Diagnose Your Inefficiency Potholes

potholesMany employees tend to complain about work-related inefficiencies as much as Wisconsinites bemoan the craters (aka potholes) left in the roads each winter. In response, companies usually acknowledge that making improvements is critical, and do their part in researching Enterprise Resource Planning (ERP) options. But, are all work-related inefficiencies exclusively due to a legacy system? Are people jumping the gun in assuming so, or are they misidentifying a process problem? Could some of these issues disappear by making a few simple process adjustments? Without empowerment and support, all the technology in the world won’t move your business forward.

There is no exact formula to determine if a problem stems from a bad system or a bad process; but asking yourself some basic questions could help you figure out where the problem lies. For example:

  • Would implementing new process improvements really resolve the problem?
  • Could implementing new system functionality resolve the problem and also provide a competitive edge?
  • Do the system benefits outweigh process benefits?

The following steps should aid you in your diagnosis and decision-making:

Create a problem Inventory 

Interview Subject Matter Experts (SME’s) from the various departments affected to develop a problem inventory list.

Identify process-related problems

Identify all process-related issues from your inventory list. Ask yourself: What is the root cause of the problem? Is there a lack of communication, lack of enforcement, or lack of an actual process? If you answered yes to any of these questions, the problem likely stems from a process issue.

Examples of process-related problems include:

  • A customer is upset that they’re getting bounced around
  • Sales Agents aren’t required to track or manage lead information
  • No official process for returns exists. (If an actual documented process cannot be provided, there probably isn’t one.)

These items may also range in severity. While going through this process, consider assigning priority levels or at least identify quick fixes.

Make process improvements where possible

This step is important because it improves overall business processes and productivity by making identified improvements. It also validates problems that can be resolved realistically. This step may take a few weeks to a few months to transpire, but it provides important insight and brings the process to the next step.

Focus on system-related problems

Once process-related problems are identified and resolved, one is able to ascertain that the remaining problems are system-related and decide if a new ERP system would be advantageous.

Examples of system-related problems include:

  • No visibility to inventory availability
  • Multiple customer masters, item masters, and vendor masters
  • Manipulation applied to reports (current system lacks reporting functionality)

This step will not completely resolve a company’s problems and inefficiencies, nor will it guarantee employee satisfaction. It will, however, allow for a more focused approach when considering solutions. It also provides the added benefit of some inexpensive process improvements along the way.

Total Recall: The True Cost of Foodborne Illness

All eyes are on Tyson this week after their recall of chicken nuggets with a trace of plastics. Unfortunately, it’s not just the makers of highly processed foods that are struggling with recalls right now.

As April unfolds, we see that the organic food industry is not immune either:

  • Three purveyors of organic black peppercorns here, here and here have also announced recalls this week.
  • And, the real shocker is this one: Tea Tree Oil mouthwash is recalled because of bacterial contamination, despite the many websites and even an NIH article touting tea tree oil’s antibacterial properties!

Traceability of the root cause is difficult for both contaminated food and hazardous consumer products, as the recent Fitbit Force recall shows. There still doesn’t seem to be an answer as to what material in the wristbands caused so many users to break out in a rash.

As the following infographic shows, foodborne illness is a serious issue, and some companies are better than others at weathering a recall crisis. As we have said in earlier blog posts, social media has been a real game changer during recent recall crises, in ways both positive (providing a way to tap into rising consumer concerns to spot quality issues early) and negative (the viral consumer frustration response at any lag in response or mis-step during a recall crisis).

Total Recall: The True Cost of Foodborne Illness infographic for disaster recovery and product recalls

 

 

Don’t let a recall become a social media storm!

With food recalls increasing and averaging one a day over at the FDA website, and a steady trickle of consumer product safety recalls as well, it’s mind boggling that so many CPG companies are handling recall response so poorly.  By poorly, I mean that consumers are not getting quick resolution from official corporate channels such as the corporate website or the consumer care toll free number–but are airing their frustration on Facebook and Twitter. Within 24 hours, the frustration has gone viral and turned into a social media storm.

In many recent cases, a recall has generated so much traffic that jams the phone lines and/or crashes the brand’s website. Sometimes, the website is down, but the social media team is still directing their angry commenters to log a complaint over at the website. It is painful to watch the frustration unfold.

Then, the consumer care team stokes the fire of consumer anger by sending rebate coupons that don’t work at the supermarket

Nicole's Comment

Or don’t line up with the products that the consumers had to toss, or don’t work in the sales channel of choice or the state of residence of the consumer who receives them.

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It doesn’t have to be this way!

Most companies have the means of capturing the product, quantity, state of residence and retailer in their CRM systems. Whether their systems have the capacity to handle the increased load during a recall is another story.

In a food safety situation, lot or batch traceability is critical, and required by domestic and international regulations. Full traceability enables manufacturers to limit the recall to only those production lots with quality issues. The ERP system must provide full forward traceability through the distribution channels, and backward traceability into the supply chain.

Process recall readiness gaps exist in the area of documented processes, roles and responsibilities, and the pre-existence of a disaster response handling project plan/timeline.

If your business faces the threat of a product recall or another similar crisis in consumer confidence, are you really ready to handle it? Take a short self-assessment, and see how you score across the key readiness categories.

The Vale of False Best Practices

What is a best practice and why you should and sometimes should not accept them.

The way ERP vendors speak about “best practices,” you would expect accompaniment from a bell choir and a sonorous, celestial host. Best practices! Let us all bow and acknowledge their wisdom!

A best practice in ERP-speak is nothing more than a set of process steps, supported by underlying functionality within the system, that a majority of system users agree works for them. This is completely understandable from the perspective of an ERP vendor, who wants to sell software to the widest possible audience.

What better way to do that than to incorporate into the software functionality and processes that provide value to the largest number of prospects? Does that mean that best practices are nothing more than a marketing ploy?

Well, yes and no. If your accounting department is not doing true three-way matches between orders, receipts, and invoices, then an automated three-way match process would probably be a best practice for you because you are behind the curve. So, best practices built into ERP software can be a huge win for companies that are behind the technology curve.

Cherdonsidering that the rest of your industry has probably already adopted better practices, it is not invalid to hope to move forward by joining the herd. I grew up in Texas where herds are not to be disparaged. They provide a livelihood to many and can be quite tasty. Being one-in-a-herd is sometimes the right place to be. Deciding when to separate yourself from the herd is the hard part.

Consider your accounting department again – when was the last time you heard anyone say that their accounting processes provided a competitive advantage or made them stand out in their market? Right. It doesn’t happen. That’s because some processes are me-toos – sure you want to do them the right way and maybe save some money, but they are simply not places where significant investment is warranted. Enough investment, yes. More than that, no.

If, however, you introduce new products in half the time as your nearest competitor, then that is an advantage you want to not just protect, but enhance. That is an area where additional investment is warranted.

Here’s the stark reality. If you are leading the pack within your market, it is unlikely that any ERP software will natively support best practices within those areas where you are a market leader or visionary. Why? Because you are an outlier. A trend setter. Once people figure out how you are leading the market, and then replicate that within their companies and in their technology in order to catch and then dominate you, then those become best practices.

Notice that best practices can make your company more efficient, but they will NOT make you a market leader. Only innovation and ingenuity can do that, and while those are always best practices, they are also uncommon in the herd.

The Lake of Unclear Benefits

lake of unclear benefits

Source: harrypotter.wikia.com

So the decision comes down, your company is moving forward with new ERP. Congratulations on your decision; just remember, a year or so from now, that ERP implementations are potentially the next great, bloody spectator sport. They are not for the weak or those lacking determination. Decision made, presumably based upon a business case that documented the expected benefits and how you are going to get there. If so, continue. If not, then you’d probably better back up a bit and get all of your bunnies in a row because, in either case, now you have to communicate why you are doing this project.

So whom do you have to communicate with? How about: anyone who will be impacted by this project. Certainly that includes directly impacted end-users and their supervision and management. It also includes people in other organizations that may not be included in the initial project, this might be HR or some other organizaton. Why communicate with them? Because they will hear about the project and will naturally have questions about it, including why they are being included in the scope of the change, especially if they are unhappy with current systems and processes.

What needs to be communicated at this early stage? Frankly, it does not have to be complicated. It almost always begins with “We are moving to new ERP because…” and then you simply fill in the blank. This is also a good time to develop a good 15-20 second answer. Why? To get the key points across quickly. That said, you absolutely MUST be ready to provide details regarding what specific goals exist, by area/location, and how you expect to get there. Elevator speeches can only go so far – it takes details to calm people who are fearful of change.

We actually get asked frequently, “why do we have to communicate so early about the reasons for our new ERP project?” Our answer is pretty simple: because if you don’t, people will fill in the blank themselves. And you won’t believe what they will come up with, most of it from the depths of fear, distrust, or native suspicion. Here’s what we’ve heard people come up with:

So, why are they doing this to us (again)?

To get the company ready to sell (and all of us are going to lose our jobs)

To increase automation and efficiency (and all of us are going to lose our jobs)

Here we go again, more churn, churn, churn and someone else gets the butter (and we are all going to lose our jobs)

Get the point? If you don’t provide a good answer in advance, people will answer their own questions in the most negative possible way.

Your communication of the reasons or rationale for moving to new ERP is merely the start of a good communication strategy and plan – not the end of it. Oh, yeah, if you don’t have a comprehensive communication strategy and plan, it is most definitely time to get one. And for pity’s sake, if you don’t know how to do this, call someone who does. Everyone who depends on the future ERP system will eventually be grateful.

Lack of concerted communication to end-users about the reasons behind the implementation, the anticipated benefits stemming from successful adoption and the ways in which each individual end-user and executive are impacted will affect project success or failure.

Mitigation Step: Create and follow a comprehensive organizational change management plan – at the very least, get an expert involved to do an assessment of readiness and challenges.

Landscape of ERP Pitfalls – New Map Discovered!

ERP MapOne of our young, and deeply curious, co-workers discovered an artifact – a map – while browsing a dusty, old book store in Boston. She bought it for a pittance and took it home where she discovered the key to cracking its codes. No, she will not share those with us – something about job protection…

The map contains the key to how so many ERP implementations stumble and – this is most exciting – confirms that the Valley of Despair truly exists! Upon further translation, she has identified the title on the map as “The Land of ERP Pitfalls”. While translation continues, we have already identified several locations on the map that are both illuminating and thought provoking.

We are moving forward with a set of blog topics involving these pitfalls and key success factors for successful ERP implementations as they are uncovered from the difficult text of the map. h/t to the curious and talented young who illuminate the days of the middle aged, if we are wise enough to listen.

Is ERP Success Really Such a Secret?

ERP isn’t just big business, it’s huge business, projected by those who know to break $50 billion yearly by 2015 in software sales, maintenance, development, and services. Thousands and thousands of companies undertake ERP investment and implementations yearly. There are millions of pages on the Internet about how to make ERP projects successful. And hundreds of firms and thousands of people exist whose life-blood is implementing ERP solutions.

ERP Enterprise Resource PlanningSo why does ERP so often fail to deliver? According to some, you’ve got a fifty-fifty chance to satisfy half of your goals for the investment. So, if I plan to drive to Dallas and only get half way there, is that a successful trip or a failure? I may have enjoyed the journey while it lasted, but then I ended it in Abilene, not Dallas. That is not a successful trip. It is a sure ride to the Desert of Disillusionment.

Failing to deliver the desired business value means the project was a failure regardless of whether it was on-time, on-budget, or on-scope. It failed. Let’s hear that again. It failed. Sure, everyone got to keep their jobs because the project concluded reasonably close to the schedule and within some allowable contingency of the targeted budget. Success, right? Well, not if you wanted to get further it isn’t. It failed.

How can that possibly continue to happen? The ERP landscape is enormous. Almost every business – particularly those involved in manufacturing or distribution – use or want to use ERP software. Certainly people know better. There are thousands of really experienced, smart people guiding and informing these projects, yet they continue to fail to deliver fully against expectation and goals.

Is the problem that goals are too high? I sincerely doubt it, as companies engaging in ERP projects rarely agree to document their goals in writing or in measurable ways, paying only lip service to “productivity gains” or “improved efficiency”. So if the goals aren’t the problem, what is? You can read for years about better project management, better leadership, a better implementation process and still miss the boat.

The bottom line is simply this: software does not drive a business. People do. And if you don’t empower and support people, all the technology in the world won’t move your business forward. This is something we’ll explore further in subsequent posts. But stay tuned as we drill into how to turn the discussion on ERP success on its head.

Top 5 Warning Signs you are on the ERP Desert Highway

desert carThere are many wrong turns on the road to the Desert of ERP Disillusionment.  Some teams go wrong right out of the gate. Here are the top five warning signs that your real destination is not the pinnacle of ERP success, but the dry parched sands of the desert.

1. Your steering committee is texting while driving. If your key decision makers are multi-tasking through every steering committee session, its easy for them to miss critical information they need to actually steer.

2. The distraction of backseat squabbling causes the PM to miss a turn.  Political infighting and lack of alignment among key stakeholders can be as difficult to manage as any carful of kids on a family roadtrip AFTER you have taken away their favorite electronic toys.

3. The driver is looking in the rearview mirror instead of the road ahead.  While there are some lessons to be learned from your last ERP implementation (how long ago was that?) , modern state of the art systems require significant behavior changes in the way users interact with information in the system.   If they are used to greenbar reports laid on their desks every morning, the gap may be too big to jump. 

4. You read a guidebook about the wilderness once….  You can’t learn all your survival skills from a book.  In life threatening terrain, there is no substitute for having an experienced guide on the team.  If you haven’t put experienced change leadership into place before you bid your consultants goodbye, you will have neither the insight to recognize the warning signs, nor the skill to lead your people out of the desert.

5. You ran out of gas!  You didn’t fill up at the last station because the ATM was out of cash, your credit card is maxxed out,  and you used your last dollars on Slurpees and Twizzlers for the kids.  If you fritter away your project budget on non-value added-customizations like moving fields on forms and cosmetic report changes, you won’t have money left to address any business critical requirements that come up late in the game.

(Hat tip to Mark Farrell for #5!)

How does your company handle major change?

Although many large technology initiatives fail because an inadequate or inefficient change management framework, many companies still lack a consistent approach in supporting their employees and external stakeholders through major system implementations and other significant business initiatives.

 

 

There are many reasons for this.

  • The roles and responsibilities for communication, training, and monitoring performance remain vague.
  • The approach varies from department to department.
  • Information is pushed out once in the wrong format (usually by email) and not made available on a portal under version control. We see this often in companies that have an immature or outdated collaboration style.

We’ve put together a short poll on change management approaches. Please take a moment to tell us how your organization handles major change, and share your thoughts in the comments.

It’s the End of the World As We Know It!

The Holidays are a great for watching “End of the World” shows on the History Channel. They were a great comfort, actually almost encouraging, because all of the prophecies target 2012.  “The Bible Code II”, “The Mayan Prophecies”, and the Big 2012 Special compendium of End of the World scenarios, covering Nostrodamus to obscure German prophets, all agree that 2012 is the big one (Dec 21 to be exact!)  What a relief!, the rest of the news reports are trending to canned goods, shotguns, and gold by the end of the year.  We really have almost a whole 48 months before everything goes bang (I wasn’t ready anyway, procrastination rules!).

Unfortunately, we need to do some IT planning and budgeting for the new year and probably should have some thoughts going out 36 months (after that see the first paragraph).  As I discussed in a prior blog, the reporting, BI/CPM/EPM, and analytics efforts are the strongest priority; followed by rational short cost savings efforts.  All organizations must see where they are heading and keep as much water bailed out of the corporate boat as possible.  Easy call, job done! 

Then again a horrifying thought occurred to me, what if one of these initiatives should fail? (see my nightmares in prior blog posts on Data and Analytics).  I am not saying I’m the Mad Hatter and the CEO is the Red Queen, but my head is feeling a bit loosely attached at the moment.  Management cannot afford a failed project in this environment and neither can the CIO in any company (remember CIO=Career Is Over).

The best way to ensure sucessful project delivery (and guarantee my ringside lawn chair and six-pack at Armageddon in 2012) lies in building on best practice and solid technical architecture.  For example, the most effective architecture is to use a layer of indirection between the CPM application (like Planning & Budgeting) and the source data systems (ERP, Custom transactional).  This layer of indirection would be for data staging, allowing transfer to and from fixed layouts for simplified initial installation and maintenance.  In addition, this staging area would be used for data cleansing and rationalization operations to prevent polluting CPM cubes with uncontrolled errors and changes.  In terms of best practice, libraries and tools should be used in all circumstances to encapsulate knowlege rather than custom procedures or manual operations.  Another best practice is to get procedural control of the Excel and Access jungle of wild and wooley data which stands ready to crash any implementation and cause failure and embarassment to the IT staff (and former CIO).  When systems fail, it is usually a failure of confidence in the validity or timeliness of the information whether presented by dashboard or simple report.

CPM, EPM, and Analytics comprise and convey incredibly refined information and decisions of significant consequence are being made within organizations to restructure and invest based on this information.  The information and decisions are only as good as the underlying data going into them.  So skimping on the proper implementation can put the CIO’s paycheck at serious risk (Ouch!).