can appear later in the production environment and will represent a risk since they were not tested in the developmental phase. This will affect the business because it can take some time to understand how to configure the system to fulfill these new requirements.

A Prescription For the New Economy

2011-01-18T21:07:00.003-08:00

By now certain concepts have been widely accepted about the recession of 2008, almost like the diagnosis of a disease. One prognosis about recovery is that we are moving into a new economy rather than returning to what once was. We are advised by the doctors (the so called experts and the business media) that to avoid coming down with another case of the economic flu in the near future we need to be inoculated with a healthy dose of innovation before venturing too far out into this new economic reality. But what type of innovation will boost our business immune system sufficiently in a new economy where viral bugs like costs, regulations and competition seem to be mutating rapidly?

Well, first I can tell you that it's not the kind of innovation that has made the term little more than a buzzword for many of us. In this article we will explore a common sense process for understanding exactly what type of innovation is prescribed for this new economy, and some proven strategies to get it done.

In the past, the term innovation has most commonly described new products or services that create new markets or leverage untapped opportunity in existing markets. The innovation needed to thrive in the new economy will likely go well beyond new offerings to involve changes to your entire business model in order to be effective.

In a recent edition of Trends Magazine an article featured a list of questions that every business should ask about their business model in order to insure they succeed in this new economy. While discussing that concept with a colleague, we began to put together a similar list for small and medium sized wood products manufacturing businesses. Here are five key questions we came up with:

· First, what is main thing your business must do in the new economy to assure that you are paid the highest price in a timely manner for your products and services?

· Second, is there anything about how you produce your products that a customer can understand that would justify paying you more than your competition?

· Third, what can be done to reduce the cost of producing your products that will not reduce quality, value, competitiveness or profit?

· Fourth, what can be done to reduce the costs of keeping, managing and training employees?

· Fifth, if your primary customer base were reduced by half next month what would you do immediately to replace that lost revenue?

If you can confidently provide the answers to those questions you are well on your way to grooming your business model to insure growth and stability in the next decade. If you cannot answer some or all of those questions... well, you are probably already well aware that some changes need to be made. So how do you begin the process of improving your business model so it can thrive in the new economy?

Let's consider the best or at least the most profitable answers to the five questions above. You might even consider each one as a category by which to evaluate your business model for possible innovation that is compatible with the new economy.

First, the best way to be paid a fair amount in a timely manner for your products and services is to deliver a flawless product consistently and more quickly than your competitors, or at least in line with the customer's best expectations. If this is not currently possible for you to accomplish then you will constantly be chasing market share in the new economy.

Second, unless you are in a very unique market, there is virtually nothing about how you produce your product that most customers would understand, that would compel them to pay you more than one of your competitors that is offering a product that is similar in functionality and appearance.

Cabinetry and wood products have been trending in this direction for years but in the new economy it will be a given. In many cases previously rigid architectural specifications have conceded to this reality in most parts of the country and on many jobs, resulting in stapled cabinets hanging right down the hall from cabinets with traditional high quality dowel construction.

Third, the most effective ways to reduce production costs without suffering any negative impact on your products or market share can be divided into two categories: automation and standardization of all processes that are high value or high profit and elimination or outsourcing of all processes that are not. If any of the processes that your business model requires to move a job from contract to final payment are not adding significant value or effectively expediting completion you have a weakness that is either reducing your profit or your ability to compete in the new economy.

Fourth, the only practical way to reduce employee related costs is to reduce the number of employees and the overall skill levels required. This can factor heavily into the decisions you make with respect to the third category of innovation above. As badly as this country needs more high paying jobs, most wood products manufacturers are not going to be able to provide them and remain competitive in the next decade.

It is truly sad for me to accept this reality, being a lifelong woodworker and cabinetmaker that started as an apprentice at the age of 14, but this is now an inescapable truth. Between the unknown costs that are being created by new laws, insurance requirements, etc, the decline of skilled craftsmen in the workforce combined with low interest in the skilled trades among young people, your ability to retain quality employees and control related costs is decreasing at an alarming rate. Ironically, your best shot at being able to create new jobs in the future may depend on how effectively you can reduce these costs now in order to adapt to the new economy.

The fifth and final answer is perhaps the most dynamic. What would you do if there is a second bump in the economy for your niche market or what if a large high-volume competitor decides to expand market share and cuts your prices in order to get your customers? The answer to survival in such situations is often not about where to look for the new customers but how quickly you can adapt to service them competitively and profitably when you find them.

The key is having a business model behind your products and services that can shift into another gear quickly so you can secure that new business by delivering flawless products on time when you get a shot at a new opportunity. That requires a finely tuned chain of processes that can take a job from contract through design and into production for a wide variety of products without major rework on a first run.

If that all sounds like a tall order I can tell you that the worst part is over as soon as you have completed a well thought out plan for changing your business - but here's the secret - don't skimp on the plan! Nobody wants self serve discount flu vaccine, right? In order to formulate the right vaccine to ward off the economic bugs of the new economy it will need to match the strain of the new threats. I haven't seen in depth clinical trials on the solutions offered in this article but I can verify that they are working quite well for our customers in a wide variety of shops in the wood products industry.

It is my sincere hope that this article will be helpful in your efforts to develop an innovative business model and see your business thrive in the new economy.

Software Testing - Software Development Life Cycle

2011-01-18T21:07:00.001-08:00

SDLC or Software Development Life Cycle is a software engineering term, which includes all the processes in Software development and deployment. It includes methodologies that are used to design and develop systems. In software engineering the SDLC concept underpins many kinds of software development methodologies. The methodologies referred are the one that help in creating a framework that can be used as a base for developing larger information systems

Testing is sometimes interpreted wrongly. People think that testing should be done after the programming is done for a system or software. In fact testing should be performed at every level of the development cycle.

The most common types of testing involved in the development process are:

o Unit Test: This is the first level of testing in cycle of software testing. The overall product is divided into small units. Testing of these units individuals are termed as Unit Testing.

o System Test: System level is the upper level of unit testing. Whenever there is a large system and different programmers are coding over different units, they are combined and testing done over the combined system is system testing Integration Test.

o Functional Test: When the system is integrated it is tested over its functionality. To test the function of the system I termed as functional testing.

o Automated Testing: It is one of finest way to increase efficiency, productivity and accuracy of the software product. It simplifies the testing practice by reducing the human effort involved. In this we create automated test cases and perform those using automated tools. Automated testing tool repeats the predefined steps and results more accuracy than the manual testing.

Alpha Testing: Alpha Testing is done after the code is competed to check most of its functionalities before actual user start using it. Sometimes a select group of users are involved in the testing. More often this testing will be performed in-house/small scale. or by an outside testing firm in close cooperation with the software engineering department.

o Performance Test: This testing is done when the product is fully developed. Its main objective is to identify the performance of the software as par the customer guidelines.

o Acceptance Test: Testing the system of the software with the intent of confirming accurateness and efficiency of the product and customer acceptance.

Sometimes the software is so complex and big that it is practically impossible to test it completely. Before ending software testing we should keep certain points in mind:

- Testing guidelines should be met
- Test cases should cover every aspect of the software.
- Bugs found in the software should be minimum.
- All the defined test cases should be run at least once.

Once the complete software testing is done the system or software is introduced in the market for the user.

Managing Change - An Occupational Health and Safety Perspective

2011-01-18T21:06:00.001-08:00

OHSAS stands for Occupational Health and Safety Assessment Series. It was developed to help organizations control and minimize Occupation Hazards and Risks. The 2007 version of OHSAS 18001 lays a strong emphasis on Change. Occupational Health, Safety Assurance Standards are today adopted by many organizations as part of their corporate governance requirements. Managing the change is not a simple exercise. Change can hit an organization all of sudden or it can sometime be regulated and planned. An agile and a flexible organization will respond to change in much more positive way than an organization with rigid and straight jacketed setup.

It is often said that only thing which is permanent in this world is change. One like it or one don't like, change will take place. If we are prepared, we can take them in our stride and move on and if we are not prepared then change will get over us and we will be doomed. So the best way to tackle the change is to keep ourselves informed and updated. An updated person will be more aware about the world dynamics and can weather the storm in a much sober and calm way.

OHSAS 18001:2007 devotes substantial portion of its written standards on change. When an organization gets certification under OHSAS 18001 standards, it is deemed that the particular organization has an Occupational Health and safety Management system in place.

Any change will require a reassessment of operations and activities which are associated with occupational hazards. Controls are required to be reassessed so that OHS risks arising out of change can be addressed.

These New Requirements of 4.3.1 in OHSAS 18001:2007 covers the Four Important Concepts.

Identification of Hazard(s) associated with "Change".
Assessment of Risks Associated with "Change"
Consideration of the OH&S Hazards and Risks Prior to the Introduction of "Change".
Implementation of the Controls needed to address the hazards and Risks associated with the "Change".

Ineffective management of change is a leading cause of accidents in workplace. To quote US Chemical Safety and Hazard Investigation Board (CSB):

In Industry, as elsewhere, Change Often Brings Progress.

But it can also increase Risks that, if not properly managed, Create Conditions that may lead to Injuries, Property Damage or even Death. Ineffective Management of change is one of the Major Contributing Factors in many of the Incident Investigations conducted by CSB.

How to Make Sure Your Time Management System Is Working

2011-01-18T21:05:00.001-08:00

Is your time management system failing?

Does it seem to take more effort than it is worth?

Does it regularly breakdown?

If your system is failing, then it's time to re-evaluate.

First we need to assess why it's not working:

Is your time management system is too complex? - This is actually the most common problem that causes systems to fail. Is it cumbersome or time-consuming? Do you use multiple tools or require a plan just to plan? If it takes more time to organize than it does to do the work then it is too complex.

Is it redundant? - Do you have multiple lists? Do you use more than one calendar? Are you duplicating work? Use one central planning tool, list and calendar.

Is it portable? - Where do you keep your time management system? Can you take it with you and have access to it at all times? You need to be able to capture ideas and retrieve information in real-time or your system fails.

Does it match your personality or work patterns? - If you are tech savvy, then en electronic organizing system is most efficient. If you are more comfortable with traditional pen and paper then carry your notebook and don't force yourself to struggle with a PDA. The best time management system is the one that works for you!

Tips to keep in mind:

The simpler the better - Choose the simplest, most direct method to get the job done.
Keep it centralized - Whatever your system, keep it in one place.
Make it accessible - Make sure that you can get to your information and capture thoughts and tasks easily in real-time.
Choose your tools carefully - Select the tools that accomplish what you need without additional bells and whistles that will distract you.
You are the most important consideration - Your system must suit you, your personality, your work style and your way of thinking or processing information.

An effective time management system should save you time and effort. It should help you make the most efficient use of your time. It should not be a struggle to use. It should feel comfortable. Maybe not initially, but after using it for a bit, if it's still uncomfortable - re-assess, tweak it or ditch it and start over.

Inventory Accuracy in 60 Days

2011-01-18T21:04:00.000-08:00

INTRODUCTION

Do you have inventory accuracy problems? Typical symptoms:

o Lots of inventory errors

o Surprise backorders, unplanned shortages, "lost material"

o Nobody believes the records-- numerous calls to "check" on availability

o Air freight bill exceeds the national debt

o Nasty financial reporting "surprises"

o Lack of consensus on importance of accuracy

o Lack of consensus on how to measure it

o Inability to reconcile inventories, cycle counts

o Error causes largely unknown

o Weak/no company tradition of data accuracy

o New systems/software implementation causing more confusion

Solution recommendations are presented as follows...

ORGANIZE PROJECT

Results are usually best when there is a bit of a crisis atmosphere established. Business as usual won't usually serve to get serious inventory accuracy problems fixed within two months. Sometimes a humbling blow, such as losing millions in an inventory "write-down", or an unfavorable "write-up" by a customer, is helpful to shatter the status quo and energize an organization to begin work in earnest on a solution. Top level executive action works best to motivate and mobilize people. At a minimum, perception of a costly problem is needed, with some realization of a need to correct it.

Custom Coding Basics And More

2011-01-18T21:03:00.003-08:00

Internet has changed the way we read, perceive and understand the world through our computer screens. Even if you are not directly affected by something like custom coding, you should be conversant about it. It is better to know about coding for website design layout, search options for beginning an online business or to get accustomed with how things work for the more curious intellectuals.

Custom coding is an object oriented PHP coding of high quality. The fusion of supporting tools and product can provide an efficient Content Management System (CMS) platform or custom code for the website.

Writing a customized code for your website can be easy. Code based on the minimum requirements is much prompt when compared to a customized CMS. Added functionality to the website with help of this customized coding is a bonus. Modification of a well written and documented code can be changed easily. The programmed code has the most important features of speed and functionality.

The coding, based on changing technology can be changed quickly. Clear know-how of your website program is possible with custom code only. Different section or pages of website can be given diverse styles with the custom programming method. Accommodating coding format can provide the required layout and even the appearance of the website. Before you start the project, scribbling down points for customized coding proves to be a better option.

What is your requirement-who will write the code?
Use of the code for website and hosting conditions.
Features you need for an efficient site.
Number of users coming to the website.
Site maintenance and updating

The applications like Customer Relationship Manager (CRM), data mining and Enterprise Resource Planning (ERP) were more rigid and costly in last decades. As the speed of internet has improved, the users expect quick business online.

Web programming has improved considerably and affordable web development is available to everyone interested in e-commerce. Bill Schrader quoted "almost overnight the internet's gone from a technical wonder to a business must".

Many companies offer to do the daunting task of coding for your website at nominal rates. You need to plan out your requirements and the desired strategy and tools for best PHP application development. Make sure you research properly and then give your project to a company for PHP coding. The web world is very vast to accommodate all businesses and hence we need to capture the attention of our clients for better trade prospects.

JIT Vs JIC

2011-01-18T21:03:00.001-08:00

Many manufacturers are realizing the benefits of lean manufacturing within their facilities through application of lean concepts and principles. They understand the importance of eliminating waste and practicing the JIT (Just-in-Time) philosophy. But has the time come where JIT inventory levels should be increased to JIC (Just-In-Case) inventory levels considering the current volatility of the economy? You'll find the answer hidden deep within your supply base.

In a lean manufacturing environment, inventory is considered one of the seven major wastes. It can be defined as any material over and above what is currently required and/or in process. The ideal situation in a JIT environment is piece per process, which equates to one piece delivered, one piece processed and one piece shipped. All inventory held over and above this quantity is regarded as waste. Although this concept may be viewed as the ideal situation, it's not very practical for most, if any, companies.

Due to the impracticality of operating under the ideal situation, inventory is carried. This inventory must be kept to a minimum to avoid excess storage requirements, carrying costs, increased material handling and risk of obsolescence, among other things. Realistically, just about every company will have to carry inventory. This inventory may be kept as sub-assemblies, finished goods and/or raw components. The finished goods and internal sub-assemblies are not the major areas of concern. These inventory levels are within your control and should be set based on the level of customer service and on-time delivery you wish to provide your customer. The real concern lies within your raw component inventory levels. This is where your highest risk resides for potentially missing customer shipments, or worse yet, shutting down your customer.

In the past few months, many small companies (as well as some larger ones) have been forced to close their doors for good. If you've been a victim to this type of situation you probably understand the need for JIC inventory, as you've felt the effect a primary supplier shutdown can have on your delivery performance. Or maybe it was a secondary or tertiary supplier that caused you to shut down? Either way, the ultimate effect could be devastating to your business. If you haven't done so yet, it's time to take a look at your inventory strategy and review your just-in-time levels.

In order to understand the greatest area of concern or highest risk potential in your company, consider the following questions; how well do you know your first, second and third tier suppliers? Are any of them at risk of closing their doors and catching you off guard? Have you looked at their financial health lately? Maybe it's time you get to know them a little better. A small ripple in an upstream process can have a major effect downstream. For example, a tier three supplier that provides heat-treating for your bolt supplier can cause major disruptions down the pipeline if they go out of business unexpectedly and there are no other heat-treating companies in the vicinity. In this case, it might be a good idea to carry a few weeks inventory (or as much stock as it may take for you to recover from a critical situation) of this small, relatively inexpensive part, to protect yourself until you get a chance to evaluate your risk potential with this supplier. You will need to dig deep into your supply base, deeper than your primary suppliers, to understand how solid their foundation is. A small investment made on a visit to a supplier or sub-supplier could help you avoid much higher future costs due to shutting down a customer.

Start by reviewing some of your more vulnerable suppliers. If you are in the automotive industry, start by checking the financial health and stability of suppliers that you share with North American automakers. Many suppliers that rely on these O.E.M.'s for their bread and butter may soon find themselves looking elsewhere for business if they haven't already. Once you've chosen your starting point, you need to determine how much JIC inventory you should carry.

In order to determine how much to carry and what inventory to focus on, ask yourself these questions; how difficult is it to find replacement parts? How long does it take to get customer approval to move tooling? How much testing is required if a new supplier is needed in an emergency situation? How long can you delay shipping before it affects your customer relations? How much space will be required to carry enough stock in case of emergency? These questions should start to take you down the path towards determining your on-hand inventory levels. Your planning strategy and rules should also help determine which components are at the greatest risk based on lead-time and commodity type.

If you are going to carry JIC inventory, you will want to carry it on small, inexpensive parts, but they may not be the parts that hold the highest risk. A shelf item may not be of great concern if another company down the road is selling the same part, so consider that fact when you develop your own risk potential chart and focus on your most critical suppliers first. Allow yourself enough time to react to moving a tool, or some equipment, to a new supplier.

Remember, this is a temporary solution to a temporary problem and I strongly encourage you to address this as quickly as possible. It would be extremely expensive to carry JIC inventory for every part, so the decision needs to be made as to which parts are the most critical. Your carrying costs may increase in the short term so consider this like an insurance policy; nobody wants to pay for it but they sure are glad they did when it comes time to cash in on it. I am a huge advocate of lean manufacturing and the JIT philosophy so the sooner you understand the situation of your supply base and get back to JIT, the better.

The ERP Market 2001 And Beyond – Part 2: Vendor Reactions

2010-09-29T23:33:00.003-07:00

Enterprise resource planning (ERP) integrated software solutions have become synonymous with competitiveness, particularly throughout the 1990's. ERP systems replace "islands of information" with a single, packaged software solution that integrates all traditional enterprise management functions (transactions) like financials, human resources/payroll, and manufacturing & logistics (See Essential ERP - Its Functional Scope for more details). We also believe that having an ERP system is a prerequisite in most business environments to fully take advantage of the latest business information processing trends, such as collaborative e-Business and customer relationship management (CRM).

For a list of the major ERP vendors and their market share, see Figure 1.

Figure 1.

This is Part Two of a five-part article. This part discusses the vendors' reaction to market changes. Part One contains an overview of the ERP market and how ERP is expanding to included SCM, CRM, and e-procurement. Part Three will briefly analyze some of the major ERP vendors. Part Four will contain market predictions. Part Five will contain recommendations for the vendors and users. Part Five will contain links to the preceding parts.

How Are Vendors Reacting?

On the other hand, in the ERP market, the major vendors focused on the high-end of the market have virtually evolved into providers of comprehensive e-Business suites (see Where Is ERP Headed (Or Better, Where Should It Be Headed)? Part 3: E-Business and Mid-Market Shakeout). They also compete with a slew of smaller extended ERP vendors for the market for small to medium enterprises (SMEs). While the heyday of the ERP market in the mid 90s may have postponed the consolidation in the lower tiers of the market, it is, however, not the case today. The acquisitions mentioned in Part One reflect the morphing enterprise applications landscape as vendors scramble to outrival competition or, more often, survive during the next phase of e-Business.

While at the high end of the market, vendors of enterprise applications suites face fierce competition from CRM, SCM, B2B exchange providers and other niche players, in the mid-market, a more conventional consolidation has been taking place, mainly with an aim of combining the resources to deliver extended enterprise software suites that meet the 'one-stop shop' requirements of smaller companies.

ERP Pricing Options

ERP systems have earned the general perception of being exorbitantly expensive to license and implement (see ERP Trivia - Every Why Should Have Its Wherefore), and vendors have recently been trying to change that infamous image with new pricing options in order to keep users' costs down. Users typically pay an up-front per-user (either concurrent, role-based, or named) license fee and an annual maintenance charge to use ERP systems (typically 12%-20% of the license fee). The per-seat price for ERP varies greatly depending on the number of users, the number of modules to be deployed and what "bells and whistles" are added, and whether the company belongs to the high-end Tier 1 (Fortune 500) or the small-to-medium enterprises - SMEs (Tier 2 and 3) market segment.

The per-user price range has been from $1,000 to $6,000 (typically higher values for larger companies), with the continual price decline trend owing to fierce competition and the reduced or postponed demand for software. Many vendors offer per-month per-user rental or outsourcing deals as an alternative to traditional up-front licenses (for more information, see Where Is ERP Headed (Or Better, Where Should It Be Headed)? Part 4: ASP's and New Pricing Models). Fixed price, preinstalled, pre-configured ERP is also available and is particularly attractive for the lower-end of market (see Fast-path Implementations - Are They Good or Bad?).

Competitive Changes

Sales cycles vary from months to years depending on the company size, its organizational structure (single or multi-site, international or not), and the functional scope of the project. While the selection phase of software acquisitions will increasingly gain critical importance (due to customers' increased awareness of possibly fatal consequences from selecting the wrong software), the pressure for faster decision-making will mount both from vendors (who want shorter and less fluctuating sales cycles) and users (in order to stay ahead of their competitors). As a rule, every $1 of ERP software sales drives on average another $3-$6 of additional hardware, third party integration and consulting, and resellers revenue, although in some cases additional costs can reach $10-15 for each dollar spent on software.

Early ERP adopters discovered to their dismay that implementing these systems was only the first step toward creating a competitive information technology infrastructure. They and new users alike are now looking for significantly more comprehensive functionality - from advanced planning and scheduling (APS) and manufacturing execution systems (MES), to sales force automation (SFA) and collaborative business-to-business (B2B) e-commerce tools - and demanding that they be integrated into their ERP backbone. Consequently, during the last few years, the functional perimeter of ERP systems began an expansion into its adjacent markets, such as supply chain management (SCM), customer relationship management (CRM), professional services automation (PSA), product data management (PDM), manufacturing executions systems (MES), business intelligence (BI)/data warehousing (DW), and e-Business (see Where Is ERP Headed (Or Better, Where Should It Be Headed)? Part 1: Functional Scope and Vertical Focus).

Faced with competitive inadequacies, the major ERP vendors have been vigorously busy developing, acquiring, or bundling new functionality so that their packages go beyond the traditional realms of finance, materials planning & management, and human resources. While most traditional ERP software enables the integration and management of critical data within enterprises, companies have increasingly recognized the need to deploy more advanced software systems that manage the global supply chain by enhancing the flow of information to and from customers, suppliers and other business partners outside the enterprise.

A typical ERP system now offers broad functional coverage nearing the best-of-breed capabilities; vertical industry extensions; a robust technical architecture; training, documentation, implementation and process design tools; product enhancements; global support and an extensive list of software, services and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day. Consequently, we believe that the above outlined trends in the ERP market are the direct consequence of vendors' attempts to:

1. Resolve current ERP functional and/or technological deficiencies,

2. Expand software sales both within their existing and potential customer bases, particularly in the lower-end of the market, by allaying the ERP complexity and costs perceptions, and/or

3. Harness the Internet, which has been reshaping the enterprise applications market by making possible unprecedented visibility and information sharing both within an enterprise and between business partners.

SOURCE:
http://www.technologyevaluation.com/research/articles/the-erp-market-2001-and-beyond-part-2-vendor-reactions-16486/

Can You Add New Life To an Old ERP System?

2010-09-29T23:33:00.001-07:00

Recently, TEC featured an article by Olin Thompson titled, "The 'Old ERP' Dilemma: Replace or Add-on" which discussed options available to companies who want to add business functionality to their "Old ERP" systems. Certainly, there are many options now available in new business functionality that run the gamut from Supply Chain Planning (SCP) to Customer Relationship Management (CRM). The pros and cons of replacing or adding on to your existing ERP system were set forward in Thompson's article. But before you look to new ERP functionality, you should see if you are getting the full benefit out of your existing system. If not, are there ways to add new life to your current ERP system without going into an extensive development project.

Whether you have an old or new ERP system you have probably learned that to maximize its value, you have to work hard at getting information from the ERP system to key users. According to Thompson, " the data checks in, but the information can't check out of many ERP systems". You also may be finding that as e-business strategies are emerging in your supply chains, you could need access to more externally generated information than your ERP system, in its current configuration, can handle. For an Information Technology manager, both situations are problematic. Many companies should take another look at data warehousing before deciding that what to do with the "old ERP" system.

*In Memoriam

Does Data Warehousing Really Work?

Bob Cramer, Director of IT for Appleton WI based Anchor Food Products has found that, " lots of the pain we have with our old ERP system is based on users not having access to information. We see data warehousing addressing most of the problems our users have with the old ERP system". Today, most reporting from older ERP systems is directly from the ERP transaction processing (OLTP) system. Typically, users take ERP transactional data and input it to an Access database or a spreadsheet to generate the reports they need to make business decisions. From a user perspective, the extraction and re-inputting of information is both time consuming and potentially error prone. From an IT perspective there are no opportunities to build in validation checks to ensure that the information is either reliable or the most current available.

Data warehousing provides another way of getting information from legacy systems. Many companies have found it necessary to "build around" their ERP system to some extent. For example, Advanced Planning and Scheduling (APS) systems have often been added after the ERP installation. Companies find that they can report from either their ERP or their APS systems, but have difficulty combining data from both systems without having to create new databases or spreadsheets. Once the data is extracted from the systems, it is very difficult to ensure its integrity. James F. Dowling pointed out in the TEC article, "Business Basics: Unscrubbed Data is Poisonous Data" data should be managed as a corporate asset that appreciates in value over time. Historical data must be addressed with as much care as current database content".

The Data Warehousing alternative uses a better approach. It "packages" the information in data cubes that are customized for each group of users. Once the information is packaged in a data cube, users can extract the information using an On Line Analytical Processing (OLAP) tool. Today, OLAP tools are available as client-server applications or can be operated from a Web browser.

The data warehouse also can include information that is not in your ERP system. By adding information from outside the ERP system, IT can provide users access to ALL the transaction information that the company collects as well as whatever information they might want to collect from OUTSIDE the company. This is a significant difference and a potentially powerful advantage. Pat Clifford, Director of Business Consulting at the Boise ID agri-business giant the J. R. Simplot Company, found after installing a data warehouse comprised of company information from their ERP and several legacy systems, " it not only gave more information to our employees, but allowed them to move from just reading reports to performing managerial analysis."

What is the Best Way to Integrate Your Old ERP with Data Warehousing?

There are two basic strategies that can be used to start a data warehousing project. For certain ERP systems third party providers have developed 'off the shelf" data warehousing solutions that are pre-built to the fit the features of your ERP system. If you have an old ERP system that is supported by a data warehousing "solution", you should seriously consider this option. Data warehouse solution products are usually based on the ERP modules you have installed. You can roll out the data warehouse to one module at a time making it easier for IT to manage. One major advantage of using a data warehousing solution is that it can be done in a significantly shorter timeframe than if you have to buy an entire data warehousing tool set.

If your old ERP system is not supported by a data warehousing solution product, you will need to "build your own" using a tool set provided by a data warehousing vendor. At Simplot, Clifford found there were advantages in defining the project by functional areas instead of trying to create one big project: "Different functional areas look at information in different ways, so it's important to work with each group as you build the data warehouse". The advantage of a data warehousing tool set is that it gives you total control over what kind of information you want to present to your users. The disadvantage is that it will take more time and internal resources to implement.

SOURCE:
http://www.technologyevaluation.com/research/articles/can-you-add-new-life-to-an-old-erp-system-16444/

Chemical Industry ERP Showdown: Infor vs. JD Edwards vs. Lawson vs. SAP vs. SSI

2010-09-29T23:32:00.002-07:00

Five vendors were selected for the evaluation: Infor ERP LX, JD Edwards EnterpriseOne, Lawson M3 for Process Manufacturing, SAP's mySAP ERP, and SSI's TROPOS. All the results presented here were determined by TEC's eBestMatch decision support system, based on the latest request for information (RFI) supplied to us by the five vendors.

The priorities assigned to the various modules and submodules were selected by the client. (This is different from Showdowns we've run in the past, where all the priorities were set evenly.)

The chart below indicates how priorities were assigned across the main ERP modules:

Distribution of priorities by main ERP modules

As the chart above indicates, the client gave Process Manufacturing Management the highest priority, at 25%, followed by Inventory, Purchasing, and Sales Management, all at 15%. Financials, Quality Management, Human Resources, and Product Technology were given the lowest priorities.

In the chart below, you can see how the priorities were assigned within the client's key module of interest, Process Manufacturing Management.

Distribution of priorities within the Process Manufacturing Module

The two most important submodules within Process Manufacturing Management, as indicated above, were Formulas/Recipes, with a 28% priority, followed by Material Management at 17%.

Results

How, then, did the vendors rank? The overall results (factoring in all the modules) are shown in the chart below.

Overall Vendor Rankings

As this chart indicates, Lawson M3 for Process Manufacturing scored highest overall, followed by mySAP, Infor ERP LX, and JD Edwards EnterpriseONE—all closely grouped together—with TROPOS finishing last.

Below are the results within the Process Manufacturing Management module.

Vendor rankings — Process Manufacturing Management

Again, Lawson placed first. But Infor LX moved up to second place, displacing mySAP ERP. TROPOS came in third, moving up considerably from last place in the overall rankings. Slipping to fourth place was mySAP, with JD Edwards placing last.

Conclusion

Of the five vendors, Lawson was the most consistent performer. But as we've seen in this Showdown, rankings can change when different areas of functionality are looked at.

For example, although Lawson placed first overall and in the Process Manufacturing Management module, the vendor slips to third place in Human Resources, behind both Infor and mySAP (see chart below). And, as we saw in the chart above, with the exception of Lawson, all the vendors shifted rankings when the focus was changed from overall results to the Process Manufacturing Management module.

Vendor rankings — Human Resources

Given that the rankings can shift depending on what functional areas you look at and the priority you assign to them, how, then, can you determine which ERP solutions are best suited for your particular business needs?

The fastest, simplest way is to use TEC's ERP Evaluation Center.

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs, at every level of functionality. At the modular and submodular levels—even down to the individual criteria—you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions on how well each vendor's functionality matches the business requirements of your organization.

It's the best way we know of to evaluate ERP solutions, and we invite you to give it a run-through. Simply click on the link below to visit our ERP Evaluation Center, and conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours.

SOURCE:
http://www.technologyevaluation.com/research/articles/chemical-industry-erp-showdown-infor-vs.-jd-edwards-vs.-lawson-vs.-sap-vs.-ssi-19265/

Business Software Firms Sued Over Implementation - Lawsuits Bring ERP Problems to Light

2010-09-29T23:32:00.001-07:00

This grim list includes Hershey Foods, Whirlpool, Allied Waste Industries, and the maker of Gore-Tex, W.L. Gore & Associates. Other stories of troubled enterprise resource planning (ERP) software implementations are also leaking out from additional companies, colleges and universities across the country. Some companies are even turning to lawsuits, alleging the software doesn't work and pointing a finger at the ERP software makers and consultants who install the systems intended to automate their accounting, order entry, and manufacturing processes. However, many analysts say that when huge software projects go wrong, it is often the buyer's fault, particularly when companies fail to understand the scope of the project or spend the time and money necessary to move from an old computer system to a new one.

Market Impact

We believe that this is only the tip of the iceberg. It is an open secret that a large number of ERP implementations do not live up to their expectations. As a matter of fact, a number of consulting practices are not only surviving these bleak days of ERP market downturn, but also making a very lucrative business by utilizing their ERP consultants in projects aimed at resolving major post-implementation "blues". The idea is the same, although each renowned consulting firm will sell their "unique" methodology disguised under the names like "Enterprise Effectiveness", "Second Wave" and "Continuous Improvement".

We believe this bad news will have greater market consequences for both the ERP vendors and consulting firms then one would initially imagine. The news will make it much more difficult for big ERP vendors to make inroads into the much coveted mid-market territory, where the prospective clients are forced to be cost conscious. Moreover, some mid-market ERP players go so far in their sales campaigns as to offer 50% of the software license payment deferral until successful project signoff.

SOURCE:
http://www.technologyevaluation.com/research/articles/business-software-firms-sued-over-implementation---lawsuits-bring-erp-problems-to-light-15551/

ERP Showdown—Round 2! Exact Macola ES vs. Infor SyteLine vs. QAD MFG/PRO

2010-09-29T23:31:00.002-07:00

Results

As you can see above, straight "out of the box," Infor SyteLine ranked first overall, with Exact Macola ES coming in second, and QAD MFG/PRO placing third. Overall scores are based on the average level of support the vendors offer across the entire ERP spectrum.

As the chart below shows, Infor finished first in five of the eight modules, QAD finished first in two of the modules, and Exact Software finished first in one module.

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

Rankings, either overall or by module, do not tell you everything you need to know. What they do provide is a basic, high-level view of vendors' general strengths and weaknesses right out of the box. However, the fact is, few businesses, if any, can use an ERP solution straight out of the box. Businesses have special needs and priorities that need to be supported by any ERP solution they use.

For example, your business may require an especially robust human resources (HR) functionality. Even though Infor finished first overall, Exact ranked first in HR by a significant margin, and may therefore be a better choice for your organization. You'll notice that QAD has a low score for the HR module, because the vendor does not offer HR functionality in its discrete ERP solution. In other words, it would be provided by a third party. Accordingly, if you want a separate best-of-breed HR solution that integrates into your ERP system, QAD may represent the best choice.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although Infor was first overall in manufacturing management, QAD was strongest in field service and repairs, as shown in the chart below. If field service and repairs is a critical area in your organization's business model, QAD may be a better choice than Infor (the overall winner), or Exact (the overall second place finisher).

Conclusion

Given that out-of-the-box rankings rarely, if ever, reflect the real-world needs of an organization, and that rankings can shift depending on what area of functionality you look at, how do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. (We got our results in twenty minutes—as opposed to weeks or even months of struggling with huge Excel spreadsheets.)

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and submodular levels, even down to the individual criteria, you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions not on out-of-the-box functionality, but rather on how well that functionality matches your business requirements.

It's the best way we know of to evaluate ERP solutions, and we invite you to give it a run-through. Simply click on the link below to visit our ERP Evaluation Center and conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours.

SOURCE:
http://www.technologyevaluation.com/research/articles/erp-showdown-round-2-exact-macola-es-vs.-infor-syteline-vs.-qad-mfg%2Fpro-18947/

Welcome to ERP Showdown: Infor ERP LN 6.1 vs. Epicor Vantage vs. Lawson M3 Discrete Manufacturing Solutions

2010-09-29T23:31:00.001-07:00

Introduction

With enterprise resource planning (ERP) systems being the information backbone of the organization, we decided to take a closer look at three of the more popular discrete ERP solutions for the mid-market. Using TEC's ERP Evaluation Center, we compared Infor ERP LN 6.1, Epicor Vantage, and Lawson M3 Discrete Manufacturing Solutions head-to-head, based on the most recent data supplied to us by the three vendors.

We looked at eight standard ERP modules. To eliminate any chance of bias, and to ensure a level playing field, all 3,600 criteria that make up the modules and submodules in our ERP Evaluation Center were given equal weight and priority. In other words, no area of functionality was treated as being more important than any other.

The chart below shows the overall rankings.

Results

As you can see above, straight out of the box, Infor ERP LN 6.1 ranked first overall, with Lawson M3 Discrete Manufacturing Solutions coming in second, and Epicor Vantage placing third. (Overall scores were based on the average level of support the vendor offers across the entire ERP spectrum.)

As the chart below shows, Infor finished first in five of the eight modules (although by some fairly small margins in a few cases), with Lawson finishing first in three modules (two of which were extremely close), and Epicor failing to finish first in any of the eight modules.

As you can also see in the chart below, thereâ€™s an especially wide range of results in Human Resources. Infor ERP LN 6.1 is the only one of the three solutions that currently provides full HR functionality. Epicor Vantage requires third-party functionality, while Lawson M3 plans to offer full HR functionality in future releases. (It should be noted that clients do not always require an HR component in a new ERP system, as many prefer to retain their existing HR solution or add on a third-party solution.)

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

Rankings, either overall or by module, do not tell you everything you need to know. What they do provide is a basic, high-level view of vendors' general strengths and weaknesses right out of the box. However, the fact is, few businesses, if any, can use an ERP solution right out of the box. Businesses have special needs and priorities that need to be supported by any ERP solution they use.

For example, if your business requires an especially robust quality management functionality, even though Infor finished first overall, Lawson scored higher in the Quality Management module, and may therefore be a better choice for your organization.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although Infor placed first overall and in Product Technology, the chart below shows Lawson as stronger in both the Reporting and Workflow and Document Management submodules. If either of these functional areas is key to your organization's business model, Lawson may be a better choice than Infor.

Conclusion

Given that 'out of the box' rankings rarely, if ever, reflect the real-world needs of an organization, and that the rankings can shift depending on what area(s) of functionality you look at, how then do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. We got our results in less than 20 minutes, versus weeks—or even months—of struggling with huge Excel spreadsheets.

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and submodular levels—even down to the individual criteria—you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions not on out-of-the-box functionality, but rather on how well that functionality matches the business requirements of your organization.

SOURCE:
http://www.technologyevaluation.com/research/articles/welcome-to-erp-showdown-infor-erp-ln-6.1-vs.-epicor-vantage-vs.-lawson-m3-discrete-manufacturing-solutions-19338/

Will That Wretched ERP Finally Die? Possibly, But Only the Acronym

2010-09-29T23:21:00.000-07:00

"The traditional ERP model is dead and collaborative commerce (c-commerce) is emerging to take its place." This was yet another ERP demise prediction, this time given by a speaker at a symposium in Europe at the beginning of April, which was hosted by a leading research house. He went on to predict that Customer Relationship Management (CRM) and Supply Chain Management (SCM) would become as important as ERP in the electronic economy by 2004. A prediction was given that ERP systems will only host 40 percent of business applications by 2004 due in part to the rise of collaborative commerce, or c-commerce.

With traditional ERP systems, attention is placed on internal productivity. What will happen to alter that model is the emergence of a more diverse enterprise framework. From now until 2004, a more dynamic online marketplace will emerge, where companies can collaborate with employees, customers, stockholders, sales channels and suppliers through a multi-enterprise framework. It was also predicted that due to a more dynamic marketplace, ERP vendors would have to focus on either 1) creating functionally stronger ERP components or 2) creating functional c-commerce frameworks.

Market Impact

There is nothing new in these statements that the market has not already been aware of. The currently infamous 'ERP' acronym may face extinction, but not its basic concept. All of the major ERP vendors realized the need to shift from an internal to an external focus a long time ago. Over the last few years, the main players have been actively partnering or finding other ways to provide solutions that allow businesses to collaborate more effectively. Also, the vast majority of vendors have recently stopped using the term ERP in their marketing campaigns, or have at least been downplaying it. Part of the reason for doing this lies in their attempts not to be branded as outdated by market requirements.

However, the real reason lies in the fact that the boundaries between ERP, CRM, e-commerce and SCM are blurred so much that this attempt to functionally separate them becomes pointless. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the more remarkable and supposedly more relevant CRM and e-commerce activity.

The cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with a customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception. Otherwise, the customer will end up on a competitor's list of customers.

Therefore, the relative importance of CRM vs. ERP, ERP vs. SCM or of any other match-up is irrelevant. All of these functional areas are critical, except for some esoteric or autistic businesses. The 64,000-dollar question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of processes relating to the customer lifecycle, product development, and so on, to name but a few, will be a big determinant of losers and winners. Therefore, while the traditional introspective mind-set of ERP becomes history, its functionality remains critical. The 'new economy' will not cause the obsolescence of general ledger and accounts payable & receivable for example. Quite the contrary, it may only emphasize their importance.

SOURCE:
http://www.technologyevaluation.com/research/articles/will-that-wretched-erp-finally-die-possibly-but-only-the-acronym-15710/

Can You Add New Life To an Old ERP System?

2010-09-15T21:21:00.001-07:00

ERP Getting a New Breath of Fresh Air in Europe

2010-09-15T21:20:00.001-07:00

According to silicon.com, a leading European IT TV News Service, European companies began to realize the importance of customer oriented ERP applications and are set to dramatically increase their investment in related projects over the next two years. A report commissioned by Oracle and enterprise systems provider Bull claims European companies will increase ERP projects by 50 per cent, double the volume of business intelligence (BI) and data warehousing (DW) projects and treble the use of CRM applications in the next two years. Two out of three companies surveyed regarded integration of established ERP systems with new CRM solutions as a crucial business strategy. The survey, conducted by IDC, was based on the IT strategies of 1,000 enterprises throughout Europe.

According to Peter Reed, marketing manager for enterprise solutions at Bull, the drive towards customer focused applications is accelerating now as e-commerce takes off and as company resources are freed from developing Y2K solutions. He said while the results of the report were positive, it highlighted a worrying trend of European companies embracing CRM applications as a cost reduction exercise rather than copying the US trend of using it as a method of customer acquisition.

Market Impact

This is a confirmation of a trend we have long noticed in the global market rather than any kind of a surprise. All major business applications players realized the need to shift from an internal to an external focus some time ago, particularly after feeling the Y2K-induced pinch. Over the last few years, the main players have been actively developing internally or partnering in order to provide solutions that allow businesses to collaborate more effectively. Also, while the vast majority of vendors have distanced themselves from using the unpopular, outdated term ERP in their marketing campaigns, at the same time, they have tacitly been enhancing their traditional back office functionality and/or providing hooks to external 'killer' e-business applications.

The real reason for this lies in the fact that the boundaries between ERP, CRM, e-commerce, BI and Supply Chain Management (SCM) have been blurred. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the more remarkable CRM and e-commerce activity, with the inevitable need for extrapolating useful information for all management levels by using BI.

The ERP system remains the backbone of the supply chain. It sets the structure a company needs to do business and to communicate with other businesses. The combination of ERP, supply chains, and the Internet, or collaborative commerce, is an integration designed to offer faster and easier access to business transactions as well as customer and supplier data. This combination does not mean ERP systems become obsolete over night. While the traditional introverted mind-set of ERP becomes history, its functionality remains critical. The 'new economy' will not cause the obsolescence of general ledger and accounts payable & receivable for example. On the contrary, it may only emphasize the importance of their efficient use. Integration and interconnectivity are therefore the name of the game in the future.

We also concur with the above-mentioned opinion that implementing CRM and e-commerce only for cost cutting and process streamlining is a rather myopic strategic move. The much stronger demand for extended-ERP components than for a core ERP system are also not unexpected, mainly due to a large ERP market penetration and saturation compared to other much more recent markets.

SOURCE:
http://www.technologyevaluation.com/research/articles/erp-getting-a-new-breath-of-fresh-air-in-europe-16008/

ERP Showdown: Deltek Costpoint vs. Microsoft Dynamics AX vs. Oracle E-Business Suite

2010-09-15T21:18:00.000-07:00

Introduction
More and more discrete enterprise resource planning (ERP) solutions are entering the marketplace these days. So we thought we'd shed some light on three of the most popular solutions for medium-sized businesses in the $25 million - $250 million (USD) range. Using TEC's ERP Evaluation Center, we compared Deltek Costpoint, Microsoft Dynamics AX, and Oracle E-Business Suite head-to-head, based on the most recent data supplied to us by the three vendors.
We looked at eight standard ERP modules. To eliminate any chance of bias, and to ensure a level playing field, all 3,600 criteria that make up the modules and submodules in our ERP Evaluation Center were given equal weight and priority. In other words, no area of functionality was treated as being more important than any other.

The chart below shows the overall rankings.

Results

As you can see above, straight out of the box', Oracle E-Business Suite ranked first overall, with Deltek Costpoint coming in second, and Microsoft Dynamics AX placing third.(Overall scores were based on the average level of support the vendor offers across the entire ERP spectrum.)

As the chart below shows, Oracle finished first in six of the eight modules, with Deltek and Microsoft finishing first in one module each

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

For example, if your business requires an especially robust HR functionality, even though Oracle E-business finished first overall, Microsoft Dynamics AX ranked first in the HR area, and may therefore be a better choice for your organization than Oracle.

The same applies within individual modules, where the top ranking vendor may not necessarily be the right one for your organization's needs. Although Deltek was first overall in Purchasing Management, Microsoft was stronger in pricing, as shown in the chart below. If pricing is a critical area in your organization's business model, Microsoft may be a better choice than Deltek (the Purchasing Management winner), or even Oracle (the overall winner)

SOURCE:

http://www.technologyevaluation.com/research/articles/erp-showdown-deltek-costpoint-vs.-microsoft-dynamics-ax-vs.-oracle-e-business-suite-18915/

ERP Showdown—Round 2! Exact Macola ES vs. Infor SyteLine vs. QAD MFG/PRO

2010-09-15T21:17:00.000-07:00

Introduction
Continuing our look at mid-market discrete ERP solutions, today's ERP Showdown pits Infor SyteLine vs. Exact Software Macola ES vs. QAD MFG/PRO, all aimed at medium-sized businesses in the over $250 million (USD) range.
Once again, we used TEC's ERP Evaluation Center to look at all eight standard ERP modules. To eliminate bias, and to ensure a level playing field, all 3,600 functional criteria that make up the modules and submodules in our ERP Evaluation Center were given equal weight and priority. (The results in this report are based on the most recent data supplied to us by the three vendors, indicating their level of support for each of these 3,600 functional criteria.) In other words, no area of functionality was rated as being more important than any other.

Conclusion

Given that out-of-the-box rankings rarely, if ever, reflect the real-world needs of an organization, and that rankings can shift depending on what area of functionality you look at, how do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. (We got our results in twenty minutes—as opposed to weeks or even months of struggling with huge Excel spreadsheets.)

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and submodular levels, even down to the individual criteria, you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions not on out-of-the-box functionality, but rather on how well that functionality matches your business requirements.

It's the best way we know of to evaluate ERP solutions, and we invite you to give it a run-through. Simply click on the link below to visit our ERP Evaluation Center and conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours

SOURCE:
http://www.technologyevaluation.com/research/articles/erp-showdown-round-2-exact-macola-es-vs.-infor-syteline-vs.-qad-mfg%2Fpro-18947/

Welcome to ERP Showdown! Infor SyteLine vs. Exact Software Macola ES vs. QAD Enterprise Application

2010-09-15T21:14:00.000-07:00

Today's ERP Showdown pits Infor SyteLine vs. Exact Software Macola ES vs. QAD Enterprise Application, all aimed at medium-sized businesses in the $250 million (USD)—plus range. Once again, we used TEC's ERP Evaluation Center to look at all eight standard ERP modules. To eliminate bias and to ensure a level playing field, all 3,600 functional criteria that make up the modules and submodules in our ERP Evaluation Center were given equal weight and priority. The results in this Showdown are based on the most recent data supplied to us by the three vendors, indicating their level of support for each of these 3,600 functional criteria. In other words, no area of functionality was rated as being more important than any other.

Chart 1. Overall rankings.

Results

As you can see in Chart 1 above, straight out of the box, QAD Enterprise Application finished first, barely nudging out Infor SyteLine in second place, with Exact Macola ES placing third. Overall scores are based on the average level of support the vendors offer across the entire ERP spectrum.

As the chart below shows, QAD finished first in four of the eight modules, Infor finished first in three of the modules, and Exact Software finished first in one module.

Chart 2. Rankings in the eight ERP modules.

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

Rankings, either overall or by module, do not tell you everything you need to know. What they do provide is a basic, high-level view of the general strengths and weaknesses of vendors' solutions right out of the box. However, the fact is, few businesses, if any, can use an ERP solution straight out of the box. Businesses have special needs and priorities that need to be supported by any ERP solution they use.

For example, your business may require an especially robust human resources (HR) functionality. Even though QAD finished first overall, Exact ranked first in HR by a significant margin, and may therefore be a better choice for your organization. QAD has a low score for the HR module because the vendor does not offer HR functionality in its discrete ERP solution. In other words, the solution would have to be provided by a third party. Accordingly, if you want a separate best-of-breed HR solution that integrates into your ERP system, QAD may represent the best choice.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although QAD was first overall in Purchasing Management (Chart 2), Infor was strongest in Requisitions and quotations., as shown in Chart 3 below. If that's a critical area in your organization's operations, Infor may be a better choice than QAD.

SOURCE:

http://www.technologyevaluation.com/research/articles/welcome-to-erp-showdown-infor-syteline-vs.-exact-software-macola-es-vs.-qad-enterprise-application-19328/

Will That Wretched ERP Finally Die? Possibly, But Only the Acronym!

2010-09-15T21:10:00.000-07:00

Can You Add New Life To an Old ERP System

2010-08-24T07:13:00.002-07:00

Recently, TEC featured an article by Olin Thompson titled, "The 'Old ERP' Dilemma: Replace or Add-on" which discussed options available to companies who want to add business functionality to their "Old ERP" systems. Certainly, there are many options now available in new business functionality that run the gamut from Supply Chain Planning (SCP) to Customer Relationship Management (CRM). The pros and cons of replacing or adding on to your existing ERP system were set forward in Thompson's article. But before you look to new ERP functionality, you should see if you are getting the full benefit out of your existing system. If not, are there ways to add new life to your current ERP system without going into an extensive development project.

Whether you have an old or new ERP system you have probably learned that to maximize its value, you have to work hard at getting information from the ERP system to key users. According to Thompson, " the data checks in, but the information can't check out of many ERP systems". You also may be finding that as e-business strategies are emerging in your supply chains, you could need access to more externally generated information than your ERP system, in its current configuration, can handle. For an Information Technology manager, both situations are problematic. Many companies should take another look at data warehousing before deciding that what to do with the "old ERP" system.

*In Memoriam

Does Data Warehousing Really Work?

Bob Cramer, Director of IT for Appleton WI based Anchor Food Products has found that, " lots of the pain we have with our old ERP system is based on users not having access to information. We see data warehousing addressing most of the problems our users have with the old ERP system". Today, most reporting from older ERP systems is directly from the ERP transaction processing (OLTP) system. Typically, users take ERP transactional data and input it to an Access database or a spreadsheet to generate the reports they need to make business decisions. From a user perspective, the extraction and re-inputting of information is both time consuming and potentially error prone. From an IT perspective there are no opportunities to build in validation checks to ensure that the information is either reliable or the most current available.

Data warehousing provides another way of getting information from legacy systems. Many companies have found it necessary to "build around" their ERP system to some extent. For example, Advanced Planning and Scheduling (APS) systems have often been added after the ERP installation. Companies find that they can report from either their ERP or their APS systems, but have difficulty combining data from both systems without having to create new databases or spreadsheets. Once the data is extracted from the systems, it is very difficult to ensure its integrity. James F. Dowling pointed out in the TEC article, "Business Basics: Unscrubbed Data is Poisonous Data" data should be managed as a corporate asset that appreciates in value over time. Historical data must be addressed with as much care as current database content".

The Data Warehousing alternative uses a better approach. It "packages" the information in data cubes that are customized for each group of users. Once the information is packaged in a data cube, users can extract the information using an On Line Analytical Processing (OLAP) tool. Today, OLAP tools are available as client-server applications or can be operated from a Web browser.

The data warehouse also can include information that is not in your ERP system. By adding information from outside the ERP system, IT can provide users access to ALL the transaction information that the company collects as well as whatever information they might want to collect from OUTSIDE the company. This is a significant difference and a potentially powerful advantage. Pat Clifford, Director of Business Consulting at the Boise ID agri-business giant the J. R. Simplot Company, found after installing a data warehouse comprised of company information from their ERP and several legacy systems, " it not only gave more information to our employees, but allowed them to move from just reading reports to performing managerial analysis."

What is the Best Way to Integrate Your Old ERP with Data Warehousing?

There are two basic strategies that can be used to start a data warehousing project. For certain ERP systems third party providers have developed 'off the shelf" data warehousing solutions that are pre-built to the fit the features of your ERP system. If you have an old ERP system that is supported by a data warehousing "solution", you should seriously consider this option. Data warehouse solution products are usually based on the ERP modules you have installed. You can roll out the data warehouse to one module at a time making it easier for IT to manage. One major advantage of using a data warehousing solution is that it can be done in a significantly shorter timeframe than if you have to buy an entire data warehousing tool set.

If your old ERP system is not supported by a data warehousing solution product, you will need to "build your own" using a tool set provided by a data warehousing vendor. At Simplot, Clifford found there were advantages in defining the project by functional areas instead of trying to create one big project: "Different functional areas look at information in different ways, so it's important to work with each group as you build the data warehouse". The advantage of a data warehousing tool set is that it gives you total control over what kind of information you want to present to your users. The disadvantage is that it will take more time and internal resources to implement.

Conclusion

IT managers are under increasing pressure to deliver information that can be used to perform managerial analysis. Decision makers in companies are no longer content to read the simple reports that are generated by old ERP systems. They need to have access to multi-dimensional information based on transactions generated both inside and outside your company. A well thought out data warehousing project can address many of the user issues behind their perceived need for a new ERP system.

SOURCE:
http://www.technologyevaluation.com/research/articles/can-you-add-new-life-to-an-old-erp-system-16444/

ERP Getting a New Breath of Fresh Air in Europe

2010-08-24T07:13:00.001-07:00

ERP Showdown: Deltek Costpoint vs. Microsoft Dynamics AX vs. Oracle E-Business Suite

2010-08-24T07:12:00.000-07:00

Rankings, either overall or by module, do not tell you everything you need to know. What they do provide is a basic, high-level view of vendors' general strengths and weaknesses right out of the box'. However, the fact is, few businesses, if any, can use an ERP solution right out of the box'. Businesses have special needs and priorities that need to be supported by any ERP solution they use.

For example, if your business requires an especially robust HR functionality, even though Oracle E-business finished first overall, Microsoft Dynamics AX ranked first in the HR area, and may therefore be a better choice for your organization than Oracle.

The same applies within individual modules, where the top ranking vendor may not necessarily be the right one for your organization's needs. Although Deltek was first overall in Purchasing Management, Microsoft was stronger in pricing, as shown in the chart below. If pricing is a critical area in your organization's business model, Microsoft may be a better choice than Deltek (the Purchasing Management winner), or even Oracle (the overall winner)

Conclusion

Given that out of the box' rankings rarely, if ever, reflect the real world needs of an organization, and that the rankings can shift depending on what area(s) of functionality you look at, how then do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. (We got our results in 20 minutes, versus weeks or even months of struggling with huge Excel spreadsheets.)

TEC's ERP evaluation center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and sub-modular levels, even down to the individual criteria, you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison, one that ranks vendor solutions not on out of the box' functionality, but rather on how well that functionality matches the business requirements of your organization.

It's the best way we know of to evaluate ERP solutions, and we invite you to give it a run through. Simply click on the link below to visit our ERP Evaluation Center to conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours
SOURCE:
http://www.technologyevaluation.com/research/articles/erp-showdown-deltek-costpoint-vs-microsoft-dynamics-ax-vs-oracle-e-business-suite-18915/

Welcome to ERP Showdown

2010-08-24T07:11:00.000-07:00

Results

As you can see above, straight out of the box, Infor ERP LN 6.1 ranked first overall, with Lawson M3 Discrete Manufacturing Solutions coming in second, and Epicor Vantage placing third. (Overall scores were based on the average level of support the vendor offers across the entire ERP spectrum.)

As the chart below shows, Infor finished first in five of the eight modules (although by some fairly small margins in a few cases), with Lawson finishing first in three modules (two of which were extremely close), and Epicor failing to finish first in any of the eight modules.

As you can also see in the chart below, thereâ€™s an especially wide range of results in Human Resources. Infor ERP LN 6.1 is the only one of the three solutions that currently provides full HR functionality. Epicor Vantage requires third-party functionality, while Lawson M3 plans to offer full HR functionality in future releases. (It should be noted that clients do not always require an HR component in a new ERP system, as many prefer to retain their existing HR solution or add on a third-party solution.)
However, as with most aspects of enterprise software, it's not that simple or clear-cut.

Rankings, either overall or by module, do not tell you everything you need to know. What they do provide is a basic, high-level view of vendors' general strengths and weaknesses right out of the box. However, the fact is, few businesses, if any, can use an ERP solution right out of the box. Businesses have special needs and priorities that need to be supported by any ERP solution they use.

For example, if your business requires an especially robust quality management functionality, even though Infor finished first overall, Lawson scored higher in the Quality Management module, and may therefore be a better choice for your organization.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although Infor placed first overall and in Product Technology, the chart below shows Lawson as stronger in both the Reporting and Workflow and Document Management submodules. If either of these functional areas is key to your organization's business model, Lawson may be a better choice than Infor.
Conclusion

Given that 'out of the box' rankings rarely, if ever, reflect the real-world needs of an organization, and that the rankings can shift depending on what area(s) of functionality you look at, how then do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. We got our results in less than 20 minutes, versus weeks—or even months—of struggling with huge Excel spreadsheets.

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and submodular levels—even down to the individual criteria—you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions not on out-of-the-box functionality, but rather on how well that functionality matches the business requirements of your organization.

It's the best way we know of to evaluate ERP solutions, and we invite you to try it out. Simply click on the link below to visit our ERP Evaluation Center and conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours.

SOURCE:
http://www.technologyevaluation.com/research/articles/welcome-to-erp-showdown-infor-erp-ln-6-1-vs-epicor-vantage-vs-lawson-m3-discrete-manufacturing-solutions-19338/

Will That Wretched ERP Finally Die? Possibly, But Only the Acronym!

2010-08-24T07:10:00.000-07:00

Manage the Change or Change the Management during an ERP Software Selection – Introduction

2010-07-04T00:56:00.002-07:00

This is the first of a series of four blog posts in which I intend to describe how change management can affect a company’s ERP software selection project.

Part 1 (Introduction): I will describe the challenges a company faces when managing the change caused by the replacement of its ERP system.
Part 2 (The Change): I will show the difference between general change in a company (e.g., management team, moving to new offices, etc.) and change during an ERP selection process.
Part 3 (The Management): I will describe the different methods and tools used to manage change during an ERP selection project.
Part 4 (Conclusion): I will provide a plan that companies can use when managing change during an ERP selection process.

Change Management Challenges that Companies Face during ERP Software Selection

Probably one of the most important challenges is internal communication. Even before starting the selection process, all parties involved should know what is going to happen and why the decision to buy or replace the current ERP software was made. The decision to replace the existing ERP solution should be discussed with the employees. Of course, in companies with hundreds of users, the chief information officer (CIO) or chief technical officer (CTO) will not speak to all of them; but there are other ways to find out what they think by using surveys, polls, etc.

After the decision to replace the system is made, the next challenge is to define a strategy that will make the selection and implementation process as painless as possible (i.e. a plan of action to accomplish a specific goal). It doesn’t have to be very detailed, but it should contain the risks faced during the implementation process and the ways to deal with them. No matter what vendors tell you, there is no project with zero risk.

Now that you have created a strategy, you will need to find people who can implement it. No matter the size of the project, you will need to create a team for the ERP selection project, made of people from different levels and different departments and led by a project manager whose main task is to supervise all actions related to the project. When building the team, try to select people who will be willing and available to work on the project (do not take very busy people or employees that are likely to leave the company).

No matter who makes the decision that leads to an ERP selection, or who manages the project, all the employees in the company will be affected. Therefore, everyone should be involved and allowed to contribute. In order for that to happen, transparency is extremely important because people cannot get involved if they don’t know what’s going on. All employees (from users to top managers) should know what’s going on and have the opportunity to give their feedback on the project.

Another important challenge is external communication with software vendors, consultants, or companies offering software selection services. If you’ve already addressed the challenges mentioned above, it will be much easier to work with vendors, consultants, or software selection companies.

Please remember that these challenges are related to change management for an ERP selection project. Ideally, these challenges should be addressed before you start the selection process, and not along the way.

In my next blog on change management, I will define change and describe what makes it such an important issue during an ERP selection process. In the meantime, please let me know what your thoughts are on change management and on this blog post.

Change happens all the time—but why are changes in our personal lives similar to those in our professional lives? There are some major events that oc

2010-07-04T00:56:00.001-07:00

If you haven’t read the blog post ERP Vendors, Are You Green Enough? that I wrote a little over a year ago, I recommend you read it first. After you’ve checked it out, I assume you’ll understand that I used a flawed and extremely simplified approach to “confirm” my impression of the correlation between the size of enterprise resource planning (ERP) vendors and the greenness of their offerings (see below for further explanation). About a year later, I used the same method to go through the same seven ERP vendors I had looked into the last time, and this time my focus was the growth of the green counts. My “conclusion” is that, on average, these ERP vendors have become 71 percent “greener” over the time span of roughly one year. Let me show you some data:

fig-1.jpg

Figure 1. Green counts from Google Search, 2008 and 2009.

Figure 1 shows the growth in the numbers of search results that include “green” on those ERP vendors’ Web sites. Google was used as the search engine, as it was last year. The result shows that almost all the vendors have significantly increased their use of “green” on their Web sites.

After going through a few of the vendors’ sustainability-related activities in 2009, I’m convinced that the increase in“green” count does have some connection to the enhancements some vendors have made.

When I checked SAP’s press releases for 2009, I found a lot of announcements related to the company’s efforts in sustainability. Below are a few examples:

* SAP Unveils Online Marketplace for Sustainability Solutions from SAP and Partners (October 27, 2009)
* SAP, Microsoft, and Accenture to Co-develop New Carbon Disclosure Project (CDP) Carbon Benchmarking System (September 24, 2009)
* SAP to Acquire Carbon Management Solution Leader Clear Standards, Inc. (May 11, 2009)

In fact, SAP has a dedicated Sustainability Newsroom Web page to showcase both its capabilities in helping customers increase sustainability and its own sustainability achievements.

Let’s take another vendor—Oracle. Below are some press releases I found:

* Oracle Delivers New Governance Risk and Compliance Suite with Vital Policy Oversight and Control Execution Integration (December 7, 2009)
* Oracle and OMRON Join Forces to Deliver New Environmental Sustainability Solution (October 12, 2009)
* Oracle OpenWorld 2009 Green Program Promotes Awareness, Education, and Sustainability (September 30, 2009)

It seems that not only does “green” as a word appear more frequently on ERP vendors Web site, but also some vendors do add to their offerings to help customers become greener. However, as I explained in last year’s blog post, the flaw of the green count approach is obvious. The word “green” doesn’t always represent vendors’ abilities to support customers’ initiatives toward tackling environmental issues and improving sustainability. Thus, again, I have to warn you that the “green count” approach should not be used for any serious purpose.

Manage the Change or Change the Management during an ERP Software Selection: The Change

2010-07-04T00:52:00.000-07:00

Change happens all the time—but why are changes in our personal lives similar to those in our professional lives? There are some major events that occur and change things forever. For an individual, such a change can be caused by marriage; for a company, by the selection of an ERP system. There is always a way out when relationships stop working (both between people and companies), but it can be painful—and stressful to go through.

Why are Changes in Our Personal Lives Similar to Those in Our Professional Lives?

Companies are made up of individuals who have similar behaviors—both at work and at home. Let’s take a look at the similarities between the two:
1. We usually have our initial meeting with our partner-to-be in a public place (restaurant, night club, concert, etc.). The same applies when meeting a software vendor (tradeshow, conference, expo, etc.). Either way, we try our best to make a good first impression.
2. On our first date, we’ll try hard to impress our partner-to-be, as the vendor will try to impress a potential customer during a product demo. In both cases, we tend to forget to mention our weaknesses—and put more emphasis on our strengths.
3. When we decide to take the big step, we need to really understand what the change (caused by both marriage and purchasing an ERP) entails. Most failures, in marriages and implementations, are caused by decisions that were not very well informed.
4. Finally, when things are not going very well with our partner or software vendor, we start looking elsewhere and (oftentimes) decide to change. This is perfectly normal; as long as we learn from our initial mistakes and try to do it right the second time.

You can take control of the change by following these simple steps:

1. Do not blindly following the others or let yourself be influenced: In both marriage and software selection, we sometimes tend to follow others because it seems like the right thing to do. You shouldn’t get married because all your friends are doing it and you shouldn’t look for or replace your current ERP system because everyone else in your industry is doing it.
2. Understand the disadvantages: It’s important to understand the disadvantages change will bring preferably before it happens. It is more important to understand the disadvantages of change, because it’s the weaknesses—not the strengths—that can make a relationship (personal or professional) fall apart, if not understood and dealt with accordingly.
3. Be reasonable and realistic: Do not expect a major change to happen and answer all your problems. A partner and a vendor can help you deal with problems and issues, but do not expect them to fight your wars or come up with miracle solutions to everything.
4. Do not try to hide the dirt under the carpet: Remember, there are always two parties involved in a major change such as software selection or marriage. Change can and will be less painful if the two communicate and share thoughts, feelings, etc. It can only be successful when everyone involved is aware of what’s happening and can contribute.

ERP (Enterprise Resource Planning)

2010-06-01T06:49:00.002-07:00

The emergence of the Internet, evolving customer demands, pressure to accelerate business process, and the need to establish more collaborative relationships with key suppliers and business partners are all pushing organizations towards ERP solution. So, what is ERP?
Enterprise Resource Planning (ERP) is described as an "information system package that integrates information and information based processes within and across functional areas in an organization" [1].

Traditional stand-alone applications were designed for specific customers, with limited functionality, and isolated from other applications. On the contrary, ERP is a business tool that integrates all the applications required by an organization as a whole, and connects the organization to other enterprises in a network form. It is usually compromised of several modules such as: a financial module, a distribution module, or a production module. Today, ERP have added new functions such as supply chain management, product data management, electronic commerce and warehouse management. Thus, ERP opens a window of opportunity for businesses to compete globally, respond to competitive pressures, and increase revenue.

ERP Characteristics & Basic Operations:

ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc.

- ERP performs core business activities and increases customer service satisfaction.

- ERP facilitates information flow across different sections or departments of the organisation.

- ERP bridges the gap between business partners allowing ongoing collaboration.

- ERP is a good solution for better project management.

- ERP is built as open system architecture, meaning it allows automatic introduction of the latest technologies such as: Electronic Fund Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E-Commerce etc.

- ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.

- ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes.

- ERP tracks a wide range of events in an organisation, and plans for future activities based on these events.

Quote-to-order: A Newcomer Causes a Stir in the Market

2010-06-01T06:49:00.001-07:00

The first part of this series provided a detailed background of the still-evolving quote-to-order (Q2O) space, including historical examples to show why the market is increasingly demand driven. Part one summed up by making general observations as to how Q2O software solution vendors have addressed the market, and about the additional features and functionalities they will need to incorporate as demand shifts.

Now it's time to take a look at one of those high-flying "newcomer" providers: enter BigMachines, Inc. (www.bigmachines.com), a rapidly growing company founded in 1999, and with North American headquarters (HQ) in Chicago, Illinois (US), and European HQ in Frankfurt, Germany. The vendor also offers global customer support and hosting operations with a technology center in San Mateo, California (US), a West Coast data center in San Francisco, California (US), an East Coast data center in Sterling, Virginia (US), and an Asian research and development (R&D) center in Hyderabad, India.

According to the BigMachines Web site and associated press releases, the vendor is a provider of on-demand configurator, quoting, and proposal software and associated professional services. Its clients are in the high tech, industrial equipment, medical instruments, and software and services industries. The company's solutions help its clients' sales teams and channels to streamline their selling processes from customer inquiry-to-order. The BigMachines solution digitizes complex selling processes and captures an organization's tribal knowledge. By doing so, it provides online product selection, configurator, quoting, and ordering capabilities for new products and aftermarket parts, and streamlines configuration, pricing, quoting, proposal generation, and order management. BigMachines' rapidly growing customer base of over 100 corporations includes global leaders such as Kodak GCG, Siemens, Ingersoll Rand, and NTT Communications, as well as innovative growth companies such as ShoreTel and Aruba Networks.

Getting Cozy with Customer Relationship Management (CRM) Powers

BigMachines' Lean Front-end (LFE) solution provides reporting capabilities that help analyze sales activities, and integrates to existing enterprise resource planning (ERP), computer-aided drawing (CAD), and CRM systems, including those from Salesforce.com, Oracle CRM OnDemand, Oracle, and SAP.

For Salesforce.com and Oracle CRM OnDemand customers, BigMachines offers two different product editions: SPP (standing for selection, pricing, proposal) and CPP (standing for configuration, pricing, proposal). The SPP is an entry-level solution that does not include the configurator module. Both solutions enable users to streamline their entire Q2O processes, all within the familiar Salesforce.com CRM interface.

The CPP and SPP product pricing capability includes BigMachines' certified and packaged integration to these two CRM products above. The vendor also offers Professional and Enterprise editions which have different price points, minimum numbers of users, bundles of other BigMachines modules, and other add-on original equipment manufacturer (OEM) software. All of these product editions are part of the umbrella BigMachines solution.

Professional Services Automation: Affordable Hosted Solutions for the Small to Medium Business Market

2010-06-01T06:47:00.000-07:00

The dot-com age of the mid-nineties introduced the application hosting model to the business world. Thus, a plethora of companies offering a wide range of software as a service (SaaS) typically offered hosted legacy customer relationship management (CRM) and enterprise resource planning (ERP) systems, allowing many to join the Internet revolution. Unfortunately with the sudden burst of the dot-com bubble in 2001, the application services provider (ASP) business model never really had a chance to prove its worth to the business world. Only in the last couple of years have we seen software giants like Salesforce.com prove that the ASP model can work. Banking on the recent momentum of this model, a number of professional services automation (PSA) solutions have built business models on ASP technology.

For professional services organizations (PSOs) that have limited resources and limited information technology (IT) infrastructures, the ASP model represents an attractive offering. Smaller PSOs may benefit from the quick deployment and affordable initial price point provided by hosted PSA solutions. In addition, increased security measures have ensured the critical protection of sensitive data within these organizations. Consequently, a niche group of PSA vendors have emerged to serve PSOs in the small to medium business (SMB) market.

Ramco Ships Technology And Products

2010-03-27T22:24:00.000-07:00

At the end of February, during the National Manufacturing Week (NMW) in

Chicago, IL, Ramco Systems Limited , a provider of

enterprise business applications and accompanied services, with a global HQ

in India, announced the delivery of a series of enterprise application suites

that it claims will "change the economics of application software". Instead

of releasing one application suite that is intended to meet the needs of

multiple industries, Ramco is providing distinct suites that are tailored to

meet the specific vertical industry requirements for process manufacturing

(Ramco Enterprise: Process), discrete manufacturing (Ramco Enterprise:

Discrete) and asset-intensive industries (Ramco Enterprise Asset Management).

In addition, the company delivered horizontal solutions in human resources

(HR) management (Ramco Human Resource Management System) and business

intelligence (BI) (Ramco Business Decisions); as well as back-office

solutions for finance and distribution (Ramco Corporate Solutions), tailored

to retail and service industries.

Ramco Enterprise Series Release 4.0 applications have been built on what the

vendor claims to be groundbreaking, model-based application development and

delivery platform called Ramco VirtualWorks. The platform includes a model-

based architecture based on a comprehensive model of granular business

processes, representing 70 different industries, a web-enabled set of

workbenches for the application development lifecycle, as well as

methodologies for all stages of development and implementation.

This is Part Two of a two-part note.

Part One detailed the Ramco announcement and discussed the Market Impact.

User Recommendations

Existing Ramco customers should continue to follow Ramco's product path. They

should evaluate the new products and technology with an eye towards moving

forward with Ramco.

Companies that see themselves as early adopters of technology should evaluate

Ramco to validate the potential breakthrough benefits. We suggest a pilot

project with Ramco may prove to be a very good investment.

Companies who are looking for new or replacement systems should not ignore

Ramco, which has proven its products, technology and services, and should

challenge the other competing vendors to match Ramco's value proposition.

Companies with both Process and Discrete manufacturing segments to their

business should particularly place Ramco on their short list. Multi-site and

multi-national corporations and/or their divisions should consider the

Ramco's value proposition, being cognizant of competitive offerings. The

verticals that would benefit the most likely from evaluating Ramco are:

* Batch Process Industries Food & Beverage, Cement, Specialty Chemicals,

Plastics, Textiles, and

* EAM Intensive Industries Aviation, Utilities

Companies who are working to "fill-in" their application portfolio and

perhaps bridge the gaps in existing applications should evaluate Ramco's

modules/components and technology. A strong point of the offering appears to

be the combination of application function, technology and offshore

development.

Companies who believe they need to deploy custom developed systems should

evaluate Ramco's approach to near term development and its long-term

consequences.

While Ramco covers most of the world its regional capabilities and industry

focus may vary. Therefore, potential clients should conduct a thorough

preliminary research on local industry expertise and reference sites when

Ramco is included in the selection process.

Supply Chain Management Audio Conference Transcript

2010-03-27T22:23:00.002-07:00

Going to begin with an overview of problems and solutions relating to technology selection, starting first with the problem:

According to our research, over 80% of enterprise technology evaluations run over time and budget, and once completed, over 50% of the implementations fail to meet functional and total cost expectations. There are three main reasons that project teams run into trouble.

1. They have no effective way to identify the critical vendor and product questions necessary to successfully initiate the evaluation process.

2. They have no ability to prioritize the different criteria, once identified, relative to one another. As a result, final priorities are often more the result of internal political agendas than true needs and requirements.

3. And finally, project teams have no ability to gather objective, validated, updated data on the vendor alternatives. As you may well know, vendors have a tendency to exaggerate product, service, and corporate capabilities if it enables them to move to the next phase of the deal.

So, what's the solution?

The solution is to create a structured, repeatable process for evaluating technology solutions and the vendors that provide them. Best practices drawn from our clients that have completed internal technology selections suggest that project teams should examine five key categories of criteria. The first two categories examine product specific capabilities, while the remaining three investigate the software vendor's overall corporate capabilities.

So let's review these criteria categories.

Number 1: Product Functionality - Product functionality is the most obvious evaluation criterion and plays a dominant role in supply chain management software selections. Simply put, this evaluates the features and functions delivered by the product as it currently exists. Together with technology and architecture, product functionality often makes up over 90 percent of the overall importance within IT selections, but this is probably too high. Other criteria such as service/support, corporate viability, and strategy should make a stronger contribution.

Number 2: Product Technology - Product technology defines the technical architecture of the product, and the technological environment in which the product can run successfully. Sub criteria include things like application architecture, software usability and administration, and platform and database support. Relative to the other evaluation criteria, best practice selections place a lower relative importance on the product technology criterion. However, this apparently lower importance is deceptive, because the product technology criterion usually houses the majority of an 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.

Number 3: Corporate Service and Support - This criterion defines the capability of the vendor to provide implementation services and ongoing support. Repeated industry surveys have identified this category as the single largest differentiating factor among potential selection options, as well as the greatest indicator of ultimate user implementation success and long term vendor viability. A proper professional services and support evaluation should include both subjective, qualitative measures validated by current product users, and objective, quantitative criteria within both the professional services and product support categories. Service and support includes categories such as consulting, systems integration, project management skills, geographic coverage, language and time coverage of the vendor help desk, and delivery mediums.

Number 4: Corporate Viability - Corporate viability is a critical, yet often overlooked category that examines the financial and management strength of the vendor. Given the huge number of dollars spent on IT procurements, not to mention their strategic importance, the financial stability of the vendor simply can't be stressed too much. The vendor viability category in WebTESS combines quantitative Wall Street ratio and metric analysis with qualitative management and corporate evaluations. Only by combining the two components can IT executives accurately assess the risk and benefit of corporate investment in a specific product and vendor option.

Number 5: Corporate Strategy - Corporate strategy evaluates the corporate road map and strategy of the software vendor with regard to specific timelines of how the product will be developed, sold, and supported within the supply chain management market. This is the most strategic and long term set of evaluation criteria, and rates how effectively the stated vendor's three to five year product, support and sales strategy maps to the overall market direction. Any dissonance between the stated vendor direction and market direction is a cause for concern, and should be rectified by the vendor through either a shift in corporate policy or a detailed and market validated explanation for the discord.

Now that we have given an overview of the requirements of a technology selection, I would like to move on to an overview of the Supply Chain Management Software Marketplace and as it exists today.

Enterprise Messaging Evaluation and Procurement Audio Transcript

2010-03-27T22:23:00.001-07:00

Begin with an overview of problems and solutions relating to technology selection, starting with the problem:

1. Project teams have no effective way to identify the critical vendor and product questions necessary to successfully initiate the evaluation process.

2. Project teams have no ability to effectively prioritize the different criteria, once identified, relative to one another. As a result, final priorities are often more the result of internal political agendas than true needs and requirements.

3. Project teams have no ability to gather objective, validated, updated data on the available vendor alternatives. It is a well-known problem that vendors have a tendency to exaggerate product, service and corporate capabilities if it enables them to move to the next phase of the deal.

4. According to our research, the net result has been that over 80% of enterprise technology evaluations run over time and budget, and that once selected, over 50% of the implementations fail to meet functional and total cost expectations.

So what's the solution?

The solution is to create a structured, repeatable process for evaluating technology solutions and the vendors that provide them. Best practices drawn from TechnologyEvaluation.Com client organizations that have completed internal technology selections suggest that project teams should examine six key criteria groupings. The first three criteria sets should examine product specific capabilities, while the second three should investigate the software vendor's overall corporate capabilities.

So what are the criteria groupings?

1. Product Functionality - Simply put, this evaluates the features and functions delivered by the product, as it exists today.

2. Product Technology - This criterion defines the technical architecture of the product, and the technological environment in which the product can run successfully.

3. Product Cost - Initial and Ongoing cost of product, this is not TCO as it does not account for internal support costs.

4. Corporate Service and Support - This criterion defines the capability of the vendor to provide a high level of implementation services and ongoing support.

5. Corporate Viability - This is a critical yet often overlooked category that should examine the financial and management strength of the vendor.

6. Corporate Strategy - This evaluates the corporate road map and strategy of the software vendor with specific timelines regarding how the product will be developed, sold, and supported within the specific market.

Now that we have given an overview of the requirements of a technology selection, I would like to move on to an overview of the Collaborative Messaging Marketplace and as it exists today.

Today's Marketplace

We will be comparing and contrasting the three primary collaborative messaging servers within the industry today, comprising more than 130 Million end user licenses. These are, as you can see from WebTESS, Lotus Notes, Microsoft Exchange, and Novell GroupWise.

Lotus Notes R5 competes directly with Microsoft's Exchange e-mail server 5.5 and Novell's GroupWise 5.5. Microsoft will be releasing Exchange Server 2000 in the 2nd quarter of 2000, presently code named "Platinum".

Novell's offering comes well short of meeting the needs of collaborative messaging users in today's market when compared to Notes and Exchange, and continues to lose market share to them.

The collaborative messaging market is booming as e-mail has evolved into a mission critical application. Lotus Notes has just surpassed the 50,000,000-installed base mark, as has Microsoft. On the other hand, Novell appears to have gone into maintenance mode, holding onto their 20 million plus install base. However, we do expect to see some large improvements in Novell's next release of GroupWise, code named "BulletProof" which is based on XML and open standards to allow greater integration with 3rd party applications.

e-Business Service Provider Evaluation & Selection

2010-03-27T22:22:00.001-07:00

We will review the critical differentiating criteria of a number of selected DBSPs chosen as a representative sample of the most common types of DBSPs a newcomer to the space may face. However, to help us understand the selection process, we need to get a handle on the DBSP space, and the companies that inhabit it. As a cautionary note, however, there are many facets, hybrids, and fringe areas, and any coarse characterization is of course subject to value judgments.

Unlike product selections, service comparisons depend on reference information provided by vendors and their clients, and are subject to value judgments and specific engagement situations. This is perhaps one of the hardest aspects of comparing vendors. However, there are many aspects that are not so soft which we can deal with, and provide measures of vendor capabilities and performance. We will also attempt here to map out the core corporate players and player types.

A Brief Market Overview

We are concerned here with DBSPs who enable business capabilities within digitally networked environments. This not only includes e-business operations on the web, but can also refer to intranet development capabilities (B2E for example), and government-to-consumer or citizen or other government etc. We have adopted the generic term Digital Business Service Provider or DBSP as the a way of describing the area, and reserved e-business service provider for profit taking companies building out digital capabilities to sell and buy over electronic networks.

From our research, there a number of flavors of DBSPs arising historically from advances in computer and network technologies. Briefly, the main DBSPs arose from seven sources:

1. Legacy/Traditional Consulting Houses, which arose from the evolution of commercial uses of computer technologies from the late 1950's to the mid 1970's. Deloitte represents the traditional consulting houses, with EDS and CSC as representative of systems engineering companies that came out of that time.

2. Network Consultants arose to service rising computer network needs during the 1980's. Lante and Proxicom are examples of this genre.

3. Systems Integrators from the mid 1970's to mid 1990's evolved to meet the needs of tying together systems and products as generic products appeared in the marketplace, chiefly financial, MRP and technical systems. EDS, begun in 1963, moved rapidly to become a major systems integrator of the day. Osprey, a latecomer to this market, started in 1993.

4. Product Centric service branches were established in the 80's and early 90's out of product developers such as Oracle and IBM. These companies developed services around their products as a means to symbiotically cross-sell products and services.

5. Website Creators and Designers (Creatives / Early Pure Plays) stepped out in the early to mid 1990's as the early Internet began to show promise for business. Businesses migrated from teletext bulletin boards and created websites to do business in the new medium. Razorfish, Agency.com, and later Organic typify these technology driven creative organizations.

6. Advertising Agencies developed technology wings from the mid 1990's (or later in many cases), creating websites for special events such as the Women's World Soccer Championship or special ad campaigns. Companies such as DDB Needham and JWT moved into the site building business, incorporating their Fortune 1000 branding and marketing expertise.

7. Late Pure Play Service Providers evolved in the late 1990's dedicated to bringing businesses to the web. Dot-com's began their fantastic market ride at this time, giving these Pure Plays high revenue contributions - up to 50% or more of total revenue. However, since the dot-com meltdown, these DBSPs are turning to more traditional business partners. Scient, Sapient, Xcelerate are examples.

On the sidelines of the market are many fringe DBSPs offering services such as ASP, site hosting, and specialized services including language translation, educational systems, telecommunication services, advertising rich media, branding and marketing research to name but a few.

Enterprise Resource Planning Systems Audio Conference

2010-03-27T22:19:00.000-07:00

Here are a couple of disclaimers before we proceed, due to a number of queries we received prior to this conference. First, the vendors we included in the first round were those vendors requested by both our offline selection clients and online readership. With those vendors we have long established an ongoing line of communications and, prior to including them in eBestMatch, we also published a research note on them on our site (we encourage you to check it out on our Web site under 'Business Applications' section). We do realize that there are a number of other worthy vendors that can and should also be included; off the top of my head I could think of at least 20 more vendors that will be added over time. Therefore, please regard this model as an ongoing work-in-progress. This conference may be its official launch, but the idea is to repeat it periodically, as new vendors are added and/or existing vendors' ratings reviewed.

Second, the idea of eBestMatch is not to give evaluations or produce magic quadrants, which are set in stone. It is rather envisioned to show you the flexibility of our software in conducting selections, where one can conduct a number of simulations by tailoring criteria, varying weights and/or factor ratings. There was the intent to give some very generic, high-level idea of vendors' standings though. Through our own research activities, client interviews and surveys, our ERP selection engagements, interactions with our counterparts and vendors, we have rated vendors at a high level across the critical ERP selection criteria. You will appreciate the fact that it is very difficult to do anything more detailed with only 270 criteria (at least in the ERP space), and more than that would cause our Web software version to be very slow or almost non-operational. A proper selection exercise, using our desktop version of the software, would involve significantly higher number of criteria (amounting to several thousand), with a sharp vertical industry focus, and that would be rated strictly in a quantitative way, as opposed to the more open-ended, descriptive rating scale that we had to use for this purpose.

Having clarified this, I'm going to begin with an Overview of problems and solutions relating to technology selection, starting first with the problem:

According to our research, over 80% of enterprise technology evaluations run over time and budget, and once completed, over 50% of the implementations fail to meet functional and total cost expectations. There are three main reasons that project teams run into trouble, in our view:

Teams don't have an effective way to identify the critical vendor and product criteria necessary to successfully initiate the evaluation process.

They have no ability to prioritize the different criteria, once identified, relative to one another. As a result, final priorities are often more the result of internal political agendas than true needs and requirements.

And finally, project teams have no ability to gather objective, validated, updated data on the vendor alternatives. As you may well know, vendors have a tendency to exaggerate product, service, and corporate capabilities if it enables them to move to the next phase of the deal.

The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

2010-01-25T07:43:00.000-08:00

Alongside other business objectives, the four factors mentioned above make the connectivity between ERP and PLM a necessity for ETO companies. Ideally, it would be great if there was a single system handling everything that an ETO manufacturer needs. However, during the early days of development, the product development application camp (e.g., computer aided design [CAD] and product data management [PDM] vendors) and the transactional enterprise system camp (e.g., ERP and supply chain management [SCM] vendors) were developing solutions in significant ignorance of each other. Also, ERP and PLM systems were not implemented at the same time for many organizations (often ERP was implemented earlier that PLM) and integration between the two systems seemed to be the only realistic option.

The Blurry Line between ERP and PLM

The purpose of integrating ERP and PLM is to ensure that product definition information (which is mainly generated by the product design and development department) is accessible instantly by the following processes (e.g., production and services). Also, data from non-design phases can be a valuable input for the decision-making process during the design and development stages. ERP and PLM vendors and implementers have developed technologies to integrate the two systems and to integrate CAD design information with enterprise software applications as well.

In the past, the boundary between the ERP camp and the PLM camp was quite clear. However, after seeing the market potential of PLM solutions, almost all major ERP players have entered into the PLM market. This doesn't necessarily mean that PLM solutions provided by ERP vendors integrate with ERP systems better than those provided by pure PLM vendors (sometimes it may take very long for an acquired PLM solution to be well integrated with its new owner's ERP system), but it should be somewhat easier to coordinate the efforts of integrating two systems together.

Both ERP and PLM vendors are trying to extend their respective solutions' capabilities to the other side. This effort makes the line between ERP and PLM blurrier—ERP solutions are now more capable of managing product data and PLM vendors are adding more transactional functionality in their offerings.

On one side, ERP solutions are increasing their inward capability of managing product data. This phenomenon can be found more significantly in ERP solutions specifically for the ETO industry. To explain how ETO ERP is advancing in providing PLM functionality, I selected two common sub-modules: product data management and product/item configurator. Both submodules are available in ETO ERP and Discrete ERP (which has more generic coverage on manufacturing industries) categories within the Technology Evaluation Centers' (TEC's) knowledge bases (KBs). The comparison of average rating scores (based on TEC's software selection methodology) of the two types of ERP on the selected submodules clearly shows that ETO ERP provides better PLM capability than Discrete ERP (see figure 1). These average scores are quite representative since they are based on 111 Discrete ERP and 35 ETO ERP solutions recorded in TEC's knowledge base. Although PLM-like functionality within an ETO ERP solution can't match what PLM can do, this extension may reflect that ETO manufacturers are eager to enhance the connectivity between product data and operation data.

Figure 1. Rating scores of two submodules within ETO ERP and Discrete ERP

On the other side, PLM vendors are now working on expanding to the ERP-like functionality. A good example is the increasing availability of sourcing solutions from non-ERP PLM vendors. No matter how a PLM vendor positions its products (i.e., sourcing as a part of the PLM package or as a parallel offering alongside PLM), it makes perfect sense to increase the proximity between product definition information and sourcing. For ETO manufacturers, delivering high-quality products on time requires efficient sourcing, decision-making, and operations which rely on instant access to accurate product definition information and streamlined collaboration around it.

The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

2010-01-25T07:42:00.002-08:00

Enterprise resource planning (ERP) and product lifecycle management (PLM) have different business management perspectives—the first focuses on fulfilling physical orders with the respect of optimizing resource use whereas the second focuses on taking care of innovation processes by facilitating product definition collaboration. However, there is an intersection between the two systems. By empowering the consistent accessibility of one system's users to another system's data and processes, the integration between the two systems delivers benefits such as shorter time-to-market, lower manufacturing costs, and higher customer satisfaction.

The Need for ERP–PLM Integration in ETO Manufacturing

It is important for all manufacturers that have implemented ERP and PLM systems to build connections between the two software applications. For engineer-to-order (ETO) manufacturers (who design and manufacture products to the specific needs of the customer), the connection between ERP and PLM is even more important due to the specificity of the ETO sector.

Facilitating Engineering Changes

For ETO manufacturers, the probability of product and process changes is high. During the time between receiving customer requirements and delivering final products, changes happen (whether the customer modifies their requirements; design modifications are requested by the shop floor; or issues on the supplier's side result in using alternative parts). Quite often, a change initiated in one system (either ERP or PLM) will have a consequence in the other. For ETO manufacturers, the capability of efficiently capturing change requests and implementing change actions throughout the entire value chain (customer, manufacturer, and supplier) in a synchronized manner is one of the key success factors.

Reducing Rework and Scrap

Every manufacturer wants to reduce rework and scrap but ETO manufacturers dislike these costly activities more than the average manufacturer. In the ETO sector, the quantity of each product is usually small—unlike mass production manufacturing. This manufacturing process allows for a certain percentage of rework and scrap and costs are allocated to finished products without significant increase on unit price. For ETO companies to avoid catastrophic wastes in manufacturing processes, they have to make sure that the design department knows what can be made on the shop floor and that the production side always works on the up-to-date design specifications that reflect correct customer requirements.

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

2010-01-25T07:42:00.001-08:00

Towards the end of offering proven technology to pragmatists, SYSPRO’s fully-integrated solution suite [evaluate this product] connects to disparate systems via Service Oriented Architecture (SOA) technologies. All the above-mentioned modules are based on standard Extensible Markup Language (XML) formats for information exchange, and Web service technologies for enhanced interoperability between disparate systems and for collaborative commerce. SYSPRO’s thoughtful approach to adopting new technology, such as Web services and SOA platforms, again reflects the desires of its sensible buyers, who are driven by business needs rather than by the latest headlines.

The decision for SYSPRO to go the Microsoft .NET Framework route was apparently done even a couple of years prior to Microsoft releasing the framework for general availability. The SYSPRO e.net solution suite was developed in close association with Microsoft on the beta .NET development tools and released immediately after Microsoft’s commercial release of .NET Framework. SYSPRO was even quoted by Microsoft at that stage as the poster child of .NET.

In retrospect, it appears that the right visionary technology step was made by SYSPRO. Over time, more and more of the Microsoft solution set has been incorporated and integrated into SYSPRO’s suite, and its customers have continually benefited from this technology decision made several years ago.

One of the tenets of PragmaVision is to support multiple levels of technology evolution, as clients want to progress to the next level at their own pace, and without feeling forced to migrate to .NET or SOA-based solutions. As an indication of SYSPRO’s commitment to its customers, the vendor continues to support some versions of UNIX even though this legacy base is less than a percentile of the installed base (and despite the fact that, in order for users to benefit and use the .NET-based functionality effectively, a Microsoft environment is required).

One may wonder what exactly is pragmatic vs. visionary at SYSPRO in this technology regard. Well, pragmatic is allowing customers to have a feature-rich system that evolves with their needs and when they are ready. Visionary is to say to the customers “You want the latest and greatest technologies and are ready for them? Then, we are ready to provide it to you!”

SYSPRO’s global distribution model is heavily geared towards partners for sales and implementations, which has also proven to be quite advantageous to the company. The partners are experts in both sales and implementations and have the regional and vertical market expertise. In each geographic region where SYSPRO has strong presence, the dominant sales and implementations model is via partnerships. Certainly, some direct sales and centralized corporate initiatives would entail vertical industry requirements definition, product extensions (via new e.net solutions), further corporate expansion and management of large global accounts.

In addition, while SYSPRO has amazingly broad and deep core functionality described earlier on, some customers require functionality that is even more business-specific. The SYSPRO environment gives its customers and partners the ability to develop around the core as a combined result of the embedded trigger functionality within the .NET environment, the graphical user interface (GUI) and pervasive Visual basic (VB.NET) scripting functionality. By accessing the business logic via Web Services, customers and partners can develop on any SOA-compliant platform without inhibiting the upgradeability of the core SYSPRO product and can do it fairly efficiently and cost-effectively .

TurtleSpice ERP! (Week 4)

2010-01-25T07:39:00.000-08:00

The story so far: Mike Chelonia, TurtleSpice’s comptroller, has been tasked to select an ERP system by his CFO. Facing pressure from his VP Wade Sharkey to short-circuit the selection process and select Big Gun Software, Mike gets a reprieve when Wade Sharkey is over-ruled by the CEO.

Now Mike has to decide how to handle TurtleSpice’s business process documentation. When we asked you what you’d do in Mike’s shoes, you voted to hire external consultants to train the TurtleSpice project team.

Don’t forget, you decide the fate of TurtleSpice’s ERP selection. Cast your vote at the bottom of this post!

turtlespice_logo.png
The three consultants from iRightPros Consulting storm into Mike’s office like a SWAT team. Offensive perimeter established: check. Evasive maneuvers neutralized: check.

They’re here to deliver their complimentary pre-proposal.

“Congrats, Mike, you’re making the right decision.”

“Haven’t made one yet. Still looking at a number of consulting firms.”

This isn’t true, really. The price is right, and they have an impressive client list in the manufacturing sector.

The consultants drag Mike through their approach to process documentation, and lay down a proposal for an action plan, which adds up to an intimidating number of workshops, meetings, reviews, and dispute resolution mechanisms.

“The beauty is, you can use this for anything you want. Do it once, use it for your software selection project, your org change management, your training processes, you name it.”

This is going to be a hell of a lot of work, thinks Mike. At least three months. He wonders if he can enlist his CFO’s help to steer this by the TurtleSpice selection team.

Unfortunately, lately the CFO has been stumbling around like he’s on the verge of a booze-fueled nervous breakdown. Not much help there.

Mike thanks the SWAT team for their invasion and promises to get back to them. They congratulate him again and move out with a little more swagger than he likes to see.

Enterprise Applications—The Genesis and Future, Revisited Part Six: Looking to the Future

2009-12-06T09:11:00.000-08:00

Today's enterprise applications are required as a matter of course to address more than the processes taking place within the walls of an enterprise. While Web-enablement and collaborative e-business will continue to be a major direction, easier enterprise applications integration and interconnectivity; more flexible pricing; embracement of "plug-and-play" applications that support commonly accepted standards (reflecting a reduced need to heavily customize multi-vendor solutions), embedding analytical applications; knowledge management (KM); and workflow and business process management (BPM) are some of the best prospects among the ongoing wave of enterprise applications hot-buttons. It is needless to say that almost all traditional ERP vendors (small and big alike) had to experience a "wake up call" and have long been trying to expand their product offering in tune with the ever-changing trends and requirements of the new collaborative economy. Multinational capabilities, product data management (PDM), APS, warehouse management, Web-based product configurators, and component (modularized) architecture might still be the order winners, but, we believe these functional and technological features are becoming demoted into commodities (order qualifiers).

The still untapped ERP mid-market segments have also vicariously benefited by learning from mistakes and failed ERP implementations in many commercial companies in the past. Additionally, many enterprise systems are now also componentized, which provides phased implementations in more manageable chunks (instead of a traditional "big bang" approach) in addition to vendors' developed implementation methodologies that are based on bypassing the usual traps of past failures. Many ERP systems have meanwhile also been Internet-enabled, which also allows for a quicker and simpler implementation, because client machines do not have to be configured time and again. Consequently, a prospective customer also has a choice of either installing software on its own intranet or renting it via an application service provider (ASP).

It is apparent that lately ERP has been redefined as a platform for enabling e-business globally. Originally focused on automating the internal processes of an enterprise, ERP systems have begun to include customer and supplier-centric processes as well, having thereby become universal business applications that encompass front-office; business intelligence; and e-commerce or supply chain management. Given the mere "ERP" moniker is no longer an acronym sufficient enough to cover the above scope, we would like to join in the above-mentioned buzzword frenzy with a new acronym—iERP, standing for inter(net)-enterprise resource planning, albeit we are full aware of the buzzwords' abundance in the market and its imperfection of not fitting the TLA description (see BLM—Buzzword Lifecycle Management).
As mentioned earlier, knowing the history and evolution of enterprise software is essential to understand its current application and its future developments. ERP was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one.

It should be noted that the underpinning of the most sophisticated business applications systems today still remains the same mathematical model introduced in the first MRP systems. This model of "what do I need, what do I already have, and what do I need to get and when" will be the backbone of the integrated, Internet-enabled supply chain.

Technology can never totally replace an effective demand management process. Therefore we have always regarded some analysts' hasty predictions of ERP's demise at the end of the 1990s as frivolous. The fundamental shortcomings of ERP revealed by the advance of technology and increasing customer demands have been addressed by extended-ERP point solutions (bolt-ons), and ERP vendors are expected to continue their quest for delivering more complete solutions. As mentioned earlier, there has been a renewed recognition that ERP is imperative to managing and controlling internal materials movements and processes, and it forms the foundation for collaboration, e-business, CRM, SCM, and so forth. Therefore, while the traditional introspective mind-set of ERP becomes history, its functionality remains critical. The "new economy" of the late 1990s will not have caused the obsolescence of general ledger (GL) and accounts payable and receivable (AP/AR) for example. Quite the contrary, it will have only emphasized their importance.

Still, one should ensure the transaction coherency that this extended scope of enterprise applications might likely hinder. In other words, unless all the functional modules have access to and use the same data in near real-time, unless all processes are fully integrated (so that, for example, a mobile sales representative can see the live inventory data for order promising), and unless users can seamlessly move from one module to another, we are not talking about coherency but rather about the hodgepodge of disconnected (or very loosely connected, in the best scenario) islands of information. While there is a promise of new technologies like portals, Web Services, layers of abstraction between application components, and so on, all to contribute to seamlessly connecting people, data and processes, that is still largely the most probable case within the context of a homogenous offering from a single vendor, and only whose all applications concurrently "look" at the same data.

Enterprise Applications—The Genesis and Future, Revisited Part Five: More on ERP Evolution

2009-12-06T09:09:00.000-08:00

Another important area of enterprise resource planning (ERP) vendors' functional expansion has been in the front-office and customer relationship management (CRM) arena, since customers are demanding applications and tools that allow them to link back-office ERP systems with front-office CRM systems. CRM has gone from a vast field of point solutions to suites of customer care applications covering SFA, field service, telesales, call center, marketing automation, etc. Today's enterprise applications are required as a matter of course to address more than the processes taking place within the walls of an enterprise. Almost all traditional ERP vendors (small and big alike) experienced a "wake up call" and have long been trying to expand their product offering in tune with the ever-changing trends and requirements of the new collaborative economy.

To that end, over the last few years, all significant enterprise applications players have been actively partnering or finding other ways to provide solutions that allow businesses to collaborate more effectively. Consequently, the boundaries between ERP, CRM, e-commerce, and SCM have blurred so much that any attempt to functionally separate them becomes ever more pointless. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the once-considered more remarkable and supposedly more relevant CRM and e-commerce activity.

The cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception. Otherwise, the prospective customer will end up on a competitor's list of customers. Therefore, the relative importance of CRM versus ERP, ERP versus SCM or of any other match-up is irrelevant. All of these functional areas are critical, except for some esoteric or autistic businesses that can get by with implementing islands of information.

The "64,000-dollar" question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer life cycle, product life cycle, and so on, to name but a few, will be a big determinant of losers and winners. As proof of the above might be the fact that the traditional large ERP providers like SAP, PeopleSoft, and Oracle can claim bigger CRM-related revenues than every pure-CRM vendor except for Siebel Systems that still clings to its CRM leadership position (see Comparison of ERP and CRM Markets' Life Cycle Snapshots). Some demarcation line here could be that ERP vendors are successfully selling into their manufacturing install base, while CRM specialists stronghold remains the service sectors where ERP as not gained much religion.
ERP software's scope has also recently gone beyond traditional transactional business functions by enabling organizations to deliver real-time performance analysis directly on the desktops of CFOs, CEOs, and other business managers. Major ERP vendors have been shifting focus from routine users' transaction requirements to the overall organization's business imperatives, thereby helping lines-of-business (LOB) become more knowledgeable and proactive. Instead of requiring a collection of processes, the system should appear to each user as a vast source of information. While relational databases, currently used by ERP systems, are good at retrieving a small number of records quickly, they are not good at retrieving a large number of records and summarizing them on request. Most ERP products have a rich database, but, translating the data stored within the database to information useful for making enterprise decisions has proven difficult. With the availability of software analytic solutions, several dozens of ERP providers can supply their customers with a valuable tool for harvesting the business value out of their database. Therefore, major ERP vendors have been increasingly embracing OLAP (On-line Analytical Processing) tools that provide a high-level aggregated view of data.

While ERP and analytics have been inseparable ever since the idea of business automation via IT way back in the 1960s, they have had different user experiences, evolutionary paths, and so on. Namely, although ERP systems have positively transformed many enterprises' business processes, many users have still been left feeling as oversold to, due to the overwhelming notion that these systems inhibit access to the vital information "jailed" in them. Often indeed, in most traditional ERP systems a number of financial activities are grouped together to form artificially created processes, which bear little resemblance to the actual business activities, such as ERP systems' focus had often appeared to only be getting the correct figures into the general ledger, which has a transactional glut as a result.

Contrary to traditional core ERP, business intelligence (BI)/analytics provides an environment in which business users receive information that is reliable, consistent, understandable and easily manipulated (i.e., flexible). Because C-level executives and middle management have always had a need to understand their business' performance regardless of good or bad economic times—while the output from BI might change, the need is always there. Particularly since the recent massive demise of dot-com's, the depressed economic times, and the stringent Sarbanes-Oxley Act (SOA) reporting regulatory requirements following up the high-profile corporate fraud scandals (such as Enron, Tyco, and WorldCom) have additionally increased executives' focus on understanding and managing corporate performance.

New disclosure rules are prompting companies to share information faster (for example, accelerated filing of 10Q quarterly statements and 10K annual reports, report sales of stock by executives (insider trading) within days of the transaction, expanded list of "significant events" to include changes in debt ratings, inclusion of financial results of partnerships in earnings reports, etc.), and sophisticated data-collection and data-analysis applications come in handy in that regard. Given that the BI tools have neither been terribly complex nor expensive to deploy, but have still been helpful in facilitating the decision-making process, they have lately become considered necessary rather than as a luxury. Also, decisions are nowadays increasingly made at ever lower levels in organizations. For more information, see Business Intelligence Success, Lessons Learned.

To that end, various enterprise business intelligence (BI) solutions enable organizations to track, understand, and manage enterprise performance, and they leverage the information that is stored in an array of corporate databases/data-warehouses, legacy systems, and diverse enterprise applications. The latest evolutionary step introduces the concept of corporate performance management (CPM) (often interchangeably referred to as enterprise performance management [EPM] or business performance management [BPM], too), which is an emerging portfolio of applications and methodology with business intelligence (BI) architectures and technologies at its core. Historically, BI applications have focused on measuring sales, profit, quality, costs and many other indicators within an enterprise, but CPM goes well beyond these by introducing the concepts of management and feedback, i.e., by embracing processes such as planning and forecasting as core tenets of a business strategy.

For the above reasons, the vendor landscape remains diverse, with every vendor, including many ERP aspirants, touting some (or nearly total) CPM capabilities. Thus, the arms race to marshal the most complete CPM platform has lately intensified; see BI Market Consolidation Compared to ERP Market Consolidation.

Enterprise Applications—The Genesis and Future, Revisited Part Four: Another Step in ERP Evolution

2009-12-06T09:08:00.000-08:00

Hence, enterprise resource planning (ERP) has entered another step in its evolution. While ERP packages traditionally excelled at combining financial control with multi-plant manufacturing and distribution coordination, they generally lacked extended planning and flexible execution functionalities beyond the four walls of the enterprise that can enable one business process today but change rapidly to handle tomorrow's new models. They were also often found lacking when it comes to delivering special financial features such as robust budgeting or international consolidation, summarized data for analysis and trending, as well as in handling real-time, physical events that occur on the factory floor, as opposed to the transaction-oriented bookkeeping functions (see Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM).

Therefore, there has been the imperative for the new generation of enterprise applications to be more customer-focused and to extend beyond the enterprise through e-commerce interaction and collaboration with business partners. The key to the Internet-driven, dynamic trade environment is agility, which is where traditional ERP packages have stumbled in the past. Thus, early ERP adopters discovered to their dismay that implementing these systems was only the first step toward creating a competitive information technology infrastructure. They and new users alike are now looking for significantly more comprehensive functionality—from advanced planning and scheduling (APS) (see Glossary*) and manufacturing execution systems (MES), to sales force automation (SFA) and even broader CRM;, to business intelligence (BI) and business-to-consumers (B2C); and business-to-business (B2B) e-business tools to name only some —and demanding that they be integrated into their ERP backbone (see Can ERP Meet Your eBusiness Needs?).

Users' visions of ERP are evolving from tactical to strategic, and users are no longer willing to choose between integration and function, since the "one-stop-shop" offering should mean that the releases are synchronized and the integration is maintained amongst all the components. ERP users who have gone live in the past several years have been making purchases of extended-ERP products (bolt-ons) to provide tangible return on investment (ROI) for their multi-million dollar investment. Recently, the enterprises have begun to analyze the viability of IT investments in a quantified manner, instead of doing only feasibility studies, which would consider only whether implementation of a system is possible but not whether it makes viable business sense. For more information, see Justification of ERP Investments; Part 1: Quantifiable Benefits from an ERP System.

Therefore, in response to the above-mentioned inadequacies of ERP software, a new breed of the above-mentioned specialized software has long emerged, named collectively as "ERP extension" software. These components can either be installed standalone or bolted onto existing ERP instances. They can usually be implemented relatively quickly and at a relatively low price, with much more immediate and quantifiable cost savings to the user. Accordingly, during the last several years, the functional perimeter of ERP systems has begun an expansion into these adjacent markets, as most ERP vendors have been busy developing, acquiring, or bundling new functionality so that their packages go beyond the traditional realms of finance; materials planning and management; and HR/payroll management.

As a result, many pundits have also jumped at the opportunity to name this new evolutionary phase by inventing names and acronyms like extended-ERP, ERP II, enterprise business applications (EBA), enterprise commerce management (ECM), comprehensive enterprise applications (CEA) and so on. More important than this contest for creating the catchiest buzzword, possibly in the unofficially accepted ideal form of TLA (three letter acronym), is the fact that most of these notions signify the evolution or enhancement of ERP, rather than its replacement or obsolescence.

Namely, we believe that, within recent years, ERP has been redefined as a platform for enabling collaborative e-business globally. Originally focused on automating internal processes of an enterprise, extended ERP systems increasingly include customer and supplier-centric processes as well. The conclusive evidence of this redefinition is the move of all major traditional ERP players into CRM, e-commerce, and SCM applications, which is the best illustrated by SAP's SCM revenue exceeding the former leaders i2 Technologies, Ariba, and Manugistics..
The reason for ERP vendors tackling SCM first might be the fact that, to circumvent MRP II's capacity planning limitations, planners have long turned to various ways of off-line (at first, given today's increasing use of memory resident, real-time systems) capacity planning: either manually, with the help of spreadsheet programs, or with the help of relatively new APS systems. APS systems were originally designed as bolt-ons with the idea of plugging into an ERP system's database to download information and then create a feasible schedule within identified constraints, such as finite capacity. The new schedule can then be uploaded into the ERP system thereby replacing the original MRP results. These APS systems typically offer simulation ("what if") capabilities that allow the planner to analyze the results of an action before committing to that action through the ERP system. Some of these systems go even one step further by offering optimization capabilities. They automatically create multiple simulations and recommend changes in the supply chain within the existing constraints. For more information, see Advanced Planning and Scheduling: A Critical Part of Customer Fulfillment.

Further, APS is a subset of supply chain planning (SCP) applications that are designed to provide forward-looking options for future time horizons, by sitting on top of a current transactional system (most often ERP) to provide planning, "what-if" scenario analysis capabilities and real-time demand commitments. SCP typically deals with activities such as developing demand forecasts, establishing relations with suppliers, planning and scheduling manufacturing operations, and developing metrics to ensure efficient and cost-effective operations. It also includes the determination of marketing channels; promotions; respective quantities and timing; inventory and replenishment policies; and production policies. Thus, the typical SCP modules would include network planning; capacity planning; demand planning; manufacturing planning and scheduling; and distribution and deployment planning.
On the other hand, while most traditional ERP software enables the integration and management of critical data within enterprises, companies have increasingly recognized the need to deploy more advanced software systems that manage the global supply chain by enhancing the flow of information to and from customers, suppliers, and other business partners outside the enterprise. More recently, the availability and use of the Web has created a demand for software that operates across the Internet and intranets. This global logistics concept merged the above described constraint-based optimization solutions called APS and specialized warehouse and transportation management software (WMS/TMS), resulting in more encompassing SCM, which should include all the processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies (see The Essential Supply Chain).

APICS Dictionary, the 10th Edition defines SCM as

"The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally."

In other words, at a high level, the SCM software scope could be segmented into supply chain planning (SCP) and supply chain execution (SCE), while strategic sourcing, procurement, spend management, supplier relationship management (SRM), and product lifecycle management (PLM) components are still considered the extension of the SCM rather than its constituents. Execution functions manage effective procurement and supply of goods and services across a supply chain to ensure completion of the plans, including creating purchase orders, taking customer orders, updating inventory, managing movement of products in the warehouse, and delivering goods to the customer. Hence, SCE includes light/assembly manufacturing, warehouse, and transportation execution systems, and systems providing visibility across the supply chain, given more comprehensive SCE suites have lately evolved consolidating execution components, such as WMSs, TMSs, distributed order management systems, and supply chain inventory visibility (SCIV), to provide a more unified solution to manage the outbound logistics process.

Still, there are two important business problems associated with today's manufacturing planning, materials planning and supply chain environments:

1. SCP applications need to address the lack of accurate logistics costs and service information that would enable more optimized decisions across the entire supply chain. SCP typically generates weekly or daily plans (in a better case scenario), but without adequately addressing the issues that arise almost every instant in dynamic logistics environments. Thus, plans are often invalid as soon as they have been made, while a mere re-planning does not answer the question what went wrong in the first place (i.e., there is no facility to learn from prior plans' inadequacy).

2. SCE applications need to further address the lack of real-time inventory visibility and event management feedback information needed for SCP to respond to frequent supply chain changes when building and executing manufacturing and materials plans.

The demand for near real-time supply chain collaboration will, in turn, place an increasing emphasis on any company's ability to immediately commit itself to promising orders' delivery dates on a global basis and to consistently meet those commitments ever after. This ATP/capable-to-promise (CTP) aptitude will be made more complex as companies rely on an increasing number of business partners and suppliers to procure raw materials, assemble, and deliver finished goods. SCE is therefore gaining increasing awareness among companies that realize that planning can do only so much without the ability to make the right and timely decisions and execute on the shop floor, in the warehouses or within the entire distribution chain

How the Mining Industry Benefits from ERP Systems

2009-12-06T09:07:00.002-08:00

Mining is a multifaceted business, one that in many ways parallels a repetitive manufacturing business. The analogy is that exploration and marketing for a mining company, for example, is similar to the marketing research performed by a manufacturer, although a noted difference between the two is that most mines are of sizes to support decades of operation, whereas a manufacturer’s production runs last for much shorter durations.

Here in this article, a loose comparison is drawn between the mining industry and the manufacturing industry, and suggested is a method to follow in order to integrate financial reporting so that auditors can verify results. It concludes with concepts that are required to manage the entire organization.

In a mining company, each department has its own way of measuring outputs, which often is incompatible with legal or shareholder requirements. An enterprise resource planning (ERP) system allows each department to use its own reporting measures. The ERP software transforms data bidirectionally to the standard (legal) business reporting. However, it is this use of disparate methods by departments that causes confusion within the mining company.

The manufacturing industry has learned that integrated scheduling, materials management, production manufacturing, and distribution are the keys to profitability. Yet in a mining company, what is understood in one business department, if managed by non-ERP software such as spreadsheets and tailored stand-alone software, is that financial integration is time-consuming and fraught with errors, and it does not allow a coherent view of the company’s operations or a true measure of annual profit.

Table 1 depicts similarities between the basic departmental structure of a mining company and a manufacturer, but this article focuses specifically on one overview of the departmental structure of mineral mining.

	Major Mining Company Departments	Major Manufacturer Departments

1.	exploration	market research and product development
2.	ore extraction and excavation	raw material acquisition
3.	transportation	transportation
4.	smelting	manufacturing
5.	sales and marketing	sales and marketing
6.	human resources	human resources

Table 1. The corresponding departments of mining companies and manufacturers.

The Departments of a Mining Company

1. Exploration
Geologists are the mining company’s major explorers. Often the geologist’s work is to follow the ore vein at an existing mine, other times it is fieldwork. The geologist collaborates with the mining engineer in exploration and in extending operations at an existing site.

In the past, the land to be surveyed was walked; samples taken were labeled and put into knapsacks for later analysis. Newer methods now use aircraft with instrumentation to look at anomalies to the earth’s magnetic field as well as at soil colorations and vegetation as indications of vast ore bodies lying beneath the earth’s surface. This primary information is used to limit where the geologists begin the on-foot exploration and the extent of their survey. Once a potential ore-bearing area is targeted, the geologist arrives to take samples.

After a potential ore body is discovered, a secondary, in-depth analysis is performed to determine the economics of building a mine. Other (chemical) research determines the amount of the ores’ accompanying minerals, such as sulfur, gold, uranium, and others. Exploration costs include salaries, camps, insurances, aircraft and electromagnetic equipment, and other machinery and materials needed to estimate the ore body size.

Financial considerations that come after an adequate “ore body size” has been confirmed include a lifetime estimate of the mine (based on a prescribed rate of depletion), labor, installation and amortization of fixed assets; cost of converting currency and royalties; and taxes. All things being favorable, the infrastructure planning for roadways, railways, and so forth is done in conjunction with the ore extraction department.

Exploration costs are based on overheads and on time and materials. Typically, this cost is converted to a per diem charge (dollars per day, amortized over a year).

2. Ore Extraction and Excavation
In a typical manufacturing company, a production order is issued to respond to a sales order, sales contract, or a marketing request to make goods to forecasted sales. The mining industry operates in a similar way. The mining sales contract is more often a multiyear (10 years or more) deal. This deal marks the beginning of the refining or smelting process. Multiple sales contracts combined initiate the mining of the ore. Extraction and transportation of the ore is subject to sales and to seasonal requirements, and these operations are managed by the geologist and the engineering groups. In the extraction environment, analysis is performed to determine decline (the angle of a tunnel or the angle of the walls) at an open pit. This ongoing work allows for maximizing safety while ensuring the lowest cost of excavation possible as the dig expands. Too sharp an angle increases risk of collapse, whereas too shallow an angle cuts into the available area for excavation.

At a working mine, consumables and spare machinery parts are inventoried. Geologists now active in the quality control (QC) role measure the quality of the excavated material and its accompanying minerals. Extraction may be performed by many means, including strip, pit, or in-situ mining (the latter of which uses solutions to dissolve desired metals). As much as possible, the ore is separated from the soil and other accompanying material.

New environmental laws require mining companies to minimize the pollution they might create, with overburden being a prime example. Overburden is the unwanted material that is excavated along with the ore. After separation from the ore, overburden is spread over the exhausted area and covered with topsoil. Other pollutants are recyclable, permitting reuse with a minimal increase in excavation costs. Typically, the financial exercise at the mine is to derive a standard cost per metric ton of metal and to establish a standard quantity of ore that can be extracted to produce a metric ton of metal.

Consumables (e.g., diamond drill bits, dynamite, chemicals, fuel, food, etc.) and fixed assets (e.g., buildings, heavy haul equipment, generators for electricity, air conditioning, etc.) are factored into the cost equation.

Amortizations, depreciation, and the like feed into a set of financial ledgers, weighting factors, and a few transformation rules assigned to each variable, when manipulated, and a cost per metric ton of the ore is derived.

3. Transportation
In the transportation department of large manufacturing organizations, management (logistics) plays a major role in minimizing costs and optimizing delivery routes. But companies in the mining industry have a larger requirement. These companies often need to build their own routes as well as purchase all their rolling stock, since mines are usually located some distance from the smelter or the stockpile area. This stockpile area could be at a wharf, at a smelter, or can even be the ore in transit. (In transit, ore and refined metal are parts of the inventory, and they are added to the measured inventory).

Specific to the mine operation are capital investments for roads, railways, and wharfs and barges needed to haul the ore to the smelter or the delivery of work-in-process metal or finished goods. Actual transportation of product requires another method of costing, based on weight and distance. Truck, rail, and boat each have their weight-distance rates. Costs for fixed assets (overhead cranes or vehicles required for ore transfer from one form of transport mode to another, based on destination) are apportioned out. The operational costs are generally converted and blended to provide an amount per ton–kilometer.

Project-Oriented Versus Generic GL-Oriented ERP/Accounting Systems

2009-12-06T09:07:00.001-08:00

The unique business needs of project-oriented organizations, when addressed by large ERP vendors that offer general-purpose enterprise software, require heavy customization in order to work. On the other hand, when project-oriented organizations turn to small off-the-shelf project-management solutions, these solutions are soon outgrown by the user company. These organizations are looking for systems to support the project manager, who is responsible for sharing and tracking the revenue, expense, and profitability of a project. Most enterprise-wide business systems sold by software vendors are general purpose in design and without significant tweaking, they do not address many of the unique requirements of businesses engaged primarily in providing products and services under project-specific contracts and engagements.

Project-oriented organizations have many project-specific business and accounting requirements including the need to track costs and profitability on a project-by-project basis, to provide timely project information to managers and customers, and to submit accurate and detailed bills/invoices, often in compliance with complex industry-specific and regulatory requirements. Yet, traditional generic GL-oriented accounting systems have not been designed with project phases, work breakdowns or detailed time capturing in mind, and thus, they can merely report how much has been spent or collected, but not why a certain project is losing or winning money.

Not many enterprise products will support the following project-based processes: job costing, managing the sub-contactor, financial reporting, managing the workforce, process time and expense, winning new business, purchasing goods and services, managing the project, and build to order. If these high-level processes sound too ordinary, then digging to a level deeper might reveal their true intricacy and attention to detail such as employee time, billing rates, budgeting, collections, or project proposals, which are supported by only a few vendors.

For example, the job costing process can be broken down into the following steps: setup project work breakdown structure (WBS), pay suppliers, pay employees, accrue purchase orders, allocate indirect costs, calculate estimated time to completion, calculate contract ceilings, compute revenue, bill customer, and report the project status. The process time and expense cycle would have the following steps: create project, create project workforce, enter timesheets by project, enter labor adjustments, enter travel expenses, apply project business rules, approve time and expenses, pay expenses and payroll, bill expenses and payroll, revenue recognition and project status reports (PSRs, which are used for period reporting on a project/task/phase level, and which can be regarded as the financial statement for the project).

The managing-the-project process would feature the following detailed steps: create opportunity plan, establish detailed scope of services, create project plan with work breakdown structure (WBS), establish task schedules, search and add resources to plan, establish budget at resource level, add consultant and expenses to project plan, add direct costs for plan, establish profit performance, save baseline budget, monitor time and expense costs, monitor schedule projected profit and revenue, and submit the project deliverables and closeout project. A build-to-order process would involve ERP materials management functionality through support for the following steps: customer demand, bills of materials (BOM)/routings, engineering change notice (ECN), materials requirement planning (MRP), capacity planning, purchase requisition/order, receiving and quality assurance, fill inventory, issue manufacturing orders, final subassembly and finished goods, customer delivery, billing, revenue recognition, and PSR.
Furthermore, many project-oriented organizations provide products and services under government contracts, and project accounting for these organizations often requires the use of sophisticated methodologies for allocating and computing project costs and revenues. There are many different types of contracts governments use and within each of those there are dozens or more variations, whereby each variation will drive its own type of billings, revenue recognition and requirements for reporting back to the government customer. Due to expected increases in defense and national security spending, US federal government contract spending and activity is also expected to increase in the next several years (see Fed Gives ERP A Shot In The Arm).

The US government requires its contractors to collect and allocate costs in certain ways; for example, according to the Defense Contract Audit Agency (DCAA) rules, labor costs must be recorded daily. Also, a contractor is required to keep track of several contracts simultaneously, meeting the rules for different types of contracts and being consistent in accounting for a number of indirect costs. According to the Small Business Administration Pro-NET sourcing service database, there are tens of thousands of small and minority-owned companies that are doing business with the federal government. With the new emphasis on improving homeland security and expanding anti-terrorism operations around the world, many of these firms will likely experience significantly greater demand for their services and grow rapidly over the next several years.
Additionally, service business application software systems are expanding as a result of a number of economic trends. Service organizations traditionally have utilized project accounting more than manufacturing firms due to the need to customize services for each client and to properly allocate the associated revenues and costs. Therefore, as the shift from a manufacturing-based economy to a service-based economy continues, the market for project-oriented organizations is expanding. Furthermore, the trend towards outsourcing an increasing range of activities broadens the market for project-oriented organizations as both customers and vendors need to track the costs associated with their projects.

Finally, many organizations with significant internal development activities can benefit from the use of project accounting systems to closely monitor progress and costs. Also, although somewhat conversely, more progressive firms may even try to boost their marketing, advertising, and PR expenditures in order to gain more project contracts during the market contraction, where for example, a proposal automation capability can come in handy. While project management and resource planning software applications help service organizations deliver within a budget, in the long term, these organizations need to win a new stream of projects or customers, which involves pre-sales customer relationship management (CRM), marketing and proposal management, and post-sales elements like travel and expense (T&E) management.

As the number and type of project-oriented and professional service organizations increases, such businesses are demanding increasingly sophisticated tools to address their core information and accounting needs, including project accounting, employee time collection, project budgeting, project reporting, CRM, sales force automation (SFA), and proposal generation. At the same time, these organizations are recognizing that because most aspects of their businesses revolve around their customer project relationships, they can achieve efficiencies in a number of project accounting and core back-office business functions. These accounting and business functions such as general ledger, accounts payable, accounts receivable, materials management, and human resources, are supported through the use of software applications designed to address the special needs of project-oriented organizations. Like other businesses, project-oriented and professional services organizations are also demanding solutions that allow them to combine their business software applications into a single integrated, enterprise-wide system.

Time is of the essence for any business that bills for its services rather than sells a physical product, but the concept can be particularly tricky for design/construction firms that may need billing at different rates depending on, for example, project phase, task, client type, or escalation clause. At the same time, the industry is quite fragmented, with legions of specialist contractors, and it also has a long tradition of technophobia.

Project-Oriented Versus Generic GL-Oriented ERP/Accounting Systems

2009-12-06T09:05:00.000-08:00

Project-oriented versus Generic GL-oriented ERP/Accounting Systems

2009-12-06T09:04:00.000-08:00

The unique business needs of project-oriented organizations, when addressed by large ERP vendors that offer general-purpose enterprise software, require heavy customization in order to work. On the other hand, when project-oriented organizations turn to small off-the-shelf project-management solutions, these solutions are soon outgrown by the user company. These organizations are looking for systems to support the project manager, who is responsible for sharing and tracking the revenue, expense, and profitability of a project. Most enterprise-wide business systems sold by software vendors are general purpose in design and without significant tweaking, they do not address many of the unique requirements of businesses engaged primarily in providing products and services under project-specific contracts and engagements.

Project-oriented organizations have many project-specific business and accounting requirements including the need to track costs and profitability on a project-by-project basis, to provide timely project information to managers and customers, and to submit accurate and detailed bills/invoices, often in compliance with complex industry-specific and regulatory requirements. Yet, traditional generic GL-oriented accounting systems have not been designed with project phases, work breakdowns or detailed time capturing in mind, and thus, they can merely report how much has been spent or collected, but not why a certain project is losing or winning money.

Not many enterprise products will support the following project-based processes: job costing, managing the sub-contactor, financial reporting, managing the workforce, process time and expense, winning new business, purchasing goods and services, managing the project, and building to order. If these high-level processes sound too ordinary, then digging to a level deeper might reveal their true intricacy and attention to detail such as employee time, billing rates, budgeting, collections, or project proposals, which are supported by only a few vendors.

For example, the job costing process can be broken down into the following steps: setup project work breakdown structure (WBS), pay suppliers, pay employees, accrue purchase orders, allocate indirect costs, calculate estimated time to completion, calculate contract ceilings, compute revenue, bill customer, and report the project status. The process time and expense cycle would have the following steps: create project, create project workforce, enter timesheets by project, enter labor adjustments, enter travel expenses, apply project business rules, approve time and expenses, pay expenses and payroll, bill expenses and payroll, revenue recognition, and project status reports (PSRs), which are used for period reporting on a project/task/phase level, and which can be regarded as the financial statement for the project.

The managing-the-project process would feature the following detailed steps: create opportunity plan, establish detailed scope of services, create project plan with work breakdown structure (WBS), establish task schedules, search and add resources to plan, establish budget at resource level, add consultant and expenses to project plan, add direct costs for plan, establish profit performance, save baseline budget, monitor time and expense costs, monitor schedule projected profit and revenue, and submit the project deliverables and closeout project. A build-to-order process would involve ERP materials management functionality through support for the following steps: customer demand, bills of materials (BOM)/routings, engineering change notice (ECN), materials requirement planning (MRP), capacity planning, purchase requisition/order, receiving and quality assurance, fill inventory, issue manufacturing orders, final subassembly and finished goods, customer delivery, billing, revenue recognition, and PSR.

Dealing with Government Contracts

Furthermore, many project-oriented organizations provide products and services under government contracts, and project accounting for these organizations often requires the use of sophisticated methodologies for allocating and computing project costs and revenues. There are many different types of contracts governments use and within each of those there are dozens or more variations, whereby each variation will drive its own type of billings, revenue recognition and requirements for reporting back to the government customer.
The US government requires its contractors to collect and allocate costs in certain ways; for example, according to the Defense Contract Audit Agency (DCAA) rules, labor costs must be recorded daily. Also, a contractor is required to keep track of several contracts simultaneously, meeting the rules for different types of contracts and being consistent in accounting for a number of indirect costs. According to the Small Business Administration Pro-NET sourcing service database, there are tens of thousands of small and minority-owned companies that are doing business with the federal government. With the new emphasis on improving homeland security and expanding anti-terrorism operations around the world, many of these firms will likely experience significantly greater demand for their services and grow rapidly over the next several years.

Expanding Market

Additionally, service business application software systems are expanding as a result of a number of economic trends. Service organizations traditionally have utilized project accounting more than manufacturing firms due to the need to customize services for each client and to properly allocate the associated revenues and costs. Therefore, as the shift from a manufacturing-based economy to a service-based economy continues, the market for project-oriented organizations is expanding. Furthermore, the trend towards outsourcing an increasing range of activities broadens the market for project-oriented organizations as both customers and vendors need to track the costs associated with their projects.

Finally, many organizations with significant internal development activities can benefit from the use of project accounting systems to closely monitor progress and costs. Also, although somewhat conversely, more progressive firms may even try to boost their marketing, advertising, and PR expenditures in order to gain more project contracts during the market contraction, where for example, a proposal automation capability can come in handy. While project management and resource planning software applications help service organizations deliver within a budget, in the long term, these organizations need to win a new stream of projects or customers, which involves pre-sales customer relationship management (CRM), marketing and proposal management, and post-sales elements like travel and expense (T&E) management.

As the number and type of project-oriented and professional service organizations increases, such businesses are demanding increasingly sophisticated tools to address their core information and accounting needs, including project accounting, employee time collection, project budgeting, project reporting, CRM, sales force automation (SFA), and proposal generation. At the same time, these organizations are recognizing that because most aspects of their businesses revolve around their customer project relationships, they can achieve efficiencies in a number of project accounting and core back-office business functions. These accounting and business functions such as general ledger, accounts payable, accounts receivable, materials management, and human resources, are supported through the use of software applications designed to address the special needs of project-oriented organizations. Like other businesses, project-oriented and professional services organizations are also demanding solutions that allow them to combine their business software applications into a single integrated, enterprise-wide system.

Time is of the essence for any business that bills for its services rather than sells a physical product, but the concept can be particularly tricky for design/construction firms that may need billing at different rates depending on, for example, project phase, task, client type, or escalation clause. At the same time, the industry is quite fragmented, with legions of specialist contractors, and it also has a long tradition of technophobia.

Essential ERP - Its Functional Scope

2009-12-06T09:03:00.000-08:00

The comprehensive definition of enterprise resource planning (ERP) software is a set of applications that automate finance and human resources departments and help manufacturers handle jobs such as order processing and production scheduling.

ERP began as a term used to describe a sophisticated and integrated software system used for manufacturing. In its simplest sense, ERP systems create interactive environments designed to help companies manage and analyze the business processes associated with manufacturing goods, such as inventory control, order taking, accounting, and much more. Although this basic definition still holds true for ERP systems, today its definition is expanding.

Savvy ERP users, increasing customer expectations, changes in manufacturing requirements, and technology's relentless pursuit of innovation are just some of the forces reshaping the definition of ERP. In today's dynamic and turbulent business environment, there is a strong need for organizations to become globally competitive. The survival guide to competitiveness is to be closer to the customer and deliver value-added product and services in the shortest possible time. This, in turn, demands integration of the business processes of an enterprise, which is the stronghold of ERP.
Today's leading ERP systems group all traditional company management functions (finance, sales, manufacturing, human resources) and include, with varying degrees of acceptance and skill, many solutions that were formerly considered peripheral (product data management (PDM), warehouse management, manufacturing execution system (MES), reporting, etc.). While during the last two years the functional perimeter of ERP systems began an expansion into its adjacent markets, such as supply chain management (SCM), customer relationship management (CRM), business intelligence/data warehousing, and e-Business, the scope of this document is limited to the traditional ERP realms of finance, materials planning, and human resources.

The Three Major Functional areas of ERP are as follows:

* Manufacturing & Logistics

* Finance & Accounting

* Human Resources & Payroll.

This encompasses a group of applications for planning production, taking orders, and delivering products to the customer. Some of its most common modules and their high-level functions are:

Operations (Production) planning - Performs capacity planning and creates a daily production schedule for a company's manufacturing plants. It involves forecasting, production scheduling and material planning, etc.

Engineering - Provides the ability to integrate at the engineering level to ensure accurate updated product information. It involves bills of materials & routings creation, engineering change management, etc.

Shop floor control - Provides control and tracking of the status of production orders in the plant. It involves production orders dispatching, capacity planning, resource allocation, production tracking & reporting, waste/reject tracking, etc.

Procurement management - Controls purchasing of raw materials needed to build products. Manages inventory stocks. It involves creating purchase orders/contracts, supplier tracking, goods receipt & payment, etc.

Order entry and processing - 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.

Sales, marketing, and after sales - Provides a basic functionality for lead tracking, customer information, quote processing, commissions & rebates, etc.

Warehouse (Inventory) management - Maintains records of warehoused goods and processes movement of products through warehouses.

Distribution (Transportation) management - Arranges, schedules, and monitors delivery of products to customers via trucks, trains, and other transport means. It involves transportation planning and execution, loading and shipping documentation, etc.

Project management - Monitors costs and work schedules on a project-by-project basis. It usually includes the following sub-modules: project control, project analyzer, project budgeting, project timekeeping, project billings, contract management, and workflow communicator.

Plant maintenance - Sets plans and oversees upkeep of internal facilities. It enables the control of every aspect of both routine and unscheduled equipment maintenance so as to provide uninterrupted work order process.

Customer service management - Administers installed-base service agreements and checks contracts and warranties when customers call for help.

Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM Part Two: Challenges

2009-12-06T09:02:00.000-08:00

Naturally, financial reporting and forecasting analytic solutions will have weaknesses. For one, they are still limited to only the data within general ledgers. Optimizing financial management processes is only a first step on the road to their better alignment with other organizational business processes. Hence, various enterprise business intelligence (BI) solutions enable organizations to track, understand, and manage enterprise-wide performance, and they leverage the information that is stored in an array of corporate databases/data-warehouses, legacy systems, enterprise resource planning (ERP), supply chain management (SCM) or customer relationship management (CRM) applications.

Once limited to the finance department of large companies, BI/analytics has expanded across departments and now even addresses the needs of customers, suppliers, and partners outside of the firm, given that if BI can help any department understand and serve customers better, that should in turn lead to better financial results. Companies have become adept at storing huge quantities of data on customers, products, and employees. However, this valuable data is often wasted, because it is analyzed in pockets, thus preventing valuable insight throughout the enterprise and beyond. To that end, nowadays, popular uses of BI include management dashboards and scorecards, collaborative applications, workflow, analytics, enterprise reporting, financial reporting, and both customer and partner extranets, to name some. These solutions enable companies to, for example, gain visibility into their business, acquire and retain profitable customers, reduce costs, detect patterns, optimize the supply chain, analyze project/product portfolio, increase productivity, and improve financial performance.
The latest evolutionary step introduces the concept of corporate performance management (CPM), which is often interchangeably referred to as enterprise performance management (EPM) or business performance management (BPM), and is an emerging portfolio of applications and methodologies with business intelligence (BI) architectures and technologies at its core. Historically, BI applications have focused on measuring sales, profit, quality, costs, and many other indicators within an enterprise, but CPM goes well beyond these by introducing the concepts of management and feedback, i.e., by embracing processes such as planning and forecasting as core tenets of a business strategy.

CPM also crosses traditional department boundaries (i.e., silos) to manage the full life cycle of business decision-making, combining business strategy alignment with business planning, forecasting, and modeling capabilities. In other words, it would entail mapping a structured set of data against predefined reports, alerts, dashboards, analysis tools, key performance indicators (KPIs), etc., to monitor and improve business processes based on the upfront established corporate strategic objectives. Further, CPM creates a closed-loop process, starting with developing high-level corporate goals and subsequent predefined KPIs, through measuring actual results against the KPIs and representing this comparison in a scorecard, with the results reported to management through intuitive reporting tools, and ultimately feeding these results back into the business modeling process for corrections in the next planning cycle.

CPM leverages the performance methodologies such as the balanced scorecard or activity-based costing (ABC), and although these approaches help determine how and what to measure, they lack a mechanism for dynamically changing values to keep abreast of the business reality. Ensuring the closed-loop management is CPM's enhancement of BI applications, which traditionally focus on measurement, which is basically worthless without the ability to act on it. Consequently, a perplexing variety of existing tools and techniques can lay claim to being part of the CPM trend—ranging from business intelligence tools and analytics (e.g., packaged data-marts; data mining tools; extract, transform and load [ETL] tools; and dashboards or executive information system [EIS]) to BPM applications and scorecard products.

Thus, CPM is the evolutionary combination of technology and philosophy, building on the foundation of technology and applications that many enterprises will have likely already implemented. The demand for these applications lies in the fact that they incrementally add value to already installed business applications, even the legacy ones, to a degree that the enterprises may finally see some long belated benefits and feel somewhat better about implementing cumbersome ERP systems. Indeed, many enterprises have already deployed some BI products too, such as querying and reporting tools, planning and budgeting applications, analytic applications, incentive management systems, portals, and scorecards, along with data warehouse technology, data models, and integration software, and what not. Anyone attempting to conduct the technology inventory stocktaking will likely find some CPM components already in use.

Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM Part One: Executive Summary

2009-12-06T08:58:00.000-08:00

While ERP/accounting back-office systems and analytics have been inseparable ever since the idea of business automation via IT formed way back in the 1960s, they have nonetheless had different user experiences, evolutionary paths, and so on. Namely, although ERP systems have positively transformed many enterprises' business processes, many users have still been left feeling they were oversold due to the overwhelming notion that these systems inhibit access to the vital information "jailed" in the system. Many have inevitably felt that mixing real time back-office transactions with astute reporting is like mixing oil and water.

Business intelligence (BI)/analytics provides an environment in which business users receive information that is reliable, consistent, understandable and easily manipulated (i.e., flexible). C-level executives and middle management have always had a need to understand their business's performance regardless of good or bad economic times—while the output from BI might change, the need is always there. Particularly the recent massive demise of dot-coms, depressed economic times, and the stringent Sarbanes-Oxley Act (SOA) reporting regulatory requirements following up the high-profile corporate fraud scandals (e.g., Enron, Tyco, and WorldCom) have additionally increased executives' focus on understanding and managing corporate performance.

New disclosure rules are prompting companies to share information faster (for example, accelerated filling of 10Q quarterly statements and 10K annual reports, report sales of stock by executives [insider trading] within days of the transaction, expanded list of "significant events" to include changes in debt ratings, inclusion of financial results of partnerships in earnings reports, etc.), and sophisticated data-collection and data-analysis applications come in handy in that regard. Given that the BI tools have neither been terribly complex nor expensive to deploy, but have still been helpful in facilitating the decision-making process, they have become considered necessary rather than only a luxury. Also, decisions are nowadays increasingly made at ever lower levels in organizations.
On the other hand, the financial statement reporting process been important ever since the establishment of capitalist business practices. In addition to the tight economy's revelations of many companies' inability to proactively manage their financial performance (thus, repeatedly missing earnings and, in a knee-jerk fashion resorting time and again to last-minute layoffs, restructuring and operational expenditure freezes), its importance has particularly been emphasized with the outbreak of attention now being paid to the above-depicted accurate and certifiable reporting to external markets and government agencies.

However, creation, maintenance, and dissemination/publishing of financial statements (e.g., profit and loss [P&L] statements, balance sheets, and cash flow reports) have traditionally been maintenance-intensive tasks, with users expending significant effort just to meet basic requirements. Not to mention that everyone amongst the top brass always wants something more and different, such as different views, complex comparative reports, and drill-down analyses, but still within the familiar form of the financial statements.

Unfortunately, the financial reporting programs delivered with the traditional back-office financial management and accounting applications have proven only their rudimentary or pesky nature. Consequently, financial savvy users, having a strong preference to see results in the traditional P&L statement or balance sheet form, have long sought for ways to improve the report creation and maintenance process. On the other hand, the formatting and calculation constraints of the above statements, which require user-defined sorting and grouping, have been nearly impossible for generalist BI providers to fully accomplish.
Most ERP products have a rich database, but, translating the data stored within the database to information useful for making enterprise decisions has proven difficult. With the availability of software analytic solutions, dozens of ERP providers can supply their customers with a valuable tool for harvesting the business value from the database. For example, the list of current back-office solutions whose GLs have been integrated with FRx financial reporting analytic solutions is impressive, and the following are just some more prominent ones: Advanced Data Systems, Best Software, Epicor Software, Expandable Software, Flexi International, Geac Enterprise Solutions, IQMS, Made2Manage Systems, MAPICS, McKesson, Ross Systems, Softrax Corporation, and naturally MBS Great Plains and Solomon (the integration with Navision and Axapta is under way). Other financial reporting providers like F9 or Timeline have almost as impressive a list of ERP partners.

As an example, MBS for Analytics—FRx (formerly FRx Financial Reporter), with its spreadsheet-like interface, can consolidate financial data from disparate accounting systems even if they use different code structures, fiscal years, or server sites. By pulling information already set up in the GL, the product automatically understands the fiscal periods, chart of accounts, detail transactions, and various types of balances. Due to built-in accounting intelligence, it even recognizes concepts such as current and year-to-date amounts, debit versus credit balances, positive and negative variances, and posted and un-posted transactions. Furthermore, users can leverage the rows, columns and formulas that they may have created in Excel and import the information, with all data intact, directly into FRx.

The key tenets of FRx's flexibility have been the following three building blocks:

1. Row format, which lets users specify the data source and what they want to do with each row of a report. By using a link to the GL, users can select individual accounts, a range of accounts or a list of non-continuous accounts to be included in a report. Once created, a row format can be saved and used again as required.

2. Column layout, which lets users specify the data source and select the type of column they want from a list. Combined with row format, Column Layout lets users include period actuals, budget information, or other types of data in a report, either from the GL or from another data source like a spreadsheet. Math formulas across columns can be applied to identify variances, projections, or percentages. Like with row format, once created, a column layout can be saved and used again.

3. Reporting trees, which lets users create a hierarchical picture of their organization to understand or change their organizational and reporting structures. An auto-build function constructs reporting trees directly from the organization's chart of accounts, while an intuitive drag-and-drop functionality enables users to create alternative structures and multiple rollups of various accounts without having to make costly modifications to their GL or charts of accounts. Once created, a reporting tree can be saved and used again.

In addition to the on-the-fly reports creation option, application servers provide report scheduling and automatic e-mail report distribution. Using one of many customizable report templates, users can often get started creating relevant financial reports right away using the building-block approach and auto-build functionality, without much help from IT resources or other technically-minded personnel. Then, these reports can be posted to the Web or be sent via e-mail to be accessed immediately by on-site and off-site users alike, while a connection to the GL is not required.

Deploying Lean Principles to ERP Implementation Projects

2009-12-03T22:50:00.001-08:00

The competitive environment that both Manufacturers and Distributors alike have experienced in recent years in the era of Globalization, Currency Fluctuation, and Market Pressures has given rise to the business impetus to run a leaner operation to remain competitive. These issues have trickled down to the IT department. IT Professionals are at times facing an enormous obstacle. They are expected to align the organization’s IT infrastructure with the strategic and operational components of the Business to improve upon Service Delivery. The other part of the issue is to reach those goals with fewer resources. Many IT Managers have had to adopt techniques to run a lean IT shop and extend that to the principles of the IT projects that are under development.

An ERP project is an ideal area to utilize lean concepts to further understand how this can be achieved, but we must first understand the basic principles of lean and how they relate to an ERP project implementation.

Lean Definition
Lean Principles have evolved from the Lean Production Philosophy which has its origin in the set of business philosophies developed in post-war Japan known as T.P.S. (Toyota Production Systems)— which has as its core philosophy cost reduction through elimination of waste (muda Japanese).The principles deployed in Lean made Toyota the pre-eminent auto-manufacturer in the world and by extension helped shape Japan into an economic power.

The concepts outlined in Lean Manufacturing evolved into a series of principles which evolved into a business concept known simply as Lean which can be applied across several disciplines i.e. Project Management, IT Deployment, etc.

The Organization known as APICS (American Production Inventory Control Society) has defined Lean as “A Philosophy of Manufacturing based on planned elimination of waste and continuous improvement of productivity.”

How ERP & LEAN Work Together
One of the ways in which ERP & Lean complement one another is in areas such as: Machine Setup Time, labor costs, and materials handling.

During Machine setup, time is lost due to the time the machine operator must setup or take down and change tooling. At other times the employee must spend valuable time looking for tools or preparing for many delays related to machine setups as a result of constant changes to the production schedule at the same work station. One of the core values of Lean Manufacturing is known as the “5S Method.”

* Sort - Eliminate all unnecessary tools, parts, instructions
* Simplify - A place for everything and everything in its place
* Shine - Maintain a tidy and organized work environment
* Standardize - Document the rules for maintaining the first 3S instructions
* Sustain - Operations carried out in sequence, eliminating waste

Execution of the” 5S Principles” meant that resources were planned in ahead, tools were in place and readily accessible, and (where possible) production jobs were scheduled to run in a sequence that minimized machine set-up. When the “5 S Principles” were applied to an ERP environment they looked like this:

* Sort - Use only parts of the ERP system which benefit the company
* Simplify - Use ERP to enable integrated business processes i.e. inventory control
* Shine - Ensure that you work with accurate and timely data
* Standardize - Document and standardize, business processes
* Sustain - Business Processes executed by ERP executed on a consistent and timely basis

The results achieved by the ERP system deployment have resulted in cost reductions and improvements in efficiency meant that work in process has to be managed closely to ensure that no bottlenecks in production occur, The tools within ERP such as Capacity Planning and Costing Modules to define direct vs. indirect labor now mean that only the time the job runs in production are calculated as direct labor.

The efficiencies gained by the ERP implementation produced reduction in set-ups, and other shop floor time management processes, means direct labor costs are also maximized. Through the use of data collection devices, you can account for time spent “on the clock” and nonproductive time spent while a work-order is in queue. This way, non-productive time no longer figures as a basis for calculating direct labor. Finally, as ERP itself evolves with the use of BI tools, along with lean techniques and philosophies such as lean pull-production principles, you will achieve business gains as you introduce JIT (just-in-time), resulting in greater capacity to monitor inventories, manage more efficiently, and align your suppliers to lean-pull production techniques. In the lean ERP model, especially where cellular production techniques in manufacturing are introduced, there is going to be less handling of materials. Once a production job begins on the shop floor, production raw materials flow through the plant rather then sitting idle waiting to be used in Production.

The Utilities Knowledge Base

2009-12-03T22:49:00.002-08:00

The utilities industry ERP knowledge bases (list of criteria used to evaluate business software) is probably the largest knowledge base created by TEC. When building it, we started with the criteria for customer care and billing (CCB), which is the core activity of any utilities company. Then, we added functionality specific to the industry, such as vehicle fleet management, and electricity generation and supply. We also added project management, quality management, etc., which are also important for a utilities company, as well as and some modules that are common to all our ERP knowledge bases such as financials, human resources (HR), analytics, and product technology.

As mentioned above, the core of the system is based on CCB functionality. Our model of CCB covers mediation, provisioning and activation, rating, customer billing and customer care, electronic bill presentment and payment (EBPP), etc. To better address the needs of the customers without necessarily using a customer relationship management (CRM) solution, utilities companies can take advantage of the sales and marketing functionality, which helps them manage packages, discounts and promotions. Finally, meter reading or automated meter reading system (AMRS), service contract and entitlement management, automatic service activation, and service order management are important functionality that a utilities company can look for when selecting business software.

Among the functionality specific to the industry, electricity generation and supply is the most important. It contains criteria concerning generation operations and management, transmission, distribution and dispatching, and energy data management. Vehicle fleet management is the other module specific to the utilities industry, allowing companies to maintain vehicle master, monitor vehicle performance, track fleet availability and use, manage warranties and vehicle documentation, perform vehicle refueling, etc.

Though it can overlap with vehicle fleet management, asset management is another important software feature for the utilities industry, since utility companies usually need to manage a wide range of equipment, machinery, tools, etc. This includes lease management, resource scheduling, decommissioning (for phased-out equipment), and mobile requirements (for field service). Scheduling can also be found in project management, which monitors cost and work schedules for all projects. Using project analyzer, project budgeting, timekeeping and workflow management, utilities companies can easily track complex activities.

The Utilities Evaluation Center

Even though the Utilities Evaluation Center has not been officially launched, you can still preview it here. TEC also offers a list of certified software and services for utilities, grouped by software type: ERP for discrete manufacturing, CRM, supply chain management (SCM), etc. Also, our online decision support engine ebestmatch™ allows you to compare systems side-by-side.

TEC’s New Utilities ERP Evaluation Center: A Preview

2009-12-03T22:49:00.001-08:00

From TEC’s perspective and based on our understanding of the industry, the utilities industry consists primarily of the following service providers: electric power generators, network operators, customer power retailers, natural gas, steam supply, water supply, and sewage removal. All of these business segments have common criteria such as a mass customer service department and billing process, remote service supply or power generation, and high cost of asset owning and maintenance. Also, a big part of the utility business is project based as well. Below are some challenges the industry faces:
• Traditional challenges: geographical spread and remote subdivisions and office lots; mass customer service that requires specific and unique business processes; global fuel price increases leading to the need to optimize transportation processes; and constant cost-cutting issues.
• Government regulatory challenges: electric power suppliers’ fragmentation to avoid monopolies and encourage competition in the utilities market; low emission and other green initiatives that have a high impact on current situations, future investments, and development trends; new local, country-wide, and international compliance requirements; elevated degree of competition.
• New challenges that divert huge amounts of resources and attract significant human efforts: new business technology and information technology that often work together; and a higher level of demand on customer service, correlated with higher customer expectations because of demographics and educational changes and advanced e-commerce service capabilities.

Despite the global and long-term trend of energy consumption, which is supposed to be higher during the next 10 to 15 years, the current economic situation is not helping the majority of businesses within this segment. With time, the industry will becomes less predictable and more risky, but information technology (e.g., a new generation of enterprise resource planning [ERP] systems that are seamlessly capable of facilitating and serving the growing requirements of utilities companies) will continue to play a significant and increasing role in the utilities companies’ businesses.

Michael Jackson: Greatest Hits for ERP Users

2009-12-03T22:47:00.000-08:00

You Are Not Alone – a customer representative will be with you shortly. Please hold the line!
Beat It – I’ll fix the label printer myself!
Dangerous – The old server is on fire because your boss decided that a new one is not necessary.
In the Closet – Where’s that interface the vendor promised us?
Black or White – As a project manager, you probably already know that implementation can only be a success or a failure
Remember the Time … when you could still track inventory without having to go check in the warehouse?
Who Is It … that sent all invoices to the wrong customer?
Keep the Faith – Still waiting for those bugs to be fixed?
Don’t Stop ‘Til You Get Enough … sales orders into the system and then please try NOT to use the “delete all” button.
Heal the World – try lean manufacturing. If that doesn’t work, try this:

Blame It on the Boogie
Blame it on yourself (sunshine)
Ain’t nobody’s fault (moonlight)
But yours and that boogie, boogie, boogie (good times)
All night long (boogie)

How Charismatic Is Your ERP System

2009-12-03T22:46:00.001-08:00

While conducting “research” for another project, I stumbled across Max Weber’s notion of classification of authority, which was news to me, as is most serious Western thought.

According to Weber, there are three types of authority:

1. Charismatic
2. Traditional
3. Legal

Weber defined charismatic authority as being derived primarily from, well, charisma, or personal magnetism. Examples of leaders that embody charismatic authority include Barack Obama, Ronald Reagan, Adolf Hitler, and Mahatma Gandhi.

As for traditional authority, Weber defined this as a type of authority exemplified by the “handing down,” or inheritance, of power from generation to generation, as in a monarchy.

Legal authority is exemplified by the majority of modern states, and it refers to, you know, the boring kind of leadership, where people are elected peacefully, and nobody talks about riots, military coups, or chads. Examples include Canadian Prime Minister Stephen Harper and German Chancellor Angela Merkel.

As you may have noticed, much of what I write has a wandering point that I like to, uh, “disguise” as sheer nonsense. So here’s the point (sort of):

What Kind of Authority Does Your ERP System Wield?

That depends on which of the following applies to your organization:

1. CHARISMATIC - We bought our ERP system based on a charismatic salesperson and a glitzy demo.
2. TRADITIONAL - We are ruled by our legacy system, and always will be.
3. LEGAL - We used a structured selection methodology to purchase an ERP system.

ERP Vendor Shootout – Redefining the “Shootout” Stereotype

2009-12-03T22:44:00.000-08:00

While the term ‘shootout’ may conjure up images of a Wild West scenario - vigilante cowboys taking shots at each other from the shattered windows and tumbleweed strewn, empty streets of a deserted Midwest town - a group of likeminded ERP Value Added Resellers (VARs) in the mid to south East USA are redefining it.

A little historical context:

Early 2007, TEC was approached by one of our VAR partners with a concept of a live event with the following thinking:

“I am SO confident that my product stands up against the competition that I would be willing to line it up alongside those competitors and in front of some project minded individuals to demonstrate what it can do in a controlled environment.”

“Our competitors will do the same thing and the attending audience will be allowed, without bias, to make up their own mind as to what products look good to them in terms of functionality, usability and efficiency.”

Ballsy? Definitely!

Foolhardy? Time would tell!

In order to add some impartial 3rd party muscle, TEC was invited to moderate and to assist in marketing the event.

Our VAR partner reached out to their competitors, thus creating and coining the phrase ‘VAR community’, and on November 29th 2007 at Georgetown University, Washington, D.C. the doors opened to the first Annual ERP Vendor Shootout, featuring six industry leading products:

* IFS Applications
* Oracle JD Edwards
* Oracle E-Business Suite
* Sage MAS 500
* Infor Visual
* Microsoft Dynamics AX

Attending, were a group of manufacturing and distribution companies, all of which were in the process of evaluating ERP software and all of whom had some preconceptions as to what they would see.

This is where being a 3rd party, impartial attendee was interesting:

How would these companies react to the event and the ability to watch the same scenario play out up to six times?

And what would they really get out of it?

After a collective nine hours of information gathering, presentations, keynote speakers and seminars, the response was overwhelmingly positive:

“The scripted presentations create a format that allows for a true ‘apples to apples’ comparison of products and functionality”

“The ERP Vendor shootout allowed my company to see a variety of ERP systems go head to head in only one day”

“I found all aspects of the ERP Vendor Shootout to be helpful in our software selection process”

In the end, while there was no ‘last man standing’ scenario, everyone (and I mean EVERYONE, from attendees, to VARs and dare I say it, even TEC) walked away with some value, whether it be a better understanding of the buying ‘public’, the state of ERP in today’s manufacturing world or the functionality available to the buyer.

Enterprise Incentive Management Leader Responds to Market Demands

2009-11-06T04:14:00.000-08:00

San Jose, California (US)-based Callidus Software, founded in 1996 and publicly traded since 2003 on the NASDAQ under the symbol "CALD," is an enterprise incentive management (EIM) provider that benefits from the market dynamics detailed in Thou Shalt Motivate and Reward Workforce Better. The company has several US offices, namely in New York, New York; Austin, Texas; Chicago, Illinois; and Atlanta, Georgia, as well as in London (UK) and Sydney (Australia), with an estimated 330 employees worldwide. Callidus (taken from the Latin word meaning "expert") receives nearly $70 million (USD) in revenue and services over 110 global user corporations across multiple industries. Such industries include retail banking (22 percent of the install base), insurance (21 percent of the install base), manufacturing/high-tech and life sciences (23 percent of the install base), retail/distribution (12 percent of the customer base) and telecommunications (the remaining 22 percent of customers). While its products can serve the pay-for-performance program needs of virtually all companies, Callidus has focused principally on the above six key market segments, which were also described in Sizing the EIM Opportunity.

Part One of the series Enterprise Incentive Management Leader Responds to the Market Demands

In addition to selling directly, Callidus actively promotes and maintains strategic relationships with systems integration (SI) partners, management consulting firms, independent software vendors (ISVs) and technology platform providers. These relationships are formed to provide customer referrals and co-marketing opportunities with the aim of expanding the potential customer base. As well, these relationships leverage the vendor's primary business model by outsourcing integration and configuration services and allowing it to expand and focus on software license sales. To that end, Callidus has established alliances with Accenture and IBM on both a national and a global basis, whereby each provides systems integration, implementation, and configuration services. The vendor has further strengthened its relationship with IBM from a technology perspective by optimizing its products on platforms such as IBM WebSphere, DB/2, and AIX.

Besides working with global business partners, Callidus also maintains relationships with smaller and more specialized companies such as Compensation Technologies and Iconixx Corporation. These relationships provide the company with new business referral bases, compensation consulting, and augmentation of its professional services, including the implementation of Callidus products. Although all of these strategic relationships have been built on solid foundations over the past few years, they are non-exclusive, and either party may enter into similar relationships with other parties.

Callidus Software's global partnerships and alliances continue to grow in number, and today include some of the world's best-known SIs, consulting and technology groups, and software solution providers. Other firms that form the company's partner base: Actuate Corporation (for enterprise reporting applications), The Alexander Group, Atos Origin, Axis Group (a consulting firm in the field of business intelligence [BI]), BEA Systems, CelFocus, Hexaware Technologies (a provider of information technology [IT] and business process outsourcing [BPO] services), Hewlett-Packard (HP), Informatica Corporation, Oracle, Saama Technologies (a consulting and SI firm that provides actionable BI for enterprises and outsourcing services for software product companies), SAP, and Sopra Group, among others.

Ten of the thirty Dow Industrial companies have thus far chosen EIM from Callidus, whereby the vendor's partner programs hope to ensure successful implementation and faster payback for these companies as well as for all of Callidus Software's 112 customers. The consulting services firms and SIs mentioned above work with Callidus to add strategic value to sales performance management and provide integration, evaluation, strategic outsourcing, and hosting services. On the other hand, ISVs and technology platform providers integrate Callidus Software solutions with applications and platforms to maximize customer benefit and help build revenue.

How Flow, Lean and JIT Differ From The Traditional Methods

2009-11-06T04:13:00.003-08:00

Flow, like its other lean manufacturing siblings, differs from traditional manufacturing through a pull vs. a push strategy to move goods. Namely, traditional manufacturing methods rely on the movement of materials through functionally-oriented work centers or production lines, and are designed to maximize efficiencies and lower unit cost by producing products in large lots. Production is planned, scheduled, and managed to meet a combination of actual and forecasted demand, and thus, production orders stemming from the MPS (master production schedule) and MRP planned orders are "pushed" out to the factory floor and in stock. External suppliers also work to support planned production, while materials management often relies on maintaining sufficient inventory, using a make-to-stock (MTS) rather than make-to-order (MTO) or assemble-to-order (ATO) approach.

In traditional manufacturing, the time and cost of changeover to produce different products is high, as are the costs of inventory, planning, and expediting. To recap, in traditional manufacturing, goods are pushed through production at levels determined by often inaccurate scheduling and forecasting tools common in MRP II (material resource planning)/ERP systems. These levels often exceed demand, resulting in building excessive finished inventory, while in a flow/lean/JIT environment orders are pulled through the process, based on actual demand.

By contrast, rather than emphasizing planning like ERP, lean manufacturing and JIT concepts emphasize the continuous improvement of processes that lead to things such as reduced inventory throughout the supply chain, shorter lead times, and faster cycle times enabling improved response to customer demands. Many vendors have consequently bolstered their commitment to lean manufacturing practices with functionality designed to promote rapid response to customer orders based on demand "pull". This includes kanban, mixed-mode manufacturing (i.e., building a new model every day, according to daily demand in order to make several different parts or products in varying lot sizes allowing a factory to produce close to the same mix of products that will be sold that day), and the flexibility to schedule, and manage flow orders for products within product families, with or without using MRP. Again, the idea is for products to arrive exactly when they are needed in the mix and in required quantities to allow production to begin immediately after a customer order is confirmed without having to run MRP or create and release a work order.

Materials are consumed from point-of-use locations or raw-in-process (RIP) locations, whereby both internal and external material suppliers receive replenishment signals at point-of-use locations, RIP, and build or supply materials when location needs to be replenished. These features are attractive at least to existing ERP users and particularly automotive suppliers, who have been pinched by a tightening economy and are under pressure to speed up operations and adopt JIT and lean manufacturing practices. The requirements for the automotive industry, which is particularly conducive to the deployment of lean concepts, are critical even in the accounting arena where evaluated receipt settlement, release accounting, self-billing, and retro-billing speedup processes while helping suppliers optimize their limited resources.

Pull vs Push: a Discussion of Lean, JIT, Flow, and Traditional MRP Part 1: Tutorial

2009-11-06T04:13:00.001-08:00

The lean manufacturing support philosophy has recently received increased interest, potentially allowing it to break like a huge wave across industry. The Enterprise Resource Planning (ERP) systems of the 1990s have been burdened with the liability of carrying on some well-publicized Material Requirements Planning (MRP) problems like complex bills of material (BOMs), inefficient workflows and unnecessary transactions, activities, and data collections. While several years ago prospects were tentatively inquiring about lean capabilities, now they seem to be increasingly requesting them.

Companies such as John Costanza Institute of Technology (JCIT) have been the pioneering source of the philosophies and techniques behind flow manufacturing, which replaces shop-floor silos, such as machines grouped by their function, and traditional scheduling and forecasting with process or product family-based production lines (often referred to as cells) designed to fill orders based on actual daily demand. The idea is to be flexible enough as to keep work-in-progress (WIP) moving smoothly and continuously, eliminating bottlenecks and underutilizing capacity. This particular flow derivative of the lean philosophy was developed and refined by John Costanza, who leveraged what he learned from his exposure to the Toyota Production Model and what he had subsequently applied while working at Hewlett-Packard. He developed specific disciplines and mathematical techniques to implement "demand pull" and "continuous flow" concepts. He named this methodology Demand Flow Technology (DFT), and in 1984, started JCIT, an Englewood, Colorado, (USA) based company, to educate thousands manufacturers ever since.

The term flow manufacturing is closely related to and thus often confused with other demand-driven manufacturing strategies, such as agile, just in time (JIT), and lean manufacturing. They also streamline processes, eliminate waste, use kanban signals to replenish supplies and are subject to continuous improvement. (The Japanese word kanban, according to the APICS Dictionary, loosely translated, means card, billboard, or sign, and the term is often used synonymously for the specific JIT scheduling system developed and used by the Toyota Corporation in Japan. It is a pull system where workstations signal with a card or something similar when parts are to be withdrawn from feeding operations or suppliers.) For more detail on JIT and lean manufacturing and on their impact on ERP, see Trends Affecting Manufacturers and ERP.

Consequent Vendor Responses

2009-11-06T04:12:00.001-08:00

More recently, most vendors have further focused on their solutions for supply management and visualization. In other words, while still adding to their ERP capabilities (for example lean manufacturing and JIT management modules), many ERP and SCM vendors have been fleshing out the components of the extended enterprise (distributed order management, flexible schedules, customer self-service, consignment inventory, vendor managed inventory [VMI] and supplier managed inventory [SMI], replenishment management, and business-to-business [B2B] e-commerce). They have also been exploring the manufacturing community (i.e., consolidated visibility via a portal of inventory, production, product life cycle, payments, and invoices).

While forecasting might have had a poor reputation in manufacturing, recently there has been an increased awareness that with good collaborative planning and forecasting software, which would support collaborative sales and operations planning (SOP) processes, many manufacturers could improve their business performance (see Sales and Operations Planning). Like with the production planning, manufacturers need to remain on top of forecasting by leveraging much shorter review intervals than traditional quarterly updates. By taking forecasting more seriously and supporting it with smart, interactive tools, all the parties within the manufacturing businesses should be on the same page at the end of the day, which should result with agility. For manufacturers in volatile markets or with products with short life cycles, forecasts based on history only, often mean missing the true demand signals from customers or distribution channels.

Any supply chain planning (SCP) endeavor starts with a demand forecast based on a consolidated view of sales and operations plans from across the organization, remote manufacturing sites, and distribution centers. These demand plans are common to all manufacturing environments alike, and are instrumental for annual planning of resources, to monitor demand mix variations, and even as data for preliminary/rough-cut line balancing and kanban planning. Enterprises use SCP for strategic purposes such as to plan for resources across an organization, prepare for promotions, negotiate long-term contracts, establish objectives, and coordinate multisite operations, whereby sales and operations, inventory, distribution, collaborative demand management, transportation planning and other departments are all involved. Flow manufacturing does not address synchronizing around the supply chain, multiple partners, and suppliers, since it is merely a shop-floor execution tool.

Thus, it would be too nave to dismiss the need for proper planning, because regardless of how responsive an execution system may be, waiting for a chaos to happen and only then trying to act, would be as much of a disaster as it has been with compiling nearly ideal plans (through cumbersome algorithms) and never doing anything about executing or obtaining feedback about the plans' outcomes. As supply chains become more dynamic and operate in near real-time, the lines between planning and execution continue to blur, which bode well for their functional convergence. Companies need real time information from execution systems to develop and adjust optimal plans, while the execution side should benefit from more realistic plans for the sake of readiness, rather than to merely react after the fact in a firefighting fashion.

Pull vs Push: a Discussion of Lean, JIT, Flow, and Traditional MRP

2009-11-06T04:09:00.000-08:00

Still, while some tout that flow manufacturing principles can be implemented successfully, regardless of the industry, type of manufacturing environment, or product volumes, the concept has not been everything to all people so far. It is still challenging or even unsuitable to use in a jobbing shop producing highly configure-to-order (CTO) or engineer-to-order (ETO) products with high setup and long lead times, although when it has been occasionally deployed there, it has met almost as much success as in high-volume, more repetitive make-to-demand environments.

The fact is also only a minority of all ERP vendors properly supports the ETO environments, let alone flow manufacturing concepts. Cincom is one notable exception, given its Flow Manager product handles kanban replenishment and demand smoothing (but not line design and operation method sheets (OMS), because these features do not bring much benefit to ETO manufacturers). Their customers often specify product families that include products requiring one or two unique and expensive components in addition to common parts that could benefit from flow methods of smoothing spikes in demand.

Also, only certain industries like high-tech, aviation and defense (A&D), and consumer packaged goods (CPG) have been the best candidates to adopt flow manufacturing, because they can most feasibly achieve feedback from reconfiguring the shop floor into dedicated production lines for product families, around which flexible and cross-trained work teams are established. However, for other organizations, that feat will not happen overnight, since achieving flow manufacturing takes more than moving equipment into product family production lines, creating flexible workstation teams, establishing quick changeovers, or introducing kanban signals. It also requires specific flow manufacturing training, continuous discipline and process improvement mindsets (e.g., zero defects, zero setup, the use of standardized components, and zero inventory).

Until relatively recently, there have not been many off-the-shelf software applications to help manufacturers institute flow processes, other than cumbersome spreadsheets and internally developed packages or practices to handle some flow techniques, such as line design, line balancing, kanban management, and mixed-model production. In addition to the lack of consensus regarding what exact set of features constitutes the flow manufacturing software, there has also been a philosophical debate about what flow manufacturing software should do in relation to ERP/MRP.

On one hand, John Costanza Institute of Technology (JCIT) has been advocating the misfit of ERP's concepts of planning and scheduling, which do not allow a manufacturer to use a demand forecast as the basis for a reliable materials purchasing plan. Conversely, flow-oriented manufacturing starts with the earlier-mentioned process called demand smoothing, which technique involves looking at a forecast over a certain period of time (anywhere from one week to several weeks) to determine how many products must be built each day to fill the total amount of orders expected over that time. The flow manufacturer will then ask its suppliers to deliver parts every day, with each shipment amounting to only enough parts to satisfy that day's quota.

On the other hand, there are some indications that flow systems cannot handle demand variability, variable product mix, shared resource constraints, or complex products with long lead times, thus limiting flow for items where variability is only at the end item mix, and not with frequent content variations of option mixes. For this, and all the above reasons, most manufacturers implement this method gradually and use flow to make one product family, which necessitates ERP, MRP, or APS (advanced planning and scheduling) for the rest of the business. While lean/flow manufacturing leverages practices to stay ahead of actual demand, the traditional approaches better coordinates secondary, back-office systems like accounting and human resources (HR) management. Moreover, flow should be a company-wide strategy that does not only impact manufacturing.

Thus, many prospects will be more amenable to the flow manufacturing product designed to complement an MRP II or ERP system rather than replace it. To that end, for example, Oracle's and American Software's system offer full support for demand flow techniques on the shop floor while also providing a standard interface to the rest of the business systems for activities like purchasing, accounting and order management. A further example would be QAD that uses MRP for mid- and long-term planning, on the execution side however, it also caters to both JIT that is used for build-to-order or final assembly manufacturing, and to lean manufacturing, which is suitable for build-to-demand pull for finished and component items. Namely, most companies will still use MRP to ascertain longer-term dependent demand (i.e., based on forecasts), but replenishment will be based on independent demand (i.e., actual customer orders), with closely managed inventory buffers. Customer demand cannot be predicted months ahead, since nothing is that certain. Thus, many ERP systems are employing heuristics, algorithms, and even simulations to estimate the uncertainty in demand and effects of constraints on the shop floor. Understanding these variations then allows enterprises to assign flexible boundaries around material and capacity plans.

SAP para la industria química: Retos y recomendaciones para los usuarios

2009-10-21T07:08:00.000-07:00

Como se ha mencionado antes, SAP AG (NYSE: SAP) ha reglado por algún tiempo en el nivel superior del reino químico, pero la competencia en los químicos del mercado medio está lejos de ser inexistente, debido a las fuertes ofertas de los vendedores como Oracle, Ross Systems/CDC Software, Infor, 3i-Infotech, SSI-World, y SSA Global. Estos son solamente los vendedores principales de planificación de los recursos de la empresa (ERP) que se enfocan en la industria química. También existen un gran número de proveedores de solución que le dan servicio a las necesidades específicas de la industria. Para mayor información acerca de la industria química consulte, ¿Qué sucede con los químicos?.

Tercera parte de la serie SAP para la industria química: una solución empaquetada para las compañías del mercado medio.

SAP ofrece software de aplicaciones empresariales dirigidas a la industria química. Para mayor información acerca del acercamiento de SAP a las soluciones empaquetadas, consulte Las soluciones industriales de SAP para las compañías del mercado medio. Para mayor información acerca de SAP y de la industria química, consulte SAP para la industria química: Una solución empaquetada para las compañías del mercado medio y SAP para la funcionalidad de la industria química.

SAP como un todo, incluyendo SAP Chemicals IBU, ha estado luchando contra creencias difíciles de aniquilar acerca de su complejidad, precio, rigidez, etc., incluso con estas soluciones preconfiguradas. Últimamente, el vendedor ha afirmado lo siguiente, lo cual poco a poco ha ganado credibilidad (aunque los clientes prospecto deben seguir retando a SAP por presentar una prueba tangible del concepto, y hablar con clientes similares):

* Algunas soluciones industriales empaquetadas de SAP son un modelo a seguir para el éxito del mercado medio: 65 por ciento de los clientes existentes tienen menos de 1,000 empleados, pero se cree que es sólo para las empresas "grandes".
* Las soluciones empaquetadas de SAP con frecuencia conducen rendimientos de un gran valor para sus clientes, incluyendo las ventas basadas en el valor como un paso muy importante en el proceso de ventas.
* Estas soluciones les proporcionan a los clientes la experiencia y las capacidades industriales (como el soporte de procesos comerciales industriales, las mejores prácticas, la amplitud de las soluciones, etc.) que con frecuencia conducen un mayor valor que las ofertas competitivas.

Pero para refutar los llamados mitos de su costo, complejidad e inflexibilidad, SAP tendrá que seguir documentando casos de estudio exitosos. Sin estas medidas bien documentadas y cotejables de un rendimiento positivo del capital invertido (ROI) o de un costo total de propiedad (TCO) favorable, el mercado podrá seguir creyendo que SAP está tratando de burlar la percepción del mercado al resaltar una afirmación de un aumento del 32 por ciento en la rentabilidad para varios clientes muy rentables (junto con la afirmación de que correr SAP fue la principal causa). Consulte ¿Qué le dice la competencia? Un estudio de caso: La nueva campaña de publicidad de SAP.
Esto puede ser una oportunidad donde todos ganen: mientras que los ISVs pueden trabajar con SAP en lugar de distraerse con la competencia con el gigante (donde a largo plazo es difícil ganar), SAP obtiene un soporte externo agresivo para sus esfuerzos para llenar rápidamente los intervalos en su industria. De esta forma, sus recursos internos pueden dirigirse a la reescritura masiva basada en la arquitectura orientada al servicio (SOA) de la funcionalidad existente a una plataforma de procesos comerciales más ágiles. SAP xApps combina los servicios Web y los datos de múltiples sistemas, con la plataforma tecnológica SAP NetWeaver que proporciona la interoperabilidad. Consisten en el software que combina la nueva lógica comercial (la parte empaquetada) con la funcionalidad de los componentes pre-existentes (la parte compuesta). En práctica un SAP xApp es una capa de aplicación que se coloca por encima de otras aplicaciones, que por lo tanto puede proporcionar un proceso funcional cruzado que es colaborativo e integral.

Dado que existen alrededor de cien clientes comunes entre SAP y Lighthammer (previo a la adquisición), y alrededor de veinte clientes compartidos con Vendavo, es obvio que los clientes están dispuestos a aceptar la solución integrada de un socio en lugar de esperar eternamente por la funcionalidad de SAP. Por lo tanto el Chemicals IBU quiere desarrollar y agrandar un ecosistema para la industria química que pueda proporcionarles valor a sus clientes, socios y al mismo SAP. De hecho, la unidad de la industria química es una de las primeras en SAP en pilotear el programa de la red de valor industrial (IVN) de SAP.

Un ejemplo de las necesidades críticas de la industria que SAP dirige por medio de sociedades es el análisis de ganancias y la gestión de precios (es decir cómo manejar los cambios de precios en el mercado con una dirección y un control central). La compresión del margen y los análisis comparativos de la rentabilidad relativa del cliente son problemas reales para la industria química, y los análisis de asignación de precios y las herramientas de soporte se pueden utilizar para manejar mejor los precios y mejorar los márgenes. Para ello, SAP se ha asociado con Vendavo, un proveedor de soluciones de software de gestión de asignación de precios, para ofrecer una aplicación compuesta empaquetada o SAP xApp para la gestión de asignación de precios llamados Gestión de margen y de precios de SAP (SAP PMM) por Vendavo que corre en NetWeaver de SAP (consulte Los gigantes de aplicaciones reafirman sus capacidades de gestión de asignación de precios). Existen otros vendedores con rutinas de optimización de asignación de precios, pero esta no es la funcionalidad actual de Vendavo. SAP cree que todos los productores de mercancía (y varios productores especializados) deberían comenzar con la gestión de precios, mientras que solamente los productores de químicos especializados más complejos deben comenzar con la optimización.

Por otro lado, Technidata ha estado ayudando a darle forma a la funcionalidad de la seguridad y salud ambiental (EH&S) por varios años, al igual que proporcionar SAP xApp para la gestión de emisiones (SAP xEM), un SAP xApp dirigido para la industria química. Las regulaciones como el Acto de aire limpio de Estados Unidos requiere que las compañías reduzcan las emisiones, y SAP por lo tanto proporciona una herramienta ahora que evoluciona en torno a los procesos en tiempo real para ayudar a las compañías químicas con el cumplimiento. Technidata también ha ayudado a desarrollar un servidor de contenido para SAP EH&S que incluyen datos por más de 200,000 sustancias.

La serie de mantenimiento de planta (PM) de SAP incluye tales módulos como el mantenimiento preventivo, el mantenimiento de fallas, y los sistemas técnicos de estructuración, para ejecutar y registrar las actividades de mantenimiento planificados y no planificados, incluyendo las tareas de mantenimiento y las órdenes de trabajo. SAP también trabajará en busca de capacidades completas de mantenimiento centrado en la fiabilidad (RCM), que se están volviendo estándares entre los fabricantes de activos (consulte Mantenimiento controlado por la confiabilidad: cerrar el "vacío de valor"). La naturaleza conectada de la fabricación ágil probablemente elevará a un nivel superior las capacidades de gestión de activos, donde los sensores adjuntos monitorearán el equipo y proporcionarán los datos que se pueden utilizar para predecir de manera más exacta las fallas o una operación ineficiente, reducir el riesgo de baja y pérdida de producción. Esto es especialmente cierto en cuanto a la reciente adquisición de Infor del especialista en gestión de activos empresariales (EAM) Datastream. Una vez más, el asociarse con Ivara puede ser útil, como en el caso de AspenTech o WAM Systems para algunos aciertos funcionales SCM de algunos químicos especiales (consulte WAM Systems Offers Supply Chain Planning Packaged Solution For Chemicals), o con un socio prospecto de logísticas enfocadas a la industria química como Odyssey Logistics.
Las compañías químicas del mercado medio que buscan sistemas empresariales deberían poner a SAP y a sus socios de servicio, implementación, desarrollo y consultoría en su lista. Las mejores prácticas de los químicos es una base fuerte y gratuita para las plantillas del socio, nuevas instalaciones y despliegues mundiales. Se basa en una nueva tecnología que les permite a los usuarios crear sus propias mejores prácticas e incluso se pueden utilizar para las implementaciones y evaluaciones del software.

Pero aunque SAP ofrece una funcionalidad extensa, estas compañías deberían comparar sus necesidades para las ofertas de SAP y los vendedores alternativos, para poder encontrar lo mejor para su empresa. SAP todavía tiene una reputación de ser difícil de implementar, cambiar y manejar. La compañía ha hecho grandes esfuerzos en dirigir estos problemas, pero las compañías del mercado medio deben decidir por ellas mismas (por medio de demostraciones de escenarios comerciales reales y detallados) si SAP es demasiado para sus necesidades o no.

El utilizar una solución ERP empaquetada para la industria química de SAP puede representar una gran ventaja, pero sólo si SAP es el sistema ERP adecuado para la empresa usuaria prospecto, y si el proceso comercial preempaquetado es adecuado. SAP reconoce que por lo general encuentran de un 70 a un 85 por ciento de encaje, pero incluso las compañías con procesos muy distintos deberían ver los beneficios conforme reciben un contrato de punto de inicio: En la mayoría de los casos pueden adoptar varios de los procesos centrales listos para utilizar, y con las mejores prácticas pueden escoger y elegir cualquier proceso. Mientras SAP afirma que la solución empaquetada es una metodología de implementación de bajo riesgo, bajo costo y más rápida (como mínimo las mejores prácticas pueden incluso ayudar a pilotear más rápido las instalaciones para evaluar los escenarios, entrenar a la gente en SAP, etc.), estas comparaciones son principalmente relativas a implementar SAP sin la solución empaquetada.

Las compañías deben entonces ver el costo total de propiedad (TCO) potencial con respecto a cada vendedor viable (asumiendo que el vendedor cubra sus necesidades) antes de seleccionar una solución empaquetada de SAP ERP como el acercamiento adecuado de implementación. Para mayor información acerca de evitar comparaciones difíciles en situaciones cuando no existe una correlación uno a uno, consulte Las mejores prácticas preempaquetadas de SAP. ¿Son las adecuadas para usted?.

Al buscar un vendedor, existen varias preguntas que se deben hacer, que las compañías siempre deberían hacer y no la hacen.

* Puede el vendedor proporcionar una lista de referencias relevantes de industrias químicas? Que el tiempo en evaluar qué referencias son relevantes de hecho es tiempo bien invertido. Demasiadas compañías, en todas las industrias, han tomado decisiones aceleradas con base en referencias irrelevantes.

* El vendedor proporciona los requisitos únicos de la industria química? (Si el modelo no puede definir por completo las realidades de los procesos químicos específicos para el usuario, no puede manejar estas realidades).

* La solución se construyó específicamente para la industria (bien) química, o utiliza una solución genérica que emplea plantillas (OK, pero no necesariamente excelentes), o simplemente es un producto genérico (casi siempre malo)?

* La solución es una aplicación única integrada con un modelo común, o es una colección de módulos que hacen interfase entre sí? Obviamente, el atractivo de la unidad de estructura es más que simple estética: una aplicación integrada puede hacer más fácil el rastreo de datos inesperados para su fuente. Por otro lado, puede ser el caso que los módulos que hacen interfaz ofrezcan una mayor funcionalidad agregada.

* La solución es una aplicación completa, o es un lenguaje de modelado que forza a los usuarios a crear su propia solución? Aquí el intercambio es que una gran cantidad de habilidad para la personalización viene con una gran cantidad de inversión y recursos.

* Puede el personal existente (como los planificadores o el staff IT) soportar el sistema, o requiere ayuda especializada de un grupo de modelado o de investigación de operaciones? Una vez más, la preferencia de una compañía puede determinarse por el número de dolores de cabeza que está dispuesto a soportar.

Los sistemas empresariales han traído varios beneficios a los ambientes químicos, pero para las empresas individuales, obtener estos beneficios requiere seleccionar una solución que pueda lidiar con las necesidades únicas del negocio. Aunque solo un puñado de vendedores afirman que pueden soportar estas necesidades, y que sí existen opciones de primera clase. Sólo al enfocarse en los requisitos que harán o romperán el proyecto, la operación química seleccionará la solución adecuada y obtendrá estos beneficios. Y eso puede marcar la diferencia entre un sueño y la realidad.

SAP para la funcionalidad de la industria química

2009-10-21T07:07:00.000-07:00

SAP AG (NYSE: SAP) es conocida por su software de aplicaciones empresariales dirigido a la industria química. Para mayor información acerca de la industria química consulte, ¿Qué sucede con los químicos?.Para mayor información acerca del acercamiento de SAP a las soluciones empaquetadas, consulte Las soluciones industriales de SAP para las compañías del mercado medio. y para mayor información acerca de SAP y de la industria química, consulte SAP para la industria química: Una solución empaquetada para las compañías del mercado medio.

Segunda parte de la serie SAP para la industria química: una solución empaquetada para las compañías del mercado medio.

SAP ha estado entregando su estrategia para la industria química al expandir sus capacidades para la fabricación y la gestión de la cadena de suministro (SCM), al ampliar sus aplicaciones empaquetadas compuestas en áreas como la gestión de emisiones, la gestión de precios, los tableros de control de fabricación, y al enfocarse en las compañías del mercado medio. De hecho, las aplicaciones compuestas SAP xEM, SAP xPMM (Gestión de márgenes y precios), y SAP xMII (integración e inteligencia de fabricación) estaban encabezadas por la unidad de químicos de SAP. En la industria química, SAP se enfoca en el mercado medio (definido como las compañías con ventas anuales de entre $50 millones de dólares y mil millones de dólares), por medio de las plantillas preconfiguradas de la solución empaquetada ERP para la industria química de SAP para reducir los tiempos de implementación y los costos.

Al ver la funcionalidad de este producto, encontramos que soporta tanto las operaciones continuas como las de lote, con tales capacidades como la producción continua en masa, producción interrumpida para llenado, asignación de número especial de lote, clasificación de lotes, generación automática del número de lote, determinación de lotes primero en entrar, primero en salir (FIFO), derivación de lotes (de masa a terminados), hojas de instrucciones de procesos (PI) basada en el lenguaje extensivo de marcas (XML) (producción sin papel), y conectividad abierta de SAP (OPC) para el acceso a los datos (en otras palabras, SAP ODA para alertas y eventos).
Vale la pena ver algunos de los ejemplos de los mejores escenarios en el caso de SAP para la industria química.

* La venta de materiales o productos en masa por medio de las capacidades de manejar bidones y tanques de tráileres.

* Los escenarios de ambiente, salud y seguridad (EH&S), incluyendo las características de gestión de bienes peligrosos, seguridad del producto, seguridad e higiene industrial y gestión de desperdicios. Por ejemplo, la capacidad de gestión de bienes peligrosos les ayuda a las compañías a cumplir con las regulaciones nacionales e internacionales de los bienes peligrosos. Este proceso se utiliza además de las capacidades regulares de ventas y distribución (SAP SD), que involucran el procesamiento de órdenes, los bienes gratuitos, el procesamiento de devoluciones, el procesamiento de retornables, el procesamiento de los tráileres de tanque, el procesamiento de las órdenes de terceros, el manejo de los reembolsos, el procesamiento de las consignas a los clientes, las ventas por Internet (sólo para la edición R/3), y el manejo de los bidones.

* El escenario de seguridad del producto les ayuda a las compañías a cumplir con las regulaciones nacionales e internacionales de la seguridad del producto al proporcionar hojas de datos de seguridad del material (MSDS)

* La capacidad de procesamiento del ingrediente activo se ocupa de los ajustes necesarios de las cantidades basadas en el contenido del ingrediente activo real, como se determinó en las pruebas.

* Existe una gran capacidad de subcontratación, que utilizan los llamados intercambios y fabricantes interurbanos.

* Se incluye un escenario de mezcla, para combinar los lotes de materiales de diferente calidad para lograr materiales específicos que cubran los requisitos del cliente.

* La opción de reempaquetado permite cambios cuando el negocio requiere una alternativa a las combinaciones de embalaje del producto actual.

* También se incluye la gestión de recetas para desarrollar perfeccionar y proteger los productos de franquicia, sus sucesores potenciales e incluso los prototipos fallidos que los precedieron.

Al inspeccionar los detalles de algunos módulos, fue grato ver la profundidad de la funcionalidad. Por ejemplo, la serie SAP Procurement soporta un área de procesos de reabastecimiento de materiales y servicios externos por medio de sub-módulos como solicitud de cotización (RFQ)/gestión de cotización, requisitos de compra, órdenes de compra, recepción de bienes (con integración QM), verificación de facturas, reabastecimiento de las existencias de material, reabastecimiento por medio de la importación, y reabastecimiento de servicios externos. El módulo de Gestión de Calidad de SAP (SAP QM) tiene varias características, como la gestión de muestras, controles en procesos, creación automática de lotes en el lanzamiento de la orden del proceso, controles posteriores al proceso, notificaciones QM, certificados de calidad revisados a la recepción de los bienes, retiros de lotes, cobertura de los costos de inspección, certificado de calidad en la emisión de los bienes, derivación del lote, registro de los resultados (incluyendo firmas digitales), salto de la hoja PI, manejo de devoluciones, lotes de inspección manual, inspecciones recurrentes, inspección del modelo a la recepción de los bienes, cuadro de control, copia de los resultados, etc.
Recientemente SAP ha presentado los tableros de control específicos para los roles para su uso en la manufactura de químicos, como aquellos destinados para los directores de planta, supervisores de producción, supervisores de mantenimiento, y supervisores de calidad. Los tableros de control de inteligencia de fabricación basados en roles de SAP son parte de una estrategia más grande de fabricación que se adapta, la cual se integra con los procesos SCM y empresariales. Estos tableros de control le proporcionan al personal de la planta la información personalizada y específica de los roles, alertas y KPIs, para ayudarlos a alinear sus actividades con las metas de la compañía y los eventos en tiempo real en la cadena de demanda y suministro.

El proceso de integración P2B está conducido por ISA-95, un estándar internacional para definir la interfase entre los sistemas comerciales y de fabricación. La primera parte de ISA-95 consiste en un diccionario de términos comunes de tecnología de la información (IT) para el personal comercial y de fabricación. La segunda parte añade detalles para ilustrar estos términos, y describe la producción por el personal disponible, los materiales utilizados y producidos, el equipo utilizado y la producción para la programación y la asignación de costos. El tercer aspecto de ISA-95, que todavía se está desarrollando, define los modelos contextuales para las actividades dispares entre los sistemas comerciales y de fabricación. SAP lanzó una iniciativa en el 2004 para conducir la adopción de ISA-95 entre los proveedores de soluciones de fabricación al construir requisitos del estándar en sus soluciones, incluyendo los tableros de control de inteligencia de fabricación. Luego lanzó un programa que fortalecía SAP NetWeaver con los socios de plante y las soluciones de fabricación de SAP. En el 2005, la adquisición de Lighthammer dio como resultado el producto de inteligencia e integración de fabricación SAPxApps (SAPxMII) (consulte, ¿Ha SAP asegurado el liderazgo a nivel de planta con Lighthammer?), que coloca al gigante en una posición más competitiva pero también más extraña con respecto a varios competidores socios en la industria, como AspenTech, Invensys, IndX/Siemens, OSIsoft, Pavilion Technologies, Honeywell, Emerson, etc.

Para conducir los problemas de la cadena de suministro en la fabricación que se adapta, SAP también está intensificando sus esfuerzos en la identificación por radio frecuencia (RFID) con un esfuerzo conjunto con Intel para facilitar la adopción de RFID al ofrecerles a los clientes la opción de integrar su hardware RFID directamente al los sistemas y procesos comerciales, o la opción de utilizar socios de gestión de dispositivos para manejar su ambiente de hardware. Este acercamiento se enfoca principalmente en el intercambio directo de datos entre el hardware lector y las aplicaciones comerciales, para permitir suficiente inteligencia de los lectores de Intel para alimentarse directamente a SAP. Una vez desarrollado, este acercamiento incluirá la ejecución de la cadena de suministro (SCE) habilitada en RFID con la gestión de la cadena de suministro de mySAP (mySAP SCM), incluyendo una integración de dispositivos de socios y gestión de dispositivos basada en socios, y una plataforma compuesta basada en SAP NetWeaver que se conecta a la gestión de dispositivos del socio, a la administración y a las herramientas de monitoreo.

La expansión de las capacidades RFID complementa las ofertas existentes de SAP para la cadena de suministro, que para la industria química incluye capacidades RFID para rastrear transportes y materiales, donde ya tiene un puñado de clientes. Para mayor información acerca de SAP RFID en otras industrias, consulte RFIDA New Technology Set to Explode?. También en cuanto a la industria química, SAP ha actualizado su núcleo de colaboración de inventario, un componente de la serie mySAP SCM, para optimizar mejor las consignas o el inventario manejado por el vendedor (VMI), y también está trabajando en mejorar la funcionalidad para la planificación, pronóstico y reabastecimiento colaborativo (CPFR).

Otra aplicación compuesta de SAP para la industria química es servicios de comercio mundial de SAP (SAP GTS), que se lanzó en el 2004 y se actualizó a principios del 2005 (consulte Cuidado con SAP). Esta aplicación les ayuda a las compañías a establecer un estándar ampliamente corporativo para los procesos de comercio a lo largo de los sistemas de SAP y que no son de SAP, para asegurar el cumplimiento con las reglas de comercio internacionales, como el control de embargo, y el reporteo de Intrastat y Extrastat. SAP GTS tiene como objetivo fomentar el uso de los datos compartidos (reemplazando los procesos manuales de mantenimiento) y proporcionar una vista global del comercio a lo largo de una empresa.
Como se mencionó antes, las mejores prácticas de SAP para la industria química v1.500 se ha actualizado y revisado con base en SAP NetWeaver mySAP ERP 2004. Se revisaron todos los escenarios comerciales del lanzamiento anterior, y se añadieron seis escenarios nuevos (manejo de bidones, intercambio de datos de la industria química [CIDX], etiquetado, gestión de tanques de almacenamiento, VMI, y gestión de desperdicios), lo que nos da un total de veinticuatro escenarios preconfigurados específicos para la industria, muchos de los cuales se describieron anteriormente. Algunos de los escenarios se definen en conjunto con varios de los dieciocho socios, mientras que algunos escenarios mejoran los componentes de los módulos SAP BW (almacén comercial), SAP RM (gestión de recetas) y SAP EH&S (seguridad y salud ambiental).

Además, todas las herramientas de prueba asistidas por la computadora (CATTs) se han reemplazado por CATTs extensos (eCATTs) para crear y ejecutar mejor las pruebas funcionales para el software. El principal objetivo aquí fue la prueba automática de los procesos comerciales de SAP, donde cada prueba generaba un registro detallado para documentar los procesos y los resultados de la prueba. Las pruebas automáticas se habilitan por medio de eCATTs tanto en la interfase gráfica del usuario (GUI) SAP para Windows y SAP GUI para Java. La configuración comercial (BC) de SAP basada en la tecnología eCATT proporciona una metodología estructurada y una infraestructura para SAP y sus socios para entregar procesos preconfigurados y extensiones de productos que deben reducir el riesgo de tener que volver a implementarse después de una actualización de la línea base de la tecnología ERP de mySAP. Los productores de eCATT predefinido suelen personalizar los datos muestra en el sistema prototipo, y acelerar y personalizar la implementación en el sistema de desarrollo. Para ello, existe una nueva herramienta llamada asistente de instalación de las mejores prácticas de SAP para todas las tareas de personalización y activación del sistema.

La documentación detallada en los procesos y ayustes de la plantilla de las mejores prácticas de SAP para la industria química se entrega como un producto gratuito complementario a mySAP ERP. Para ordenar todo el conjunto de CD de las mejores prácticas de SAP, incluyendo la documentación y el CD de preconfiguración, los usuarios pueden contactar a la oficina local de SAP para ordenar en línea del catálogo del software en el mercado de servicio de SAP. Para ordenar solamente el CD de la documentación, simplemente se puede ir al mercado de servicio de SAP para ordenarlo en línea desde el catálogo de conocimiento.

La solución ERP empaquetada de SAP para la industria química también incluye una oferta de servicios de precio fijo, que se centra en implementar la solución empaquetada con la mínima desviación de su contenido. Para esta oferta, SAP ha desarrollado una metodología específica para el mercado medio que incluye un patrón de trazado claro, consistente de implementación paso a paso. El acercamiento de las mejores prácticas de SAP tiene como objetivo no sólo reducir los costos de implementación (por medio de una implementación más rápida), sino también para minimizar los riesgos durante la implementación. Por lo tanto, a principios del proceso de implementación, un "taller de requisitos Delta" determina si la compañía usuaria puede trabajar dentro de la aplicación quee se proporciona como parte de la solución empaquetada. Entonces, como en otras industrias, por un precio fijo SAP o sus socios de servicio proporcionarán una gestión de proyectos básica o avanzada, una implementación y otros servicios. El esfuerzo por reducir la implementación viene principalmente de reducir la duración del proyecto en un 30 o 50 por ciento, con una implementación de 15 semanas en algunos casos (debido a la reducción en la copia comercial o en el análisis del campo de acción y las fases de realización; la preparación del proyecto y las fases de preparación para estar listo siguen sin afectarse en gran medida).

SAP para la industria química: Una solución empaquetada para las compaas del mercado medio

2009-10-21T07:05:00.000-07:00

Aunque se podría tener la impresión de que la vida ha sido muy sencilla para la industria química, éste no siempre a sido el caso. Es cierto que los representantes químicos hoy en día están acuñando dinero virtualmente en sus propios términos, pero hace dos años la industria se estaba muriendo, los productos químicos casi no se vendían. Las compañías químicas están plagadas de inventarios rebosantes, y su poder de asignación de precios estaba anémico. Pero ahora, las plantas operan a un ritmo febril para cubrir la demanda; la rentabilidad y el flujo de caja son muy altos (y siguen en aumento); y los tanques de almacenaje se están vaciando rápidamente.

Primera parte de la serie SAP para la industria química: una solución empaquetada para las compañías del mercado medio.

Pero eso no necesariamente significa que la industria lo haya logrado: los químicos son un lote que se mueve lentamente, a pesar de (o debido a) su madurez, y los retos fundamentales de la industria obviamente no van a desaparecer. Con una rotación de activos, flexibilidad de producción e innovación del producto limitada (simplemente ya no queda nada que inventar o descubrir, en especial para los fabricantes de químicos básicos como productores de plásticos y hule; fibras; materiales primos e intermediarios; materiales inorgánicos; fertilizantes; etc.), la industria puede estarse acorralando.

La complejidad de la industria química mundial de hoy en día crea dificultades para la gestión efectiva de la demanda, ya que tanto los proveedores y sus clientes están sujetos a la incertidumbre del mercado y de la volatilidad de precios. Las crecientes tendencias hacia la adaptación y la segmentación significan que los productores tienen una variedad más amplia de productos por fabricar, y elecciones más difíciles de hacer para maximizar su eficiencia de producción y su rentabilidad. Aunque se puede lograr un pronóstico más exacto al mezclar análisis estadísticos, proyecciones de clientes y el conocimiento de los equipos de servicio y ventas, existe un límite natural para la precisión de la planificación y el pronóstico ya que no es mucho lo que puede ayudar el inventar una correlación mejor de eventos pasados. Para mayor información acerca de la industria química consulte, ¿Qué sucede con los químicos?

SAP AG (NYSE: SAP) ofrece aplicaciones empresariales dirigidas a la industria química. Para mayor información acerca del acercamiento de SAP a las soluciones empaquetadas, consulte Las soluciones industriales de SAP para las compañías del mercado medio.

Un estudio reciente de SAP (conducido en conjunto con Boston Consulting Group) confirmó que las compañías químicas del mercado medio en particular se han dado cuenta de la necesidad de mejorar sus procesos comerciales a lo largo de toda la empresa. El estudio basado en la encuesta se condujo con nueve compañías (cinco en Estados Unidos y cuatro en Alemania), y mostró las áreas estratégicas con las que con frecuencia luchan estas compañías:

1. Eficiencia de la cadena de suministro
Las compañías quieren reducir los costos de inventario, mejorar el tiempo del ciclo a través de la visibilidad y eficacia de la cadena de suministro, reducir los costos de material a través de la subcontratación estratégica de servicios e instituir la demanda colaborativa y la planificación de suministros para reducir el capital de trabajo.

2. Gestión de planta
Las empresas buscan formas de mejorar la productividad de los activos a través de la gestión de inversión y uso de capacidad, y para aumentar la eficiencia operacional a través de una programación mejorada.

3. Soporte del desarrollo de nuevos productos.
Las compañías buscan evitar la producción temprana de mercancías al manejar el ciclo de vida del producto y anticipar los requisitos futuros, y mantener una ventaja competitiva a través del diseño colaborativo y la respuesta rápida a los requisitos del cliente.

4. Servicio al cliente y rentabilidad
Los negocios quieren reaccionar más rápido a las demandas cambiantes en las especificaciones del producto, para optimizar la eficiencia operacional a través de una programación mejorada y por último lograr una transparencia comercial.

SAP es un proveedor reconocido de aplicaciones empresariales dentro de la industria química. Grandes compañías e industrias confían en SAP, incluyendo a Dupont, Dow Corning, Eastman, Dow Chemical, Rohm & Haas, ICI, y Huntsman. SAP se ha dirigido a los fabricantes de químicos virtualmente desde sus inicios, y ha capturado casi a todas las compañías de Fortune 500 en este sector. Pero ¿se debería considerar a SAP como un vendedor para las compañías químicas del mercado medio? De hecho, de los más de 1,500 clientes de SAP en la industria química, sólo el 10 por ciento tienen ingresos que exceden la marca de los $1000 millones de dólares, lo que nos lleva a la conclusión de que en realidad SAP puede ser una consideración viable. De hecho, SAP sirve como la estructura de la planificación de los recursos de la empresa (ERP) para la mayoría de las industrias químicas, incluyendo las quince más importantes a nivel mundial, al igual que las setenta y nueve de las cien más grandes.

Frank Kochendoerfer, un director de la industria química de SAP menciona que es de conocimiento común que SAP tiene una gran penetración en grandes cuentas ya que el 85 por ciento de las compañías químicas mundiales utilizan SAP. También menciona que aunque SAP tiene varios clientes en el espacio del mercado medio (alrededor del 70 por ciento de todas las instalaciones se encuentran en el rango de ingresos de hasta $1000 millones de dólares). De hecho, SAP tiene alrededor de 1,300 clientes del mercado medio en el espacio de los químicos. Por lo tanto, aunque la percepción del mercado es que SAP es sólo para empresas grandes, SAP de hecho ya tiene una gran presencia en el mercado medio. De acuerdo con Kochendoerfer, estas compañías se encuentran a lo largo de todos los segmentos químicos, incluyendo los químicos orgánicos, los químicos inorgánicos, el hule, los materiales de plástico, las pinturas y los recubrimientos, las tintas, los fertilizantes y los agentes surfactivos.

Además, SAP cree que esto es sólo la punta del iceberg: ya tiene más de 5,000 subsidiarias de las compañías químicas más grandes en su base instalada, pero su nueva oportunidad mundial del mercado consta de alrededor de 40,000 empresas químicas pequeñas o medianas. Para ser justos, este es el número estimado total de las compañías químicas mundiales, de acuerdo a las asociaciones industriales. El mercado objetivo para SAP se encuentra en el rango de los 10,000 a los 15,000, y el resto son empresas muy pequeñas.

El gigante incluso proporciona algunos hechos contundentes con respecto a los beneficios tangibles para algunos de sus clientes químicos del mercado medio, soportados por varios recursos independientes. Algunos elementos de la eficiencia mejorada de la cadena de suministro incluyen los inventarios reducidos (inventario general con un promedio del 7 por ciento e inventario de gran valor con un promedio del 5 por ciento), la utilización mejorada de los recursos (reducción laboral clérica con un promedio del 16 por ciento y una reducción de los costos de rastreo de la agencia de protección ambiental [EPA] con un promedio del 25 por ciento), y un desempeño mejorado en términos de reducción de diseños por un promedio del 8 por ciento. Por otro lado, las mejoras potenciales no cuantificables en manejar las operaciones de la planta vienen de la integración de los socios y proveedores externos, de una mayor exactitud del pronóstico, planificación a la ejecución y a la subcontratación de servicios (tiempo más rápido de respuesta), y una flexibilidad más alta, en términos de productos y empaquetados especiales.
SAP ha estado entregando su estrategia para la industria química al expandir sus capacidades para la fabricación y la gestión de la cadena de suministro (SCM), al ampliar sus aplicaciones empaquetadas compuestas en áreas como la gestión de emisiones, y al enfocarse en las compañías del mercado medio. Estas soluciones específicas de la industria han ocurrido conforme SAP ha cambiado a sus clientes ERP de un ambiente cliente/servido (bajo el antiguo producto SAP R/3) a la serie comercial mySAP, que muestra una arquitectura orientada al servicio (SOA) fortalecida por su plataforma de procesos comerciales y de integración, SAP NetWeaver. Esta es la base técnica que compone SAP xApps (aplicaciones cruzadas o aplicaciones compuestas), las soluciones de la serie comercial de mySAP (incluyendo mySAP ERP), las soluciones de los socios, y las aplicaciones construidas especialmente para los clientes. En el 2003, SAP anunció que ya no seguiría desarrollando SAP P/3, aunque seguirá proporcionando mantenimiento y soporte hasta el 2009, y ofrecerá un mantenimiento específico para el cliente por una cuota extra. El reemplazo, mySAP ERP (la solución ERP central de SAP, que ahora opera en SAP NetWeaver), incluye una funcionalidad mejorada para la gestión de procesos comerciales (BPM), y sirve como una fundación para las compañías en transición a SOA (consulte SAP NetWeaver para múltiples propósitos).

En el 2005, SAP lanzó un programa de adopción para ayudarles a las compañías con esta transición, y la producción de renovaciones de licencias para mySAP ERP y para la serie comercial de mySAP (entre las compañías más grandes que todavía utilizan SAP R/3 como la estructura corporativa) ha sido pequeña pero creciente: mySAP ERP se lanzó a todos los clientes en mayo del 2005, y desde entonces ha capturado más de 1,400 clientes. De cierta forma irónica las compañías químicas pequeñas (por lo general en desventaja tecnológica) que son clientes completamente nuevos serán capaces de tomar ventaja de la última plataforma de procesos comerciales y de la plataforma ERP más flexible de SAP, mySAP ERP 2004 (que está en el centro de la solución ERP química empaquetada de SAP), y por lo tanto superiores a los de las compañías más grandes. La alerta de finales del 2005 de AMR Research, las compañías químicas SMB pueden ser capaces de saltar con SAP resume el punto dentro de su título.

SAP ha mejorado fuertemente R/3 para lograr un encaje perfecto para algunas industrias de procesos (como las químicas) y para eliminar las nociones de que el producto era únicamente para su uso a un nivel corporativo superior (en lugar de que fuera para las plantas fabricantes y las divisiones remotas), pero lo ha logrado a costa de la complejidad percibida y con un alto costo total de propiedad (TCO). Para ser justos, durante la era del crecimiento de ERP, cuando varias compañías implementaron ERP debido al Y2K o a las necesidades de integración comercial, no existía una copia central para una rápida implementación (y ningún proceso comercial estándar específica para la industria química), y las compañías comenzaron proyectos caros de re-ingeniería con sus consultores elegidos. Durante los últimos dos años, los equipos de SAP Chemicals IBU y SAP Best Practices han trabajado sistemáticamente en conjunto para entregar un producto ERP empaquetado a las compañías químicas del mercado medio, con caídas de los precios y una implementación simplificada que lo hace atractivo a SAP, sus socios y sus clientes más pequeños.

En la industria química, SAP se enfoca en el mercado medio, definido como las compañías con ventas anuales de entre $50 millones de dólares y $1.5 miles de millones de dólares, por medio de las plantillas preconfiguradas del paquete para reducir los tiempos de implementación y los costos. Como se dijo anteriormente, SAP estima que sostiene del 40 al 55 por ciento del mercado medio en la industria química, y el 85 por ciento de compañías químicas grandes. Sin embargo, el vendedor quiere proporcionar soluciones para compañías de cualquier tamaño, en lugar de tomar un acercamiento "unitalla". Por lo tanto, las mejores prácticas de SAP también se pueden utilizar para las subsidiarias y las compañías más grandes, con instalaciones flexibles para todas (clientes de SAP y cllientes que no son de SAP) desde la parte inferior hasta la parte superior o dentro de las infraestructuras existentes que utilizan Business Configurator (BC) de SAP.
De acuerdo a esto, SAP ofrece que la solución ERP empaquetada para la industria química de SAP; Kochendoerfer afirma que es fácil de instalar, implementar, mantener y que tiene una funcionalidad industrial completa (en lugar de ser una versión Light). La solución es una inversión sustancial hecha por SAP y varios de sus socios de consultoría e implementación. Cubre componentes como la gestión del material, las logísticas, la gestión de operación de fabricación, el mantenimiento de planta, la gestión de almacén, la distribución y las ventas, la gestión de calidad, la gestión de bienes peligrosos, la administración y la higiene y seguridad industrial. Sin embargo, aunque todo esto es parte de la solución de las mejores prácticas de SAP para la industria química, la gestión de emisiones está fuera del campo de acción empaquetada, y sólo está disponible como una aplicación compuesta separada (SAP xEM).

Las compañías químicas del mercado medio no obtienen ninguna concesión debido a su tamaño, tienen que lidiar con las mismas presiones de regulación y competitividad de igual forma que sus contrapartes más grandes, y descritas anteriormente. Con frecuencia son forzadas a lidiar con redes de suministro igualmente complejas y relaciones comerciales, mientras que tienen que competir con las economías a escala de las plantas más grandes y de las redes de distribución. Por lo tanto, al preocuparse con proporcionar una funcionalidad suficiente (la complejidad es inherente a la industria, y no es mucho lo que puede hacer el vendedor para simplificar la solución), las mejores prácticas de SAP para la industria química tiene como objetivo proporcionar un acercamiento para soportar la cadena completa de valor, comenzando con la planificación orientada al mercado (planificación de ventas, planificación de capacidad, requisitos independientes planeados, y planificación de requisitos de material [MRP]), y siguiendo con el desarrollo del producto (gestión de recetas, colaboración de clientes y gestión de calidad [QM]), reabastecimiento, fabricación, ventas y distribución. El proceso cierra con las finanzas y el control (el módulo principal SAP FI/CO, que muestra el control de costos del producto, el análisis de rentabilidad, y el control de costos de operación).

To Gain Market Share in the Mid-Market, SAP Leaves No Stone Unturned

2009-10-21T07:03:00.001-07:00

TEC recently interviewed Patrick Hickey, Director SMB Solutions, SAP America and Steffen Fischer, Manager SMB Solutions, BU SMB, SAP Labs in order to get a closer look at SAP mid-market product and sales strategy. SAP is traditionally known as a provider of enterprise solutions for larger organizations capable of undertaking expensive and lengthy application implementations. SAP is the fourth largest software company in the world (after Microsoft, Computer Associates, and Oracle).

SAP's CRM strategy is SAP's supply chain management strategy, is SAP's ERP strategy, is SAP's global strategy. The CRM is fully integrated with SCM and ERP and is also cross-functional. SAP has since added two more product lines to its mySAP Business Suite solution directly addressing small and medium business (SMB) market needs. mySAP All-in-One, a fully integrated, industry tailored business management solution, is delivered through a network of channel partners. SAP Business One is also a fully integrated solution geared to the smaller companies and also delivered through a network of channel partners.
Like its competitors, SAP has been addressing the growing SMB market since 1996 with a lean positioning. SAP offered one ERP product line and it was up to the smaller companies to fit their needs to SAP's application. The challenge for SAP was to pre-customize packages to fit a broader spectrum of types of companies. The new product line would target businesses with complex production processes that would need an ERP application to support their businesses. The idea was cultivated in early 2002 and yielded to the creation of mySAP All-in-One.

The intricacy for such a venture lay in the comprehension of the internal motivations for each vertical sector in order to adapt the software to match each specific business model. SAP opted for a wise approach and partnered with industry specialists with a comprehensive knowledge of each sector. SAP provided them with access to the code and the partners built specialized versions on top of SAP's software.

Mid-market organizations demand solutions that are built to support business processes and SAP is definitely fulfilling such expectations by prepackaging and adapting their application to fit the specific needs of this market. Functionality alone is not sufficient to excel in the SMB market. Vendors must clearly demonstrate their understanding of the SMB culture and needs, and consequently relate their product, pricing, and distribution strategy to best match such culture.

The mid-market combines two main groups: an upper mid-market segment and a lower end segment. The growth potential of the mid-market has piqued the interest of large enterprise CRM players. Vendors like Oracle Corp., PeopleSoft Inc., SAP AG, and Siebel Systems Inc., have already gone downstream to offer CRM software for the higher end of the mid-market and for divisions of large companies. This segment was traditionally catered to by mid-market solution providers like Onyx Software Corp, and Pivotal Corp., and now they are being directly challenged by the heavyweights. The lower end relative tranquility, originally catered to by Best Software Inc, Maximizer Software Inc., and FrontRange Solutions Inc., is also being disrupted by vendors like SalesForce.com Inc and UpShot Corp., which offer hosted services at a low-cost monthly subscription. Newcomers like Microsoft Corp with MS CRM, are courting both higher and lower segments.

The SMB market is crowded. Considering the majority of companies worldwide are mid-sized organizations, it is crucial for vendors operating in this arena to partner with consultants, value added resellers (VAR), or independent software vendors (ISV) to secure a broader access to this market. The small size of the mid-market companies makes them even harder for vendors to find and sell to. The local solution provider, however, can act as an extended sales force for the vendors with which they work.

Unlike PeopleSoft, SAP seems to have adopted this reality and has partnered with strategic firms to reach scattered customers. The perfect example of such an alliance is between SAP and American Express for the sales of SAP Business One. Business One was a buyout of an Israeli Company geared to very small businesses and combining CRM with ERP. The relationship between SAP and American Express involves two major components: American Express will serve as an individual reseller of SAP Business One and is building its own national network of highly qualified channel partners. In addition, American Express is working with SAP to develop specialized versions of SAP Business One, to be offered exclusively by American Express and its channel partner network under the brand, SAP Business One -- The American Express Edition.

SAP tends to cover the whole spectrum of the market with SAP Business One, mySAP All-in-One and mySAP Business Suite.

mySAP All-in-One is an e-business solution that encompasses industry specific processes by leveraging SAP best practices. It is pre-packaged in order to reduce implementation time and cost.

For many years Siebel was considered as the leader in providing the most comprehensive CRM package to the market. Today the gap is shrinking and both SAP and Siebel are reaching functional parity, causing users to consider other factors in their selection process. SAP even outscores Siebel in important features such as order management and content management that factor high in a sales force automation (SFA) environment.

As vendors reach functional parity across CRM applications, the SMB users pay more attention to other decisive factors such as integration costs, usability, architecture, and Total Cost of Ownership (TCO). SAP offers mySAP All-in-One as an integrated ERP/CRM solution. The combined solution reduces the integration complexity and TCO when, and only when, the integration is with SAP's own applications.

SAP is tapping a large installed customer base, knowing that that is where its solution will best sell. Patrick Hickey claims that nearly 58% of SAP installations worldwide are in companies with less than $500 M (USD) in revenue (SAP's definition of the SMB marketplace), which represents more than 20,000 potential installations. SAP has strategically selected to secure support from its network of SMB channel partners. These channel partners constitute the vertical expertise needed to customize and implement the mySAP All-in-One application. SAP has a network of eighteen SMB channel partners dedicated to developing, selling, and supporting SAP products across North America. In partnership with its Channel Partners, SAP supplies the end-to-end integration, unlimited scalability, and most pertinent business processes that small and medium-sized businesses require. Partners like the Plaut Sigma would offer CP-Food, Cosmetics, management consulting, and computer reseller solutions. Where as Itelligence covers Automotive, complex manufacturing and wood related companies.

SAP presents its offering in a three-layer horizontal packaging. The first layer supported by SAP represents the technical packaging. Then SAP, together with its horizontal partners, provides the sales and delivery packaging elements. The last layer is the services bundling supported by the horizontal and channel partners. SAP pre-configures the industry specific solution within the desired horizontal (i.e. CRM) module relying on their existing best practices knowledge base and the principles of rapid, low cost implementations.

SAP Best Practices for CRM includes:

Prepackaged delivery capability to reduce implementation time and cost
Training and documentation to accelerate knowledge transfer
Helping companies see the value of CRM
Pre-configured best practices for the scenarios that SMBs demand
Integration, flexibility, and configurability of mySAP
Installation guidelines let you choose the scenarios you want to implement
A solution that will grow with the company
Industry-specific capability through Best Practices and mySAP All-in-One
Dedicated channel supporting SMB customers through sales, delivery, and support
SMB BU and Smart Business Solutions; SAP's commitment to the mid-market.

Welcome to ERP - Distribution Showdown! ERP Showdown: Infor SyteLine vs. Exact Macola ES vs. QAD Enterprise Application

2009-10-21T07:02:00.000-07:00

Introduction

Chart 1. Overall rankings.

Results

As the chart below shows, QAD finished first in four of the eight modules, Infor finished first in three of the modules, and Exact Software finished first in one module.

Chart 2. Rankings in the eight ERP modules.

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although QAD was first overall in Purchasing Management (Chart 2), Infor was strongest in Requisitions and quotations., as shown in Chart 3 below. If that's a critical area in your organization's operations, Infor may be a better choice than QAD.

Chart 3. Rankings in Purchasing Management module.

Conclusion

Given that out-of-the-box rankings rarely, if ever, reflect the real-world needs of an organization, and that rankings can shift depending on what area of functionality you look at, how do you determine which ERP solution is best suited for your business?

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. We got our results in 20 minutes, as opposed to weeks—or even months—of struggling with huge Excel spreadsheets.

ERP Showdown!

2009-10-21T06:59:00.000-07:00

The chart below shows the overall rankings.

Results

As you can see above, straight "out of the box," Infor SyteLine ranked first overall, with QAD MFG/PRO coming in second, and Exact Macola ES placing third. Overall scores are based on the average level of support the vendors offer across the entire ERP spectrum.

As the chart below shows, Infor finished first in five of the eight modules, QAD finished first in two of the modules, and Exact Software finished first in one module.

However, as with most aspects of enterprise software, it's not that simple or clear-cut.

For example, your business may require an especially robust human resources (HR) functionality. Even though Infor finished first overall, Exact ranked first in HR by a significant margin, and may therefore be a better choice for your organization. You'll notice that QAD has a low score for the HR module, because the vendor does not offer HR functionality in its discrete ERP solution. In other words, it would be provided by a third party. Accordingly, if you want a separate best-of-breed HR solution that integrates into your ERP system, QAD may represent the best choice.

The same applies within individual modules, where the top-ranking vendor may not necessarily be the right one for your organization's needs. Although Infor was first overall in manufacturing management, Exact was strongest in field service and repairs, as shown in the chart below. If field service and repairs is a critical area in your organization's business model, Exact may be a better choice than Infor.

Conclusion

The fastest, simplest way is to do what we did to produce the results you see here: use TEC's ERP Evaluation Center. (We got our results in twenty minutes—as opposed to weeks or even months of struggling with huge Excel spreadsheets.)

TEC's ERP Evaluation Center allows you to set priorities that reflect your organization's business model and special needs at every level of functionality. At the modular and submodular levels, even down to the individual criteria, you can tell the system which business processes are critical, important, or not important to your organization. The system then compares your priorities against the vendor responses to produce a shortlist of solutions. You get a custom comparison—one that ranks vendor solutions not on out-of-the-box functionality, but rather on how well that functionality matches your business requirements.

It's the best way we know of to evaluate ERP solutions, and we invite you to give it a run-through. Simply click on the link below to visit our ERP Evaluation Center and conduct your fast, free custom ERP comparison. After all, there's no other organization quite like yours.

Warehouse Management for Manufacturers: Why Extended ERP Might Be the Right Choice

2009-10-03T06:57:00.000-07:00

Any manufacturer that makes a substantial number of shipments from a distribution facility has likely considered bringing a degree of automation to its warehouse and shipping functions. For some companies, a full-blown warehouse management system (WMS) is a necessity, particularly if their operation relies on an automated racking system, perhaps housed in a rack-mounted structure with its own track-mounted materials-handling system.

However, for the vast majority of manufacturers—even those that complete a large number of shipments every day—a WMS that is separate and distinct from their other business systems will be counterproductive. Even a full integration of WMS with an enterprise application like enterprise resource planning (ERP), designed to eliminate entry of the same data into two different systems, will result in redundant systems and substantially greater expense than a unified system would. Moreover, WMS-ERP integrations that rely on batch updates will create opportunities for inaccurate information and will often slow operations down rather than expedite them.

This article explores the drawbacks of integrating stand-alone WMS and ERP systems, and makes a case that for many companies, it makes more sense to extend the manufacturing application already used by the organization as a whole, as opposed to integrating with an entirely new technology stack. Also offered is advice on selecting and implementing a warehouse automation solution that works well with a client’s manufacturing enterprise suite.

Basic Warehouse Management versus WMS

At a certain point in a manufacturing organization’s development, management will begin to look for ways to automate the movement of materials from manufacturing to distribution, and into the customer’s hands. A broad spectrum of WMS can in fact help manufacturers to better use their workforce by automating the picking, staging, and shipping processes. The ultimate goal, of course, is to increase the speed and reduce the cost of getting the right product to the right customer at the right time.

The primary business trigger that often prompts a company’s management to begin considering some type of WMS solution is the sheer number of shipments the company has to handle each day. As the number of shipments increases, it becomes more attractive to move the distribution process from an order-by-order environment toward an arrangement that makes better use of labor in the warehouse. Rather than send someone into the warehouse each time for individual orders, warehouse management technology makes it possible for workers to

* pick multiple orders in a single pass through the warehouse
* bring those orders to a shipment staging area
* crate the orders up appropriately for each carrier
* see that the orders are in the right place for pickup

Warehouse management can also help automate the work of warehouse laborers who might be picking different items that are all part of the same order. Through automation, these workers can reliably be directed so that these items are staged at the shipping area for proper inclusion in the combined order.

Moreover, it should be the goal of managers planning a warehouse management project to have warehouse workers use handhelds or other mobile devices to receive instructions on what to pick. The use of such devices eliminates the need for workers to travel repeatedly to and from a centralized dispatch station, where pick lists are printed as hard copies and distributed.

Most manufacturers are producing a product that will be moved into an on-site or close by warehousing or shipping area. If they are already running an enterprise suite, like IFS Applications, for example, they have access to some preexisting logistics functionality, which is integrated with inventory functionality and information on the customer orders to be fulfilled.

Extending that existing enterprise suite with straightforward technology designed to direct workers in the warehouse can be easily achieved without a stand-alone WMS solution. Moreover, the extended ERP approach can facilitate the more comprehensive approaches to picking and warehouse management, including the following:

*

Batch and wave picking. Batch picking involves combining the picking requirement for several orders, and then sorting the materials for individual orders as the picker goes along. Wave picking entails accumulating a large number of orders for picking as a batch.
*

Voice-directed and light-directed picking. Both voice and light inputs can instruct workers what to pick, and extended ERP strategies can accommodate each of these methods.
*

Picking by carrier. For some companies, it makes sense to pick by carrier, particularly if they have a large number of small shipments that need to be packaged according to carrier specifications (UPS or FedEx, for example), while larger shipments are treated much differently, since they are to be shipped by the pallet or by truckload.
*

Communicating picking information to warehouse workers over handhelds in multiple languages. Even companies that are strictly domestic in their footprint likely employ people for whom English is a second language, and can benefit from making other languages available in the warehouse. Global companies obviously need broad language support in their enterprise suite and in their warehouse solutions, including through handhelds.
*

Accommodating requirements to pick and ship items according to first-in, first-out (FIFO) or in accordance with expiration dates.
*

Picking products that are subject to revision levels. Revision levels present warehouse workers with the challenge of looking at two of what appears to be the same item, but that in fact differ on the basis of detailed revisions or engineering change levels, which are tracked in the manufacturing system. While these revisions are documented in inventory records, they may not be visually obvious. Validating picking requirements at the revision level on the handheld scanner eliminates these potential errors.

We believe that many companies will benefit more from extending the logistics and shipping functionality within an enterprise environment than by rolling out a full-blown WMS. After working with a number of companies that have integrated a full-blown WMS with their ERP system, we have found that there is a definite gap between ERP distribution capabilities and WMS distribution logistics. Furthermore, these full-blown WMSs duplicate many of the systems within the ERP environment and deliver numerous capabilities most manufacturers will not use. Most manufacturers simply need a few pieces of key automation, logistics support, and labor- and productivity-enhancing features; they don’t need all the bells and whistles of a complete WMS.

In our experience, we have had success extending the warehousing capabilities of ERP systems by blending them with our automated workforce productivity suite, which includes data collection, mobile devices, truck mounted devices, and the ability to direct workers to the next task. This approach delivers functionality for picking and warehouse automation, driving efficiencies to and automating the work of people performing those functions. A WMS might accomplish some of the same things, but it brings the added cost of additional licenses for the application and database, additional server hardware, additional support and maintenance fees, and additional staff time to maintain expertise on two disparate systems. Moreover, the integration of the ERP system and WMS will add cost not only in the initial implementation, but during each upgrade as well, since the integration will need to be “uplifted” to accommodate new software for both the ERP system and the WMS.