If the software can be uniquely valuable to your business, then bespoke software offers a great commercial opportunity. But it requires substantial investment, and you will be living with the decision for years to come.
Conversely, an enormous range of off-the-shelf software is now available, and it is increasingly flexible and powerful. And modern off-the-shelf products are normally cloud-based with subscription pricing, so they are easier than ever to own and operate.
Large off-the-shelf implementations, however, are also difficult and complex projects, and they will not provide your business with a point of difference. In fact, normally, these projects are deliberately aiming to drive established best-practice into business processes and to enforce standardisation and rationalisation.
Custom software development on the other hand is complicated and risky, but it can deliver uniqueness and genuinely valuable innovation. This comes at a price, and many bespoke software projects fail—bespoke software is valuable because it’s not easy.
What are the benefits of bespoke software?
Bespoke software can deliver stand-out user experiences and functionality. This may allow your business operation to do something different and better than the competition; it may allow you to deliver valuable innovations.
But business leaders need to ask themselves this challenging question: Is it a genuine innovation, and would customers value it?
Bespoke software can be a means to create new market opportunities, to build engaging brand experiences for your customers, and to radically reduce cost or service. It can bring innovation and digital thinking to the heart of your business culture.
Bespoke software projects are very difficult to plan and manage, and because anything is possible, it is often difficult to manage scope.
Conversations between non-technical business leaders and highly technical software developers are often fraught. It’s very difficult for non-technical leaders to assess the completeness, security, or quality of software, and developers often struggle to explain the implications of their design decisions. Effort estimates are notoriously unreliable, and problems may only become apparent very late, so relationships can become strained.
All bespoke software requires ongoing fixes and changes, either to address errors (which are inevitable) or keep up with the continual evolution of IT. As there really is no end to a bespoke software project, you need to ensure that experts are always available and involved. And tools and approaches that work for small-scale software are not appropriate for large, important software products, so if the project is successful, there is a constant need to upgrade.
Many business leaders are frustrated that the costs never seem to end.
How can I ensure that bespoke software delivers innovation?
Businesses that embark on bespoke software need to understand the likely cost and effort in the short-, medium- and long-term. They need to create a robust business plan that demonstrates the value and remain entirely focussed on delivering it.
They need to ensure that have the necessary technical skills and leadership skills to deliver the software to time and budget and to deliver the intended business outcomes.
For more non-technical advice, visit our ERP and Integration Issues Knowledge Centre, which includes all content related to this topic.
The future of manufacturing part 3: Getting data right
In previous instalments of this series, we discussed the key trends in the future of manufacturing and provided a checklist for new ERP and MRP projects. Now we need to talk about a critical commercial issue for any manufacturing business: getting the data right.
We meet many manufacturing CEOs who are frustrated that, despite spending huge sums on new systems, they lack visibility of the true cost of production, have higher than expected waste, and have no clear view of inventory.
New systems like IFS, Nav, AX or Dynamics 365, SAP, Sage, Epicor, Oracle or Syspro can cost big money. But if the project fails to deliver, often the root cause is that the master data is wrong. The system may be fine (though often it isn’t!), but if the data is wrong then everything is built on sand.
Poorly controlled master data confuses everything, embedding waste, errors and poor service in the organisation. For example, product costings, bills of material, recipes, or routings, may have not been set up correctly in the first place or may have become out of date.
We’ve frequently seen examples of businesses where the same customers, finished goods (FGs) or raw materials (RMs) are entered multiple times, but called different things, creating all kinds of confusion. The bigger and more widely distributed the company, the more possible this can happen.
This often results in reports that are wrong or time-consuming to fix. Staff costs increase, especially for the finance team, who may have to clear up the mess in Excel.
Procurement may over-order to create safety stocks, tying up cash; sales can’t accurately forecast delivery dates. Eager salespeople may pinch items from different orders to fulfil today’s priority, creating more problems down the line. Inventory turn is lower than planned and OTIF targets get missed.
Customers are disappointed by long lead-times or upset by incorrect, incomplete or late delivery. Labels or documents may be wrong, which is inconvenient at best and, at worst, can have legal or safety implications.
On the other hand, well-structured manufacturing data provides insights to senior managers, allowing them to answer important questions:
Who are our most profitable customers?
What are our least profitable products?
Which processes require the most rework?
Well-structured data also allows for accurate real-time data, empowering supervisors to organise work within defined boundaries.
Fundamentally, poor data can make it hard to take advantage of efficiencies of scale. You can roll out new systems, but the problems will remain. And a growing business becomes less profitable rather than more profitable.
So then, how does a mid-market manufacturing business get data right?
Data is difficult and 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 about the data. 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.
But this issue has strategic implications, so a Board-level leader needs to take ownership. And whoever takes charge of the data needs to have time to get to the bottom of the issues, the experience of this kind of work, and authority to make decisions and get things done.
Production and business teams will have to be involved as well, taking responsibility to help get the data right and keep it that way. And since data quality is an ongoing exercise, the senior team should receive reports at regular meetings.
2. Identify the problems and their solutions.
It may seem obvious, but it’s often overlooked: data quality issues will keep reoccurring and snowballing if you don’t find the root causes and create solutions.
One place to start is to look for who is supposed to be in charge of data quality – if anyone. Data problems often reflect process problems or a lack of alignment between people and departments. It may not be clear internally who is responsible for what, for updating data as things change, or for correcting data when errors are found.
Perhaps data quality falls to some very overstretched, helpful people who may be vital but have a very low profile (the Directors wonder what they’re doing all day!). Or there may be no-one who has time to manage data quality.
Using multiple systems without proper integration is another common cause of data quality issues. Sales, finance and production teams’ reports simply won’t agree if they are working from different base information. Fixing the problem may require process changes, technology changes and some retraining (or even ‘redeployment’ if the real issue is particular people!).
There may be good reasons for using multiple systems: for example, specialist warehouse management solutions that work with advanced technology such as voice- or sight-picking, which isn’t supported by a basic ERP platform. But with separate systems, there must be clarity as to which system owns what data (e.g. ERP owns stock quantities, WHM owns stock location) and the interfaces need to be tested and working.
3. Make rational decisions about when to solve problems.
Data issues often arise because time and commercial pressures make shortcuts 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 be 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 it won’t be fixed now, then perhaps it’s on the list for next month. In the meantime, monitor the impact of the problem. Deciding to tolerate a problem, for now, might be sensible. Ignoring it or sweeping it under the carpet isn’t!
Even poor systems can work effectively if the data is structured, maintained and policed. Most importantly, this is a good platform for system improvements: maintaining data quality can eliminate a whole range of problems and inefficiencies, can boost profitability, and can give everyone new energy as less time is wasted on distractions and snags.
Freeman Clarke is the UK’s largest and most experienced team of IT leaders. We frequently work with manufacturing clients to help deliver transformational programs. We work only for you: we are entirely independent of any technology or suppliers. Contact Us and we’ll be in touch for an informal conversation.
The future of manufacturing part 1: The six key trends of manufacturing 4.0
The IT industry often deliberately spreads ‘fear, uncertainty and doubt’ in the market. They create confusion about the future, and then, of course, sell you the perfect solution to a possibly non-existent problem. Is the so-called ‘Fourth Industrial Revolution’ and ‘Manufacturing 4.0’ part of the usual befuddlement bandwagon?
What is really happening? What are the technologies that will form this change? And what difference do they really make? Read the 6 key trends, but for a top line perspective watch the short video below.
Shop floor technology is increasingly information technology
First, a little context. Historically, there was a clear distinction: your operations teams owned shop-floor tech, and the IT team owned IT. But this gap is rapidly closing. For many companies, the challenge now is to have the right leadership to effectively lead these cross-border initiatives and to deliver value.
The winners will be those companies who are smart enough to use technology and data to meet customer needs more effectively and to innovate ahead of the competition. This is as much about leadership as it is about technology.
We believe there are six key trends to this generation of tech:
IoT/5G
Improved collaboration
Big data, AI and machine learning
Robots/cobots
Servitisation
3D printing
Here’s what they each mean.
1. How will IoT/5G make a difference to manufacturing?
Just to be clear, ‘IoT’ means the ‘Internet of Things,’ or using connectivity to control machinery and harvest data. ‘5G’ is the fifth generation of technology for cellular networks.
When it comes to manufacturing, IoT and 5G is about incorporating sensors and controllers on the shop floor to make the production activity more visible and controllable in real-time. This requires new systems as well.
Most importantly, it requires skilled staff to deliver the benefits, which will include minimising costs and maximising output with more accurate ordering, production, and stock management.
One of the best aspects of IoT and 5G for manufacturers is how it improves reporting. Rather than basing decisions on reports that were manually created a week or a month ago, information flows into your ERP or MRP systems to provide accurate, up-to-the-minute information, with minimal manual intervention.
Ultimately, IoT lowers costs, increases profits, and delivers better quality and service to customers.
Continue reading the key trends below the video.
Find out how to meet manufacturing challenges with technology
2. How will Manufacturing 4.0 improve internal and external collaboration?
When you hear ‘Manufacturing 4.0’ or ‘Industry 4.0’ it generally means increasingly autonomous systems and information in real-time.
More specifically, Manufacturing Execution Systems (MES) allow the capture of more data about detailed process activities and individual operations on individual items. MES can make use of barcode or QR-code scanning, or automated collection of RFID information, or similar smart-monitoring.
As more real-time information is available, and office IT like Microsoft Teams becomes mainstream, your management, supervisors, and even skilled operators no longer need to be on the shop floor to manage production. Managers and supervisors can see precisely what is happening, managing production in real-time, or detecting issues as they happen. They can also look backwards to understand costs, cycle-times and quality. Managers can assess effectiveness of processes, teams, production batches, and even individual machines or staff.
E-commerce has reset customer expectations across all industries. Your customers will increasingly expect to be able to see and assess the progress of their own orders through your factory.
This technology has external implications as well. Fortunately, with Manufacturing 4.0, integration of your production activities with your customers, suppliers and partners becomes possible at a far more detailed level.
3. The impact of Big Data, Artificial Intelligence and Machine Learning in manufacturing
Of course, large volumes of data create new challenges as well as opportunities. Manufacturers need new tools to understand data patterns. Technologies such as Tableau and Snowflake make vast number-crunching and visualisation easy, and once the data is digestible it’s a small step to introduce automation for some aspects of decision-making.
It doesn’t have to be rocket science. It can be a structure of simple rules, such as alerting the customer to reorder ahead of time. Or it can be sophisticated Machine Learning and Artificial Intelligence.
The combination of data, AI, and machine learning is already proving to be extremely powerful. But it doesn’t mean that people no longer matter. The issue is often one of skilled leadership. Manufacturers need tech-savvy leaders to set the vision and to create a culture of data-driven, analytical decision-making. With the right tech leadership it becomes much easier—and more profitable—to exploit all this new technology.
4. The new generation of robots and cobots
In the past, due to their high cost, and the production volumes necessary to justify the expense, industrial robots were often confined to large manufacturers.
But now we have a new generation of collaborative robots, or cobots, which automate tactical elements of production activity. Their simplicity and flexibility mean they are easier to deploy and can quickly deliver value, which makes them far more appropriate to the mid-market.
Again, implementing this fantastic technology creates a leadership challenge. Cobots are often configured and programmed by skilled production operators working in tandem with IT staff. You’ll need a skilled IT leader who can facilitate this collaboration.
5. Servitisation Creates Greater Value
‘Servitisation’ simply means the shift from selling products to selling services. We live in an era where companies want to buy everything ‘as a service’; manufacturers can increasingly look to a future where they charge customers for using their products rather than buying them. Whether it’s car tyres, aircraft engines, or workwear, manufacturers are charging recurring revenues or licenses to their customers for the use of the products, often with support and replacement bundled in.
Servitisation will increasingly work in tandem with other aspects of Manufacturing 4.0. Perhaps the greatest opportunities are in monitoring and communicating with your products while in use. This enables new models for preventative maintenance, guaranteed service and support.
We will also see entirely new opportunities for value-added services, along with greater opportunities for upselling and better customer lock-in. The bottom line is that reliable, recurring revenues are more valuable than one-off sales. Manufacturers who make this change will become increasingly dominant.
6. The 3D printing revolution continues
3D printing will have a revolutionary effect on many aspects of manufacturing. Rw apid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customisation where customer expectations will undergo a major change. Customers will expect endless product versions and variations.
For manufacturers, the benefits are also enormous: 3D printing now allows for a wider range of materials, and data can be included directly onto the product. For example, QR codes or human-readable product IDs can be printed as part of the production process, with obvious benefits for process monitoring and stock management.
And 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.
What this means for everybody (and the mid-market)
Along with the increased flexibility for customers and manufacturers, the above trends will have massive effects worldwide.
These changes will reduce labour costs, which in turn will reduce the attractiveness of low-cost economies as well as economies of scale. Together with an increased post-COVID focus on security of supply, this will enable a return to more local manufacturing.
Finally, it’s worth noting that more local manufacture would be a reversal of decades (or centuries) of growth in global trade of manufactured goods. Despite forecast increases in consumption, a recent ING report estimates a reduction in world trade by as much as 40% by 2040!
The reduction 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!
It seems then quite reasonable to speak of another industrial revolution. But while many in the IT industry will want to sell solutions, we see it more as a leadership challenge. We believe that ambitious mid-sized businesses will find huge opportunities, so long as they have the right leadership in terms of their IT and technology.
Find out what a Tech Leader can do for your business: Get in touch
Freeman Clarke is the UK’s largest and most experienced team of IT leaders. We frequently work with manufacturing clients to help deliver transformational programs. We work only for you: we are entirely independent of any technology or suppliers. Contact Us and we’ll be in touch for an informal conversation.
The future of manufacturing part 2: Board checklist for successful MRP/ERP projects
Our previous instalment on the future of manufacturing discussed the main trends and their effects on mid-market businesses.
In this instalment, we’ll discuss something of direct importance to mid-market manufacturers: Material Requirements Planning systems (MRPs), which help manage manufacturing processes, and Enterprise Resource Planning systems (ERPs), which integrate your main businesses processes.
More specifically, how to ensure you get them right.
A manufacturing company’s internal efficiency and effectiveness are highly reliant on sound MRP or 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.
Large systems projects are expensive exercises. And yet the results are often disappointing and rarely meet their business objectives. And then you are stuck with them: MRP or ERP systems generally have a lifetime of seven years or more. Get it wrong, and you can repent at leisure!
How can you avoid this?
This Board checklist provides some key pointers. It can be a useful review even if you’re halfway through, or a primer if you’re about to start.
Has there been an open workshop at Board level to agree on the basic business objectives? The objective isn’t to implement a new MRP or ERP, it’s to deliver specific business outcomes…what are these? Has everyone agreed on them?
Be specific. For example, an objective may be to halve manufacturing cycle/throughput time; to remove four FTEs by avoiding any rekeying between the ERP and website; or to eliminate errors in labelling by automating label production.
2. Be clear about the key requirements.
In everyday business language, document the key things the systems must do, or must enable, or must achieve. This might be a list of forty or fifty statements, such as, Telesales handling staff can see accurate stock info and pricing on any products within thirty seconds.
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. And all department heads need to be involved, to agree, and to sign off—yes, put ink on the paper!
3. Get specific about who is involved and who is accountable.
First, pick the right people to own the project. Are there experts on the business who will need to be assigned to the project team? Will their positions need to be backfilled?
And don’t assume that every techie in your business understands MRP or ERP projects. Increasingly the line is blurred between shop-floor technology, automation, and information technology. The Ops team (who might have owned this project a decade ago) may no longer have the right skills or experience.
Second, everyone must be clear on their roles in the project. Are you aiming to involve some of your own people in the details so they can become expert superusers of your new system? 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.
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 drop. The cost-benefit should be based on improvements in Key Performance Indicators (KPIs)—for example, identify the target on-time, in-full (OTIF) and compare to current measurements of the same KPIs.
5. Select your products rationally.
There are hundreds of systems available: IFS, Nav, AX, SAP, SAGE, Epicor, Oracle, Syspro to name a few! This can be a minefield – but not if you’re clear-headed about it. Once you have all your requirements, you can use them to create selection criteria, a scoring system, and clear questions to ask.
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), or a dedicated Manufacturing Execution System to collect detailed process efficiency data. Make sure all the business stakeholders are part of the decision-making process so they all have a vested interest in success.
6. Select your partners rationally.
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 trust and a good cultural fit. Take up references, and check everything! Ask around: are they experts in your sector? Are they financially secure? Have they got a stable team?
And start early, so that you have time to negotiate a good price and contract rather than having to cave in due to pressing deadlines.
7. Insist that your partners have a plan.
The vendor or implementation partner must provide a credible plan, and you must extend it to 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 the plan should include 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 MRP and ERP projects fail because companies try to configure new software to match the way they always have worked, as opposed to designing the most efficient processes.
This often leads to expensive bespoking; and, if the implementation partner is charging for this, then their salespeople will be delighted to help you make bad decisions!
9. Identify process and organisational changes.
With new systems come new ways of working. And change can be hard for some. You need to plan, document, and carefully roll out these changes, and communicate frequently with everyone involved. This may be the most difficult part of the entire project, especially if some of your teams are remote and not often in the office. It will not happen by accident; without proper management, many people will go to great lengths to avoid changing how they do their jobs!
10. Take the opportunity to clean up your data.
Start cleaning your data today. Because getting the data right can be make-or-break for a new system, and this task can be the biggest and most critical part of the project.
After all one of the key benefits of an ERP or MRP is how the information helps decision-making; if you take away that with poor and inaccurate data, you’re taking away the whole point.
Think about product codes and bills of material and how they can best be structured to deliver the information the business needs. Seriously, start now. Don’t wait until go-live. In our experience, those who wait until go-live end up bringing inaccurate and unclean data across to the new system!
11. Manage device integration.
Devices are going to be integrated with these news systems, so get started on identifying them and testing as soon as possible. For example, shop-floor data collection devices like scales, environmental sensors, barcode scanners, or RFID trackers are increasingly key sources of efficiency, so they shouldn’t be an afterthought.
Remember to test for more than just if the new software works. Are the devices suitable for the environment? Consider temperature, humidity, vibration etc. Whenever you can, involve the device suppliers.
12. Run a testing and conference-room pilot.
By making the vendor run their product through your business processes, you can check that the system and business practices will fit and that the key staff are ready for change. A pilot is more than a last chance to stop problems. It’s a great way to get superusers onto the system; it may also be an opportunity to identify additional benefits.
13. Manage the 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. Train and monitor staff.
Staff will need training and coaching in how to work with new systems and processes. There may be a period of de-snagging and minor changes. This needs careful monitoring and policing to ensure that employees have clear ways of working and do not adopt bad habits. You should be prepared for some pushback: for many, change is daunting and 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 slower processes.
15. Get specific about who has ownership moving forward.
The project owners need to ensure the original business objectives and cost benefits materialise. But this is also the moment when the new system becomes ‘legacy,’ so it’s critical that ongoing ownership is clear.
Ongoing monitoring must be part of the routine, and new issues must be addressed quickly and without a fuss. Whose job is that?
In addition, you will need an annual budget for vendor support, for training of new staff, for fixes, and for amendments so the system stays aligned as working practices and products change (as they inevitably will).
Lay the foundation for your future
All too often we see a lack of focus on the key points of this checklist. As a result, projects become bogged down, with overruns of both costs and timescales. Eventually, in the dash to finish, the original vision is forgotten, there is no more time or money, and the aim becomes to ‘just get it done’!
But if you follow the checklist, you greatly increase the risk of success, and along with it, the transformational benefits of a new ERP or MRP system. 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 those conversations.
Freeman Clarke is the UK’s largest and most experienced team of IT leaders. We frequently work with manufacturing clients to help deliver transformational programs. We work only for you: we are entirely independent of any technology or suppliers. Contact Us and we’ll be in touch for an informal conversation.
Don’t run your business on Excel
Excel is incredibly popular, and with good reason: it’s cheap, it’s useful, and it’s easy to use. You still shouldn’t run your business with it.
Because some colossal blunders have been due to Excel:
The ONS massively overrated the UK economic outlook.
Barclays spent millions on worthless contracts.
Public Health England lost 16,000 positive COVID tests.
JP Morgan lost $6Bn(!).
These mistakes were due to manual errors in large organisations. But the same mistakes happen in mid-market business as well. Or a mid-market business will get stuck in a kind of Excel circular reference — over time, simple spreadsheet solutions become gradually more complicated and time-consuming, demanding more and more manual fixes, creating bottlenecks that inhibit efficiency and growth.
It’s also dangerous:
Excel is easy to change. This allows for continuous tinkering. And it can be very difficult to assess the impact of changes and to identify errors.
Excel files are a cyber security risk. People send them via email or put them on shared drives, which is a recipe for data theft and confusion.
Excel is a dead-end. There is no way to formalise an Excel process into a more managed system with proper controls, an audit trail, security, data management, and error-checking. Nor is Excel a sound basis for automation or integration. Good systems go hand-in-hand with good processes, and Excel encourages neither.
The bottom line is that to run a business well you need integrated systems that support efficient, agile processes and deliver useful management information to enable decision making. You won’t get all that with Excel.
So how does a mid-market business avoid an over-dependence on Excel?
Use Excel only when it’s appropriate. For example, new ideas, new opportunities, or an informal look at data. Use Excel as a personal tool for tackling problems.
Establish your business’s timeframe or scale-of-use for Excel. For example, ‘We won’t use Excel to manage this project for more than nine months.’ Or: ‘It wouldn’t make sense to run a new business line on Excel once revenue exceeds £100k per month.’ Or: ‘We always ring alarm-bells when someone starts using Excel’s built-in coding platform’.
Here’s the tricky part: you need an integrated set of systems and processes that can smoothly replace Excel when the time comes.
Excel is an amazing product; it is ubiquitous for a reason. But its convenience can be your downfall.
If your company needs help replacing Excel with an affordable integrated system, get in touch. We have a lot of experience helping mid-market businesses streamline their systems, and we’re always up for an informal chat.
Transform your business and increase revenue using custom software
About a quarter of our clients are ambitious mid-market companies who want our help to manage and drive custom software development either for internal systems or for ecommerce and revenue-generating phone apps or web apps. Sometimes they are struggling to get started, sometimes they are well underway but having all kinds of problems. Technical, commercial, people problems that can be very time consuming and energy sapping.
Custom software done well can be worth a huge amount of money and can significantly transform the value of a business. If it were easy then everyone would do it. That’s the fact! But why is it hard and how do you get it right…?
This short video explains why businesses should look to implement custom software projects to increase revenue and competitive edge.
Over the coming weeks we are creating a series of content pieces about CTOs, their role, how to find and recruit them and the invaluable benefits they provide to a business. All of which can be found on our CTO Knowledge Centre page here.
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:
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:
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.
A strategy for solving systems integration problems
For many businesses, systems that don’t work together are the source of major headaches.
Systems that don’t talk to each other create layers of manual work, errors and issues, and make reporting difficult or impossible.
Over time individuals create workarounds and ways to bypass these problems. So their own ways of working become complicated, inefficient and fragmented. Not only does this affect the bottom line, but frequently it affects the morale and ambition of the whole company.
Solving these kinds of problems is really hard because there are really complicated! Getting to the root of the issues can be exhausting; trying to solve them feels like wading through treacle.
Busy directors just don’t have time for this.
So where do you start? First decide on your strategy by getting the Board together and answering these 3 questions:
1. Ambition – how much do you intend to grow and change the business in the coming years; do you need a platform for growth and acquisition, or can you continue to cope?
2. Resources – are you prepared to invest significant resources in projects, or would you rather minimise change and try to tackle problems piecemeal?
3. Impact – how much is this really affecting (or in danger of affecting) the business commercials? Is there a major opportunity to reinvent your business, or just an opportunity to remove some irritations?
The approach may be a dedicated project to address a range of specific issues and to solve them each individually. Or it may be that major replacement projects are needed.
Technology may be the easy bit But, whatever the approach, the solution will probably require a combination of technical changes, changes to processes, organization, roles and incentives. There may be difficult conversations and the need to call out people who are personally contributing to these issues.
This discussion can be stormy because systems that don’t integrate often reflect departments or Directors who don’t integrate!
Building a unified consensus around the Board table is the crucial first step. There needs to be a senior member of the team who has time, focus and authority to get to the bottom of these issues and to lead the changes.
We have also created a more detailed CEO’s Briefing on how to address these kinds of integration challenges which you can download below.
A CEO’s Briefing: solving systems integration problems
Systems that don’t talk to each other create manual work, errors and issues, and make reporting difficult or impossible.
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:
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.
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Graeme Freeman Co-Founder and Director
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