Deployment of Enterprise Resource Planning (ERP) systems in organizations requires careful analysis of strategic factors that ensure the success of the project and the achievement of the organizational objectives for which the decision to deploy the system was made.
Many organizations already benefit from deploying ERP systems, as such systems improve communication and business process integration capabilities across departments.
The failures in the process of ERP systems implementation happen because the organization treats the process as a mere technology project, installing a new software package, and not as a comprehensive and high-impact organizational change that when badly executed, can directly affect the company’s strategy.
In 2000, a poor implementation of the ERP project at Nike brought losses of $ 100 million in sales, a 20% drop in stock and a flood of processes. This is thanks to a frustrated attempt to integrate ERP. The later evaluation of the project showed that Nike had planned the project poorly, with a view only of the technology area, that key people and business had been left out, and that the team was poorly trained in relation to the system and Its commercial value.
Success in the implementation of ERP systems is directly linked to these factors:
- Accept the change of the organization to receive the new functionalities;
- Discipline in the execution of processes in adherence with the ERP system;
- Actual parity between physical and systemic processes;
- Adequate training and understanding of integrations between processes;
- High management support in changing the procedures for adaptation to the modules of the ERP system;
- Commitment of the whole organization in the implantation of the new practices and systems;
- Be a “company” project and not a new technology system.
In most companies, ERP systems are deployed as a technology vision only and not as a strategic management tool that affects the organization. Even in organizations where systemic processes are already supported, updates or re-plantings can generate conflicts and acceptance difficulties in changing organizational processes. It is no use having procedures set up in third-party control ERP, and still have the sales area doing the process without registration in the system.
In most companies the adherence of ERP systems reaches only 35%, mainly due to lack of compliance with the factors mentioned here. This is one of the great factors of ERP changes, in the wrong way, the ERP is changed due to lack of adherence, but the error of being a technology-only project is repeated, reaching the end with a different brand and with the Same low business grip.
In the verticals of the automobile industry is where the biggest success of ERP systems with adhesion of more than 75% is found, but why only in the automobile and auto parts industry does this occur?
Because in this sector if the company does not have rigid standards of its processes and high discipline in the execution of the works, this type of company practically succumbs to the highly competitive and technological market. The automotive industries are the major drivers of improvements and more up-to-date practices of complex planning processes for demand and distribution and factory floor processes.
Factors that the automotive industries and their suppliers need to be highly competitive in the use of ERP:
- Jus time – complex processes in which suppliers have to deliver the raw materials and / or assemblies to meet production in an orderly manner and in fixed time periods;
- Milk run – processes of delivery in sequence appropriate to the production of the client, in the smallest possible timeframes;
- Zero inventory – Simplification of outsourcing of production processes to streamline the cycle of production and delivery of products with reduced costs;
- Needs and distribution planning – Elaboration of a production and distribution plan according to the company’s strategy, with the knowledge and participation of the supply chain of suppliers with the objective of fast reach and the lowest cost. This requires a plan with at least 15 days of firm orders and no changes to meet the factors from 1 to 3;
- Commitment of all those involved in the Supply Chain to achieve the objectives of the strategy;
- Mitigation, if possible complete (zero deviation), of any deviation from the planning of the Supply Chain Management. The biggest challenge for companies is not to deviate from the material and production plan.
With these concepts, we should consider the implementation of an ERP system, not a technology project of the company, but an organizational design of the whole corporation, and if necessary to the involvement of supplier partners and Tier One customers, because for a planning Efficient, high-performance, partner engagement is required, remember that they will feed most of your process inputs, which is the key to having highly reliable metrics and results.
Another recommendation is to carry out a strategy of small package delivery, the traditional model of having a single project of 9 months, is something not recommended these days, in 9 months the economic market has many modifications, and this can bring risk to have a Go Live project with low adherence to business as it will be with a vision 9 months ago. Having partial deliveries makes the project flexible and motivating for the team involved and for the business because the value of the ERP is already part of the company’s daily routine during the project.
The question you should ask at the end of the project is: Does your business work for ERP or ERP for your business? If the answer is positive for the second question, congratulations, your deployment was successful, if the answer is yes to the first question, review the project.