The Dangers of Distribution ERP Go-Live

Read any ERP go-live article, and you will get a good sense for the enormous amount of cost, effort, and risk that all intersect at go-live. There is no going back; only plunging ahead and hoping that problems do not accumulate faster than the ERP implementation team can find, diagnose, and repair them. Even within the controlled chaos which is a successful ERP go live, however, there is an area that warrants even more contingency planning, resource allocation, and technical support than the others – distribution ERP.

There are several factors that make ERP go-live for distribution a high-risk area. Tweet This

There are several factors that make ERP go-live for distribution a high-risk area. The biggest is that it is the final customer touch point. This means that if finance, supply chain, purchasing, and manufacturing all work flawlessly, but distribution can’t ship product, then customers notice that, feed that back to the sales force and executive leadership, and the ERP implementation is perceived as failed. The second reason this area is at risk is that – as a single module within a general ERP system – distribution ERP functionality is often not as efficient, focused, or user friendly as the stand-alone software or legacy software (written specifically for an organization’s distribution system) that it replaces. A third factor is that an implementation team can rarely generate enough volume testing to surface all of the problems a distribution operation will have. Still another consideration in weighing risk is that a distribution center must generate legal documentation, and binding financial documents that are accurate, and will withstand the scrutiny of a customer or legal dispute.

A Constipated Disaster

The idea of assembling a group of products – whether they are boxes, pallets, drums, bags, or automobiles and creating a new thing called a “shipment” is conceptually simple, but programmatically complex. There are inventory movements to be recorded, labels to be printed, trailers to be assigned, loading to be confirmed, weight to be calculated, handling instructions to be communicated, financial transactions to be queued up, and departures to be reported. It is easy enough to load a pallet on a truck, but a sales order must be properly decremented, inventory relieved of the appropriate identification unit and quantity, a packing list added to, a bill of lading updated, and a quantity verified. If all of these things do not happen with 100% transactional accuracy within the distribution ERP system, the trailer remains parked at the loading dock, deliveries are not made, and product is not billed. In short order, your distribution operation becomes a constipated disaster.

The point of all this cautionary talk is to convince you to over-staff your distribution operations with transactional and technical ERP support until it is certain to you that distribution can ship more in a twenty four hour period than manufacturing can make. If you expect that at ERP go-live, the transactions are going to go more slowly than you expect, and the problems are going to be more complicated to correct than you expect, and staff accordingly, you will be perceived as someone who thinks of everything, instead of someone who almost pulled off a successful ERP go-live.

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Shane Starr

About the author…

Shane Starr is a former ERP project manager, with business experience in manufacturing management, supply chain, finance, and strategic planning.

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Shane Starr

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