Did you know that 50% of ERP projects fail as a general rule? When it takes too long to implement, it is a telling sign that you might join this unfortunate statistic.
When implementing an Enterprise Resource Planning (ERP) system, there are many variables that will impact the success of the project. Despite due diligence, these issues often only become evident late in the implementation process, resulting in unforeseen costs, continuous project delays and mounting frustration for both management and operational staff.
Implementations end up making use of only a few modules of the ERP (such as financial and distribution), leaving the critical requirements for the manufacturing and production departments out of the equation entirely. Creating the Bills of Material (that contain all the necessary information regarding parts and manufacturing steps) take forever and are even more difficult to update and maintain.
Additionally, production scheduling is generally excluded; inventory quantities are for the most part inaccurate and render proper tracking of plant performance, efficiency, rejects and downtime impossible.
Furthermore, management does not obtain accurate, timely information needed to take appropriate decisions and improve the production plant efficiency and often requires additional staff to maintain and feed that system.
These are all signs that the project is not going in the right direction and bound for failure.
WHY DID THIS HAPPEN?
- Top management did not allocate the right resources to organize the project activities and leverage on their knowledge to provide accurate information to the ERP modules;
- Top management did not do a detailed analysis of the current business and operation process to identify what changes are required internally and those related to staff needs with the new ERP;
- The configuration and training was performed without test transactions to identify and define a list of tasks for both, the software provider and staff, with full understanding and support from the top-management of both parties;
- Some key staff members are reluctant to change or are making unrealistic, irrelevant and unwarranted requests to the ERP provider, which results in major delays and discord in the project team;
- During the ERP software selection process, the company failed to identify if the software was appropriate for their manufacturing process, resulting in additional cost overheads to maintain it as well as further customization costs and delays to achieve the anticipated benefits.
If you are experiencing some or all of these reasons for the delays and costs, here are a few suggestions to avoid project failure.
Top management process and software validation review
- Detailed review and comparison between current process and new ERP:
By doing this, top management can exactly determine what needs to change (software vs internal process) and what is required to do internally to achieve the anticipated benefits. This effort should be done at the pre-selection and early start of the project, but is never too late to do it!
- Top management involvement is crucial:
To allocate the right people to focus on key tasks with their full positive and constructive cooperation. Also, because it may be required additional investment with the ERP provider. In addition, Top management can validate special requirements that need to be addressed or specialized software to get the anticipated benefits.
- Speak with other companies in the industry that have successfully implemented the selected ERP:
To understand the extension of the project and to discover their experience implementing it and to see for yourself if they realized the benefits they were looking for.
SO… WHAT ARE YOUR OPTIONS?
If you only get promises, delays and additional expenses, this is likely a major indicator of what you can expect in the future and warrants seriously evaluating your options.
Just like any bad investment, it may be time to recognize when to get out if the operating costs are ever increasing and if the anticipated benefits are too far off and difficult to achieve. The ERP might be designed for flexibility but, in fact, may overcomplicate simple processes and not readily fit your requirements to optimize and simplify the business workflow.
In that case, you require a recipe-process based ERP rather than typical manufacturing ERP software. You may find other systems specifically designed to be efficient for your type of business, that are less expensive to operate and accrue better benefits and value to the business than the projected current customization costs.
Stopping the project and stepping back to re-evaluate the situation is essential to prevent failure down the road. The goal is to re-energize your company from the top-down with a simplified, more efficient management structure that will make your company more efficient, competitive and profitable for the next 10+ years.
In conclusion, if you are looking for a system that readily provides 95% of what you need to achieve your strategic objectives, without customization, implemented by a team of industry professionals exclusively dedicated to helping plastics processers improve efficiency, profitability and service, then maybe it worth investing the time to obtain a value assessment from CyFrame.