No matter how much you analyse the processes you are currently operating, the changes you make today will themselves become out of date in the foreseeable future. Continuous improvement is… continuous! Therefore, the effort you need to input to change those processes must be minimised, if at all possible. The business system you use will have a big impact on that cost.
I would like to tell you a story…
Take ‘Company ABC’. A family run, manufacturing business. Been around for 50 years and maintained a high product quality reputation. They are considering handing over from 1st to 2nd generation.
The 1st generation are now beginning to feel tired and are looking towards retirement. They do not quite understand why these new fads such as social media are starting to affect their business and realise it is probably time to hand over to the next generation. They are just slightly worried that it could all collapse as soon as they walk out the door.
The 2nd generation understand all of the new techniques and can’t understand why the 1st generation are too scared to grasp new opportunities. They desperately need to get the company back to its former levels of profitability.
Internal conclusions suggest that they need to change the business processes, therefore modernising the internal IT to then support those processes. To be able to sell more, they need to drive down costs and therefore stop themselves from slipping back to where they are now…
In short: Lean Productivity & Continuous Improvement
Old processes:
Each department is a silo
- Data & effort duplication
- Mistakes not reported across departments
- This may be reported frequently
Change to
New processes:
- Some processes done automatically (Who faxes order confirmations anymore?)
- Some processes are eliminated (Copying sales orders to distribute to other departments)
- All Processes are computerised
BUT… it is vital you choose the right processes to streamlines and those to eliminate.
It is not good enough to do a process twice as fast if you can eliminate it completely.
- The first gives you a 50% saving.
- The second gives you a 100% saving.
Getting back to our 1st and 2nd generation owners…
1st generation are not daft, they know things need to change. After all, 20 years ago they realised they needed to invest in new technology and got a mini computer. So it stands to reason they needed to make some more changes now… But once they’ve done that, they’ll be ok for another 20 years right?
The 2nd generation, however know that what they change today will need to be changed again next year… business today moves too fast. There are an amazing number of new ideas and unprecedented levels of investment available for those ideas.
So talking about processes…
They need to be standardised. The easiest and best way to do this is via an ERP solution. But ERP solutions come in many shapes and colours. Many are marketed by extolling the virtues of best practice.
But when such systems have been around for 30 years, are we really trying to say that best practice 30 years ago, will be the same as best practice today?
From our earlier observations, this clearly is not the case.
So if you want your business processes to behave in a flexible manner, you must have an ERP solution that also acts in a flexible manner.
If you want the benefits of Continuous Improvement, your ERP must be capable of being changed continuously.
Some examples from some of our friends…
Trutex
Many years ago
- Material sourced in the UK
- Clothing manufactured in UK
Later
- Material sourced in the Far East
- Clothing Manufactured in the UK
- Specialist badging in the UK
Later Still
- Material sourced and clothing manufactured in the Far East
- Specialist badging in the UK
Now/Future
- All processes are off-shore
Many of our Project Oriented manufacturers for example British Thornton & ATG Access…
Design by project, manufacture (where possible) by batch and install by project.
Anything to do with a living product for example Rodda’s & Humphrey Pullets…
Handling blocks of cheese that are not exactly the same weight. Dealing with animals that eat different amounts of food and grow at different rates. Milk that has differing fat content due to the greenness of the grass eaten by the cows.
Alerts and warnings for example GSM Automotive…
User facility for automatically identifying when a process needs stopping. 1st off process checking. Highlighting to users, not just if they’ve done something wrong, but also when they’ve forgotten to do something.
So what can we conclude?
- Your ERP system does not operate in a vacuum.
- ERP must have the capability of change, continuously.
- To save your cash reserves such changes must be easy to do.
- To save your sanity (and your cash reserves) the changes must work with all future standard upgrades (without any additional coding).
- There is no universal perfect business process, all businesses operate differently.
- Continuous Improvement is exactly that..
…CONTINUOUS!
Written by: Phil Nicholls
Managing Director, Medatech UK
Find out more about Phil here