ERP for Manufacturers: Does ERP Support your Strategic Advantage?

Do you know why you make a profit? Not, because revenue exceeds costs, but why your customers are willing to pay you a premium above costs for your products? If you can't articulate why you have an advantage, two things are undoubtedly true: (1) If you ever begin losing money, you won't know why, either, and (2) your ERP implementation team will not know what manufacturing or business processes to concentrate on in order to support your strategic advantages.

If your strategic advantages are post sales support and customer service, but your ERP blueprint design emphasizes inventory control and quality monitoring, it is a certainty that you will end up with a system that does not maximize ROI. Even worse, you will hear the dreaded statement in the field, our new computer system won't let us. And once that statement is permitted, then every managerial problem you can think of - ranging from container ship congestion in the port of Singapore to the quality of coffee in the cafeteria vending machines - will blamed on the new ERP system.

After you become convinced of the importance of articulating why you make money, then organizationally, how will you convey that to your project management in a manner that is clear and unambiguous? Because the implementation team is going to be comprised of manufacturing managers, quality managers, supply chain professionals, financial controllers, sales managers, distribution managers, new product development managers, purchasing managers, and customer service managers all of whom who are all fully invested in the notion that their functional area is the sole reason the company makes money. In the absence of clear leadership direction the ERP solution will be a watered-down version of consensus, in which every area receives a little bit of ERP attention, but no area has a world class business solution.

Put it in Writing

So, if you are considering an ERP implementation, take ten minutes and write down the three or four sentences that describe why you make money, and give it to your project manager. This will help the team select the appropriate modules, and the vendor with the strongest modules in the important areas. If you are in the middle of an ERP implementation, ask your project manager to write down the same three or four sentences about why he or she thinks profit is made, and see how it compares to your list. If there is a difference, you still have time to make a mid-course correction. If you have already implemented, and there is a difference between the two lists, keep a close eye on your business performance.

In ERP, an ounce of prevention is worth a ton of cure.Take the time at the beginning to define the big picture.