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Manufacturing – Part 3: Getting Data Right

Getting Data Right is a Critical Commercial Issue for Manufacturing Businesses

We meet many manufacturing CEOs who are frustrated that, despite spending huge sums on new systems, they are still unable to get visibility of the true cost of production, have higher than expected waste and no clear view of inventory on hand or on-order.

New systems like IFS, Nav, AX or Dynamics 365, SAP, Sage, Epicor, Oracle or Syspro can cost huge sums, but if the project fails to deliver often the root cause is that the master data in the system is wrong. For example product costings, Bill of Materials, Recipes, routings, etc may have not been setup correctly in the first place or may have become out of date. The tech may be fine (though often it isn’t!) but if the data is wrong then everything else is “built on sand”.

Poorly controlled master data confuses everything – same customers, FG’s (finished goods) or RM’s (raw materials) entered multiple times but called different things. And the bigger and more distributed the company, the more this can happen. Reports are wrong or time-consuming to fix; customers are upset by incorrect, incomplete or late delivery; procurement over-order to create safety stocks; sales can’t accurately forecast delivery dates; labels or documents may be wrong which can be inconvenient or, more seriously, can have legal or safety implications.

Fundamentally, poor data can make it hard to take advantage of efficiencies of scale. New systems are rolled out but problems remain and a growing business becomes less profitable rather than more profitable.

What are the root causes and real solutions?

1. Strong leadership or ownership.

Data is difficult, detailed and, let’s be honest, it’s not very interesting. Solution vendors are contracted to deliver some tech, so they don’t really care. Everyone’s too busy doing their day job so it may get left to the Finance or IT teams to sort it out, and they may not have the knowledge to fix issues or the authority to get people to change bad habits?

This issue has strategic implications so a Board-level leader needs to take ownership. The individual needs to have time to get to the bottom of the issues, experience of this kind of work, and authority to make decisions and get things done.

2. A complete strategy and solution.

Data problems often reflect process problems, or lack of alignment between people and departments. It may not be clear internally who is responsible for what, for updating data as things change, for correcting data if errors are found. Perhaps this kind of thing falls to some very over-stretched helpful people – and Directors wonder what they’re doing all day. There may be no-one who has time to get to the bottom of what goes on and why.

Sales, finance and production teams’ reports simply won’t agree if they are working from different base information, but they may have good reason for this and fixing the problem may require process changes, technology changes and some retraining (or even “redeployment” if the real issue is particular people!)

We often see data issues resulting from multiple systems being used but there may be good reasons for this. For example, specialist warehouse management solutions are often used as they integrate with advanced technology such as voice or sight picking which isn’t supported by basic ERP platform. But if you have separate systems there needs to be clarity around as to which system owns what data (eg ERP owns stock quantities, WHM owns stock location) and interfaces need to be complete, tested and working.

Overall the architecture of the processes, systems, and data needs to be clear, simple, well structured and then well implemented. Processes and data standard need to be defined and enforced. These activities need to be monitored and corrected when necessary.

3. Long-termism and commercial realism!

Data issues often arise because lack of time and commercial pressures mean that shortcuts are necessary. Getting data right may be a matter of diminishing returns as obscure problems can be very difficult and time-consuming to fix, and they may just not worth it!

The most important thing is to make considered and rational decisions. List the data problems, estimate the necessary effort for each, and the business impact. If short-term pressures mean that a problem won’t be fixed now, then perhaps it’s on the list for next month. The impact of these data problems can be monitored and, when time allows, further progress can be made.

Deciding to tolerate a problem for now is not the same as ignoring it or sweeping it under the carpet!

Even poor systems can work effectively if the data is well structured, well maintained and well policed. And, most importantly, this is a good platform for system improvements. Well structured data can eliminate a whole range of problems and inefficiencies, can boost profitability and give everyone new energy as less time is wasted on distractions and snags.

You may also like to read the additional content on our Manufacturing series:

Manufacturing – Part 2: Board checklist for successful ERP projects.

Manufacturing – Part 1: The impact of the Internet of Things.

Freeman Clarke is the UK’s largest and most experienced team of IT leaders and we frequently work with manufacturing clients to help them deliver transformational programs of improvement and system efficiency. We are entirely independent of any technology or suppliers.

We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.

 

Manufacturing – Part 2: Board Checklist for Successful ERP Projects

Manufacturing companies’ internal efficiency and effectiveness are highly reliant on sound ERP systems. But all too often we meet CEOs whose systems just tie them in knots, add cost and hamper customer service! These systems become a brake on expansion and growth.

Manufacturing companies embark on ERP projects, often expensive exercises, but the results are often disappointing and rarely meet their business objectives. How can you avoid this?
This Board Checklist provides some key pointers. It can be a useful review even if you’re half way through, or primer if you’re about to start.

1. Get the business objectives clear. Has there been an open workshop at Board level to agree the basic business objectives? The objective isn’t to implement a new ERP, it’s to deliver some specific business outcomes… what are these? Is everyone agreed? For example the objective might be to halve manufacturing cycle/throughput time; to remove 4 FTEs by avoiding any rekeying between the ERP and website; or to eliminate errors in labelling by automation of label production.

2. What are key requirements? Document in everyday business language the key things the systems must do, or must enable or must achieve. This might be a list of 40 or 50 statements, for example, “Telesales handling staff can see accurate stock info and pricing on any products within 30 secs.”. Often the emphasis is on how you go about things today but the focus should be on outcomes as there may be better ways to get there. All the heads of departments need to be involved, need to agree and sign off (yes, put ink on the paper!)

3. Who is involved and who is accountable? Who on the Board is accountable for delivery? This should include not only delivery of the technology, but all the business outcomes identified at the start. Are there experts on the business who will need to be assigned to the project team? Will they need to be backfilled? Everyone must be clear on their roles. Are you aiming to involve some of your own people in the details so they can become expert superusers?

4. Get clear on the cost/benefit model. Although you don’t know the detailed costs yet you can establish the cost/benefit model. This means understanding how this project will deliver hard benefits so that, when compromises are necessary, you can identify what’s worth keeping and what you can afford to drop. The cost/benefit should be based on improvements in KPIs, for example, identify the target OTIF (On time in full) and compare to current measurements of the same KPIs.

5. Rational Product(s) selection. There are hundreds of systems available: IFS, Nav, AX, SAP, SAGE, Epicor, Oracle, Syspro to name a few! This is a minefield, but using the requirements already agreed you can create selection criteria, a scoring system and clear questions to ask, rather than just being seduced by great salesman. You need to weigh up the advantages of integrated ERP with multiple specialised systems, which might offer better features but greater complexity. For example it can make sense to select a standard ERP and a specialist warehousing product for better goods handling (picking, putaways etc). Make sure all the business stakeholders are part of the decision-making process so they all have a vested interest in success.

6. Rational Partner(s) selection. A partner will configure, customise and support your systems. As you will need to have a long-term relationship it is critical that there is a good cultural fit and trust. Take up references, and check everything! Are they experts in your sector, are they financially secure, have they got a stable team. Ensure you have time to negotiate a good price and contract rather than having to cave in due to pressing deadlines.

7. A credible & complete plan. The vendor or implementation partner needs to provide you with a credible plan and you need to extend this with your own plans for things like communication, data setup and retraining. Most importantly, the plan needs to show all activities to deliver the business objectives, not just delivery of the tech, and should span all the resources and commitments not just the supplier.

8. Define target business processes. Working with the implementation partner you need to design your target processes. Many ERP projects fail because companies try to configure new software to match the way they always have worked. This often leads to expensive bespoking and, if the implementation partner is charging for this, then their salesman will be delighted to help you make bad decisions!

9. Process and organisational changes. With new systems, come new ways of working. These need to be planned, documented and rolled out carefully with plentiful and personal communication to everyone affected. This will not happen by accident; without proper management many people will go to great lengths not to change how they work!

10. Data migration, cleansing & setup. Getting the data right can be make or break for a new system. This task can be the biggest part of the project and may be the most critical. Take the opportunity to clean data and improve its accuracy, after all one of the key benefits of an ERP is the information it can provide the business to help advise decision making. If the data is poor and inaccurate today that won’t change tomorrow unless effort is put in to improve it. Think about product codes and bills of material and how they can best be structured to deliver the information the business needs. Start cleaning today and don’t wait till the point of go live. Experience tells us that the point of go live all too often results in taking inaccurate and unclean data across to the new system!

11. Device integration. Where shopfloor, in-vehicle or other devices are to be integrated with the systems then this needs to be implemented and tested, probably in collaboration with device suppliers. For example, scales, environmental sensors, barcode scanners, or RFID trackers are increasingly key sources of efficiency so shouldn’t be an after-thought – device integration should be carefully planned, managed and tested. Are the devices suitable for the environment… think about temperature, humidity, vibration etc.

12. Testing and conference room pilot. By making the vendor run their product through your business processes you can check the system and business practices will fit together and the key staff are ready for change. It’s a great way to get superusers onto the system; it may also be an opportunity to identify additional benefits that weren’t thought of at the beginning … or a last chance to spot unforeseen problems!

13. Implementation/Cutover/Go-live. A ‘big bang’ go live can be complicated and risky; different parts of the new system may be ready at different times; and different phases will deliver different benefits. So there will normally be a progressive adoption of the new system(s) and decommissioning of the old ones. This needs to be thought through and carefully managed.

14. Training and monitoring. Staff will need training and coaching in how to work with new processes, systems and roles. There may be a period of de-snagging and minor amendments. This needs careful monitoring and policing to ensure that employees have clear ways of working and do not adopt bad habits. For many staff this change is daunting and where this means doing their jobs differently it can cause stress and resentment, and when they don’t yet fully understand the new way of working they may blame the system for mistakes or processes that are taking longer due to the unfamiliarity.

15. Review and ongoing ownership. The project owners need to ensure the original business objectives and cost benefits materialise. But this is the moment when the new system becomes “legacy” so it’s critical than ongoing ownership is clear. Ongoing monitoring must be part of the routine and new issues must be addressed quickly and without a fuss. There needs to be an annual budget for vendor support, for training of new staff, for fixes, and for amendments so the system continues to remain aligned as working practices and products change (as they inevitably will).

All too often we see lack of focus on these key points and, as a result, the projects can become bogged down and overrun both costs and timescales. Eventually there is a dash to finish… the original vision gets relegated and the aim becomes to “just get it done”!

But the benefits delivered by new ERP systems can be transformational when the project is conducted well. Many of our clients have achieved significant uplift in efficiency and service and find new confidence to grow because their business starts to feel like a platform for scaling up! When system issues are no longer on the agenda the Board have more time to talk about strategy and growth. And effective systems provide data and reports to feed into those strategy and growth conversations.

You may also like to read the additional content on our Manufacturing series:

Manufacturing – Part 3: Getting data right.

Manufacturing – Part 1: The impact of the Internet of Things.

Freeman Clarke is the UK’s largest and most experienced team of IT leaders and we frequently work with manufacturing clients to help them deliver transformational programs of improvement and system efficiency. We are entirely independent of any technology or suppliers.

We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.

 

Manufacturing – Part 1: The Impact of the Internet of Things

The impact of the Internet of Things on manufacturing is often talked about, but as ever, IT companies like to baffle the market with new buzzwords and to spread fear and uncertainty!

We read about the Industrial Internet, Industry 4.0 and smart factories. What’s really going on?

In simple terms this is all about using technology on the production line that incorporates sensors and controllers to make the production activity more visible, smarter and controlled in real-time.

More visibility means your own staff can deal with customer requirements more accurately, manage stocks, ordering and production to minimise costs, maximise output and quality.

Rather than basing this on manually created reports a week or a month old; devices and sensors are integrated into ERP systems to provide up to the minute information accurately, with minimal manual intervention.

Of course, it’s not a huge step from here to introduce automation for some aspects of decision-making. This can be a structure of simple rules – it doesn’t have to be rocket science. Or it can be sophisticated machine learning and Artificial Intelligence.

If production information is available internally then it can be made available externally.

Customer expectations across all industries are being reset by people’s own domestic experience of ecommerce – your customers will increasingly expect to be able to see and assess the progress of their own orders through your factory. Integration of your production activities with your customers, suppliers and partners becomes possible at a far more detailed level.

Perhaps the greatest opportunities are to continue to monitor and communicate with your products after they have been shipped and are in use. This enables new models for maintenance, support and entirely new opportunities for value-added services.

3D printing will have a revolutionary effect on many aspects of manufacturing in the future. Rapid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customisation where customer expectations will undergo major change in the coming years. Endless product versions and variations will become the common place.

Equally significantly, 3D printing will massively reduce the need for stock holding, especially for spares, which will free up cash. This may have a transformative effect on smaller companies and their ability to invest in these new trends.

At a macro-level, these changes will all reduce labour costs which will reduce the attractiveness of low-cost economies, reduce economies of scale, and will enable a return to local manufacturing. We believe that ambitious mid-sized businesses will find huge opportunities in this change.

Finally, it’s worth noting that these trends towards local manufacture are forecast to reverse decades (or centuries) of growth in global trade of manufactured goods. A recent ING report estimated a reduction in world trade by as much as 40% by 2040! This will affect a wide range of industries from shipping to insurance, and may have very broad-ranging geopolitical ramifications as well. It won’t be the first time that manufacturing has changed the world!

You may also like to read the additional content on the Manufacturing series:

Manufacturing – Part 2: Board checklist for successful ERP projects.

Manufacturing – Part 3: Getting data right.

Freeman Clarke is the UK’s largest and most experienced team of IT leaders and we frequently work with manufacturing clients to help them deliver transformational programs of improvement and system efficiency. We are entirely independent of any technology or suppliers.

We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.

 

Scale-Up an Ecommerce Business – a Strategic Model.

Many successful Ecommerce businesses have been launched by entrepreneurs passionate about a product or market place, or who have spotted an opportunity and exploited it successfully.

But Ecommece business can become bogged down as they grow. They can stop feeling successful, profitability can dip, and they become bogged down with operational, systems and process issues undermining performance.

We see 5 main causes of this:

  1. Disconnected systems and processes create wasted time and errors.
  2. Product and data errors result in returns and unhappy customers.
  3. Complexity and more staff create cost and drain your energy.
  4. Simple marketing ideas become bogged down in data and system issues.
  5. Technology is expensive, time consuming and not what you’re interested in.

All of these issues are consequences of growth, and the need to move to the next level of maturity. We use a model for 4 levels of maturity for growing Ecommerce businesses:

Baseline

Scaling

High Performance

Enterprise Grade

The infographic in the link below shows the 7 key streams that are involved in progressing through this maturity model. For each stream, there are 3 objectives. In other words there are a total of 21 objectives.

To achieve each objective requires a series of projects that can be progresses as the company grows and succeeds, this way the growth is managed and the costs are controlled in line with increasing revenues.

Download our infographic here: Optimise your online business in 7 steps

Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT leaders. We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.

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Graeme Freeman
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You’ll now receive regular expert business insights.

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