ERP and Business Process Improvement

Over the years we have seen different types of conflict at manufacturing companies when they consider ERP software. Many of these companies have implemented “lean” manufacturing programs. The majority of those efforts has focused on shop floor improvements, but has also found their way into “lean” office improvements.\
The conflict occurs when the company begins to consider replacing their legacy information system with a modern ERP system. At this point one of the following arguments surface:

  1.  Our business information processes are so bad that that we should throw them out and start over with a new ERP system.
  2. Our business processes are so bad that we cannot implement a new ERP system until we improve our existing processes. Otherwise we would be implementing bad processes.

So, who is correct? Both statements can be correct based on the circumstances and the attitudes of management. Let’s examine both situations.

  1. “Throw out current processes and start over” – The company’s attitude is that they cannot achieve improvements by reengineering their existing systems and processes. They believe they can only change their poor business processes as part of an ERP implementation that has best practices. Many of these existing processes were driven by decisions made far in the past. This company has done some process improvements in the past that have been department driven. The result may be a number of islands of information driven by loosely or non-integrated solutions.
  2. “Improve our businesses processes first” – This company has people on the team that have had success improving business processes through either Lean or Six Sigma programs. The attitude is that incremental steps toward business process improvements will yield incremental benefits. The company has a legacy system. Through its journey of continuous improvement, the company has modified the legacy system, and added various departmental solutions. Again, the result may be a number of islands of information driven by loosely or non-integrated solutions. Both positions exist in today’s world.

Both positions have validity based on the personality of the company. At Michell, we have been asked to assess both situations. For both situations we recommend a plan to assess all of the aspects of their current state, get educated on what is possible, and to develop a vision of a future state, and a plan to achieve the business benefits of change.
Eventually, all of these legacy systems have to be replaced. Most companies lose their competitive footing with outdated technology. The question becomes what is the best path toward the improvement and the transformation of their business processes and technology