About ERP Systems

By Jerry Tiarsmith, VP Operations

I have three rules: Do the right thing, do the best you can, and always show people that you care.

 -  Lou Holtz 

Earlier this month, Mike and I went to a potential client site. During discussions with Mike, the company president said he read Mike’s comments on ITToolbox and a recent blog I wrote. That blog was, “ What makes a Good Consultant”.  We were eager to do our look around to learn whether we could help.

Our no-fee Gemba Walk took several hours and initial assessment findings coincided with the president’s undisclosed beliefs. The president then hired us to present a five-day ERP education program to the management team. Additionally, we held two days of informal education for employees to explain the importance of an ERP system implementation and their involvement. Clients who see education as the critical first step to improve operations excellence for their organization enjoy greater success. 

C-Suite commitment helps increase employee engagement as a basic rule.  This company’s employees enjoy that level of support. Initial skepticism quickly gave way to active involvement early in the education process. 

• On day two, the group asked questions, clarified concepts, and began to speak a common language 
• On day three, they challenged us and engaged one another non-stop for more than 45 minutes 
• On day four, the team shared process improvement ideas and redefined their roles and responsibilities 

We discussed Policies, Processes, and Procedures as well as performance metrics on the fifth day. At Manufacturing Practices, Inc., we use the expression Keeping People Involved™ when addressing Key Performance Indicators (KPIs) and this management team really understands that. 

 As part of the Keeping People Involved™ presentation, I introduced the Lou Holtz quote. It generated significant and impactful discussions. The management team whole-hardheartedly adopted it.  More importantly, the company president reiterated it at each employee session! 

As a veteran owned and veteran staffed organization, we continue to support those we work with; only now, we call them successful clients! 

Here is one from the archives...

We Stopped Dreaming

The driving force that led me to become a Management Consultant was a simple idea: Dream bigger. The big moment of realization for me happened at a rather comical lunch meeting with my boss at the time, the company’s owner, who wanted to discuss a problem we had with missing shipping dates for a new customer. The Chinese restaurant where we met was a favorite of mine and not far from the plant, and my boss had reluctantly agreed to go there even though he was leery of eating “different” food, especially Asian.

We arrived just as a supply truck passed by and pulled around to the back of the restaurant. We entered the establishment, and I introduced my boss to the owner. She directed us to a quiet area not far from the kitchen, and my boss was noticeably nervous about the place. I assured him not to worry because their food was fresh and delicious. We focused in on the discussion, and I explained the engineering problem that caused the order to ship late, as well as the best way to avoid the problem in the future. Satisfied with my assessment, he acknowledged how much he appreciated my ability to get to the point quickly and explain the situation in a simple and concise fashion. He then added that my work ethic was inspirational, especially in light of the fact that I was not really a part of the “wealth stream of the business.” I asked him to explain what that meant, and he replied, “You are not family or one of the company’s lifelong friends, so you will never get to share in the wealth that we have planned for our retirement years.”

I was speechless for a moment, and then said, “I thought there was enough opportunity to include all of the company’s employees in the wealth stream”. He replied that it was simply impossible to do so, that it was his mission to ensure that this small group of stakeholders had a comfortable future.

At that moment, the server came through the kitchen door with our meal, followed by the chef who was chasing a cat with a meat clever and shouting at it in Chinese. The look on my boss’ face was priceless. He immediately arose and said, “I’m leaving. Fresh cat is not in my diet.” He headed for the door, and I stifled my laughter as I left money to pay for the meal and followed him out. The owner stopped me to apologize and explain that the cat snuck in while they were unloading supplies from the delivery truck. I told her it was okay and suggested she may want to institute a policy not to accept supplies during the lunch or dinner rush.

I was reminded of this true story a few days ago while I was watching Neil deGrasse Tyson’s videos on YouTube. It is entitled “We Stopped Dreaming Part 1” and “We Stopped Dreaming Part 2”and is worth a few minutes of your time to watch and consider. I left that company shortly after that incident, because I realized that the owner’s dreams for his company were too small to include rewards for the very people who were most responsible for his success.

Today, my goal when working with companies is to help them dream big. The odds of properly implementing an ERP System increase proportionally with the commitment of C-Level people and with dedicated involvement of the user community. As my business adviser so often and simply states, “A company can't stop dreaming. It has to take bold steps. It has to become a team with a bold mission. It cannot rest on its laurels and wait to see what everybody else does before taking a new step forward.” And he is absolutely correct!

In my opinion, the best motivator is to help everyone see a bright future. Let them know that the future is brightest when the organization unites around a common goal and all the players are doing their part to focus the company around that goal. That is what ERP systems are all about, helping people in different departments of an organization come together to manage the business better and build the business to the point that everyone can reap the rewards.

Don’t stop dreaming, and don’t let your dreams be small. Dream big, and include everybody in that dream.

 

 

 

 

 

 

By Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

The way we live, work, and play describes an environment that experiences a constant state of change and reflects an ever-growing increase in complexity. These changes, or external stimuli, require each of us, individually and collectively, to react―to improvise, adapt, and overcome―on a daily basis. What is true of our personal lives also proves true in the lives of our corporations, which remain nothing more than a microcosm of society.

Corporations experience a daily state of flux and even the best run organizations suffer from entropy―a natural state of decay―or as others describe it, a “drift into failure.” Organizations, such as Operational Excellence, promote continuous improvement programs to help corporate leaders cope with the challenges presented by this increasingly complex global system, but these programs merely reflect the true challenge of our time―that we must constantly evolve in our thoughts and actions in order to survive and we need to do so in real time!

What do we mean by “complexity?” The Oxford Dictionary defines “complexity” using terms such as convolution, intricacy, involvement, but a simpler way of looking at complexity involves examination of an open-system, our inter-relationships, of the woven pattern to our lives that illustrates a myriad of interdependencies. We live in an interconnected world, more so since the advent of the internet, and one in which knowledge becomes a commodity. Today, if you have a question about almost anything, the typical response or helpful advice proffered says, “Google it!” The Knowledge-based system in which we operate today has changed the way we operate, sometimes for the better, but not always. A company failing to keep up with the modern world simply falls further behind, experiencing a more rapid “drift into failure,” and fail it must.

There can be no doubt that the corporate mindset must change in order to survive. This responsibility falls directly to the corporate leadership.

• Complexity increases uncertainty and resistance to change, but also creates opportunities. Leadership must “get comfortable being uncomfortable!”
• Leadership must challenge their thinking, inject innovative ideas, methods, products or services to improve performance, grow their businesses, and reverse entropy.
• Leadership must understand and convey to all managers and employees that there are no shortcuts to success―that everyone’s actions and decisions effects their shared future.
• Time is not your friend, instead, it remains a “wasting resource” that requires effective decision-making in “real time.”
• Leadership must remain aware of external opportunities and be prepared to act decisively to take advantage of those opportunities as they unfold.

Manufacturing Practices, Inc., a veteran owned and veteran staffed company, has the expertise, experience, and knowledge to assist company leadership teams in developing these capabilities by exploiting the internal advantages afforded them through the optimization of their business management systems. Our consultants are APICS certified, an important distinction, in that ERP systems use the APICS Body of Knowledge (BOK) as the basis for the internal system logic. ERP systems provide the “real-time” information the leadership team requires to make effective decisions and we know ERP systems.

Keep People Involved™

Years ago, as Operations and IT Manager for a small company, I was charged with finding a consultant to help us through an improvement project. One thing we learned that was entirely counter-intuitive was how easy it was to change the corporate culture – in less than a year! The consultant implemented a process to measure individual performance within the company, and the positive transformation in the organization was truly remarkable.

The process was a deceptively simple, inexpensive, and powerful tool called Key Performance Indicators (KPI). KPI help change the way people do their jobs, approach their day, and deal with daily roadblocks. KPI help people focus on the BIG PICTURE. KPI help people distinguish the important from the trivial, the “must be done” from the “could be done”, and allow employees to set their own priorities. When the boss reviews performance charts, questions follow. People begin to learn the importance of those measures. When people focus on activities and apply what they learn from the KPI, good things happen.

KPI differ by industry; and KPI are not just for individuals.

• Inventory Turns is a very important KPI for manufacturing and distribution companies
• For telemarketers, the number of phones calls made is an important KPI
• For retail, the average dollars per sale is a good KPI
• For accounts payable departments, the number of AP Days outstanding is important
• For accounts receivable departments, the number of AR Days outstanding is important
• For managers, employee turnover is an important KPI

Using KPI reaps great rewards, and the secret lies in its focus on the business scorecard activities of revenue, costs, and cash.

Displaying KPI results is a vital part of the process. For example, some companies post the results of inventory accuracy counts with several positive results: 

1. People understand that the activity is an important company function
2. People take pride in their work, because everyone knows how they are measured
3. KPI provide a level of control that is not apparent when those values are not measured

During our implementation, everyone including the president had KPI, and we posted performance to those KPI. The fact that the “person at the top” reported measurements had a unifying effect on the entire company. We all understood that everyone had a role to play and our measurement criteria. Everyone did! We felt that since the “BIG GUY” showed us his, we would show him ours, and we accepted the fact that things were changing. We wanted to join the crowd; consequently, the corporate culture changed almost overnight.

KPIs reflect the performance to company policy. The easiest way to implement KPI is to start slowly. Choose a couple of performance measurements that are important to your industry and make sure that they produce the desired outcome. You can always add additional KPIs after this simple tool demonstrates its value. The most important idea to remember about KPI is that they Keep People Involved™

Blog by Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

The old maxim, “Whether you think you can, or you think you can’t, you will be proven right,” reflects the importance of one’s mindset to future outcomes, good or bad.  The children’s story of The Little Train That Could taught us that perseverance and determination contribute to success.  Athletic team coaches know the value of a “warrior mindset;” the difference between winning and losing more often reflects the mental preparedness of the players rather than the relative physicality and athleticism of the opposing teams. Military combat leaders know that victory (and failure) begins in the mind!

Manufacturers must possess a positive mindset toward successful outcomes. Clearly, the stakes are high; people’s livelihoods are at risk and we are not here to discuss children’s stories or motivational platitudes. Whenever businesses fail, reputations as well as many individuals, families, and communities suffer great consequences. “Failure is not an option!” Yes, the company organization, at all levels, must exhibit perseverance and develop a fierce determination to succeed in the arena of competition, but that may not be enough. Sometimes, companies require outside expertise, particularly when they lack the internal experience and resources required to initiate major change.

That fact proves especially true for many manufacturers in relation to the selection and implementation of the company’s Enterprise Resource Planning (ERP) system.  Improper ERP implementations result in cost overruns, take too long, and prove too disruptive, even if considered “successful.” Companies that lack the necessary internal experience to manage the selection and implementation processes experience significant problems. Executives may strive to develop a thorough plan in anticipation, but their project management and process objectives fail to align adequately with reality. Poorly defined processes or an insufficient understanding of needed resources required for a timely and cost-efficient implementation may be the culprits, but many companies simply do not know what questions to ask of the vendor/sales rep or how to interpret the (often obfuscated and sometimes inadequate) answers they receive from the vendor’s implementation team. Poor ERP deployment results from the following: insufficient system pilot testing, the failure to input needed or correct data, the inadequate knowledge transfer from vendor to company employees, and yields sunk costs in a system that never sees full implementation.

The consultants at Manufacturing Practices, Inc. possess the requisite experience, knowledge, and resource capabilities to help guide your next ERP system selection and implementation processes. Our consultants successfully implemented over 70 ERP systems in companies much like yours. We require our consultants to receive training and earn professional certifications in the APICS body of knowledge; the very same body of knowledge most often used in the architectural design of ERP systems. We are proud members of APICS; the most widely recognized professional association for supply chain and operations management in the world. Our firm abides by the code of professional ethics established by the Institution of Management Consultants. Manufacturing Practices, Inc. is a veteran-owned and veteran-staffed company that offers scalable, flexible, and cost-effective solutions to meet client needs.  

By Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

I read an interesting article. It noted that for the first time China’s Gross Domestic Production (GDP) exceeded that of the United Sates. My strategic interest in China began in the mid-1970s. At that time, China ranked amongst the poorest of the world’s nations, but I believed then that China, a “sleeping dragon,” would emerge as a formidable foe in the near future.

 

China forcefully declared its interest in territorial expansion and regional dominance in 1979 when it invaded Vietnam. Despite overwhelming military superiority, the Chinese achieved little. If nothing else, the conflict highlighted problems in Chinese manufacturing: a lack of standardization, poor quality control, and little understanding of logistics, just to name a few. The Chinese worked hard to correct those problems. Since then, Chinese military technologies and capabilities have dramatically improved.

 

Today, Chinese companies account for three of the world’s top ten companies by annual revenue. In contrast, only Wal-Mart (2^nd) and Exxon (5^th) represent the US in that group. In 2007, GM led the list, once dominated by the likes of IBM, GM, and Ford. Apple, the technology darling, occupies the 16^th position while GM slipped to number 23. Regarding trade, the US imports more than four times the goods from China than it exports. This generates a tremendous trade imbalance favoring China. China also holds more than $1.23T in US debt obligations on which it collects significant interest payments. These hard currency flows from the US help fuel China’s growth and tend to diminish US domestic growth.

 

Other reports note a slow-down in China’s growth rate from a 40-year average of 8% to 7.3%. America’s recent growth rate remains slightly above 2%. If these numbers continue, what could we expect in the next forty years? Using simple analytics (i.e.; the Rule of 72), we extrapolate trends that show China’s economy potentially doubling every ten years over the next forty years while the US economy doubles only once in that same time frame. That means that by the year 2054 the Chinese GDP could approach $240T, greatly dwarfing that of the United States at $30T.

 

While an unsavory thought for many, China already wages war against the United States. A war fought in the realm of intellectual property, on the battlefield of economics and in cyberspace, and one that the US is losing! Some wounds appear self-inflicted. American manufacturing suffers, in part, from poorly conceived governmental policies regarding taxation, trade, regulation, and education. As a result of those policies, the US hollowed out its manufacturing sector over the past forty (or more) years, businesses increased off-shoring activities, neglected the domestic development of critical skills and tradecrafts, and struggled under costly government-mandated burdens. American manufacturing became less competitive. This must change!

 

At Manufacturing Practices, Inc., we witnessed illiterate, low-wage Chinese workers taking great pride in the aesthetic quality of the work they produced. Their work ethic, enthusiasm, and dedication prove commendable. One only has to recall the mass choreographies of the Beijing Olympics; precision performances by thousands designed to impress (and, perhaps intimidate) the world. These performances proclaimed China’s arrival as a major force on the world’s stage, one that includes industrial production. China uses American universities to help educate the next generation of Chinese computer literate, techno-savvy, and highly competitive minded business leaders, the same ones who will ensure China’s global economic dominance, a position once enjoyed by the United States. Americans must relearn the lesson that a strong manufacturing base makes for a stronger, healthier economy and a wealthier, more productive middle class.

 

This is one reason why Manufacturing Practices, Inc. assists small- to mid-sized manufacturing and distribution companies. Our proprietary processes help C-level management understand and access the hidden value in their ERP systems. We help clients unlock the ability to enhance the speed and efficacy of management decision-making through better use of their ERP system. Our proven methods enable management to implement continuous improvement programs that refine processes, improve procedures, and empower employees through Lean and other methodologies. As a result, our clients gain a significant competitive advantage, leading to increased revenue growth, improved cash flow, and significant cost reductions. We believe that Operational Excellence comes first from an effective implementation and deployment of a business management system. We remain committed to our clients’ successes. This has been the hallmark of our company since its inception.

Companies worry about shop floor throughput but change shop schedules before completing them.  Companies do not properly define specifications for suppliers but worry about supplier quality.  Companies miss customer shipment dates because they misunderstand shop floor loading concepts. 

All of these are disturbing events.  However, something more disturbing is happening in the majority of small and mid-sized manufacturing that is correctable with minimal disruption and chaos.  This “disturbing thing” costs companies millions of dollars annually.  This “disturbing thing” is the misunderstanding of the proper use of an ERP system. 

This misunderstanding, leads to the major issue that causes companies to fail in the ERP implementation process.  Research published by firms like KPMG, the Standish Group, and others shows that 61% of companies fail in properly facing the challenges of the work before them.  Moreover, the results are costly. 

ERP Implementations commonly fail to deliver the anticipated benefits and requested services; these projects have huge cost over runs; projects fail to meet implementation schedules, and worst of all, some companies abandon the ERP project altogether.  It takes little effort to prepare properly for the ERP system implementation.

The most important effort to thwart this problem is the commitment and leadership from the C-Level team to create necessary expectations for the company.  This means that the leadership of the company has to understand ERP, develop the implementation criteria and commitment to provide hands-on oversight of the ERP system deployment with the user community.

Education about what ERP is and what it will do both for and to an organization is necessary at both executive and user levels.  It creates a common understanding of what is necessary when companies use an ERP system. 

Something else many companies miss is the benefits and understanding of the application of Lean Thinking.  Such a philosophy assists organizations in creating processes that are clean, efficient, and self-sustaining.

The last activity to aid an implementation is a proper project management activity.  This keeps the project on track. 

Failure to follow these simple tasks costs manufacturers more in money, productivity, throughput, customer satisfaction, and worker morale than all other problems manufacturing executives spend their time in daily worries and battles.

Manufacturing Practices, Inc. is a Management Consulting firm that works with small and mid-sized manufacturing organizations.  ERP Systems that C-Level teams use confidently to make important business decisions is the product that Manufacturing Practices delivers to these organizations.   

Our proprietary processes give organizations a common understanding of ERP System capabilities.  Our proprietary processes educate C-Level and users teams independently to understand what ERP Systems will do both to and for an organization.  Our proprietary processes create users that understand why ERP data needs to be timely, accurate, and complete.  Our proprietary processes make ERP Systems key to organizations’ success.   

By Jerry Tiarsmith, VP Operations, Manufacturing Practices, Inc.

Proponents of LEAN processes often seem at competitive odds with those who support the use of Enterprise Resource Planning (ERP) systems. While we at Manufacturing Practices, Inc. (MPI), favor the use of ERP systems by our clients, we also recommend complementary LEAN processes to effect discreet process improvements where needed.

LEAN processes improvements differ dramatically from ERP system deployments. Lower level management personnel and frontline supervisors typically conceive and execute LEAN projects.  LEAN processes most often focus on small scale, tactical process improvement to eliminate various forms of waste from that process. More than just a process, an ERP system acts as an important management decision support system that holistically integrates key corporate functions. This integration helps reduce internal communication barriers, enhance cross-functional management awareness, and speed the management decision-time cycle process to provide a competitive advantage.

The assorted benefits of incorporating LEAN processes within an ERP system deployment prove important, but empowering employees to support needed change and pursue continuous improvements to productivity are priceless. We see ERP as the “Go To” System when making decisions about resources (labor, cash, materials) necessary to run the organization.  We depend on ERP to determine which monetary investments will deliver the biggest bang for the buck.  ERP also helps us understand which markets need a focused sales campaign and where to position inventory for better customer service.

One cannot simply describe ERP systems as a process methodology. In effect, ERP systems connect the strategic vision and business planning of the corporate executive team to the execution of the planned production processes and to the control systems on the factory floor. 

The Manufacturing Practices, Inc. management team changed much in the past several months.  These new responsibilities have taken time away from many commitments.  As such, attempts to write blogs, work with veteran projects, and spend time with my family and friends are almost futile.  Even my dog snarled at me on Friday when I arrived home hours after her feeding time!  I also have not been a good leader in making the introductions of our new team.  Sorry!

Dan Valentine is our most recent addition.  Dan is a retired US Army Lieutenant Colonel where he spent time as an infantryman and an aviator.  For the past 20 years, Dan held roles in sales and sales management.  He first began to work with us and to teach us how to align potential customers’ concerns with the value we offer at Manufacturing Practices.  After some frustration with my interactions with potential clients, Dan decided that his commitment needed to become a long-term effort.  It seems I was having a hard time not using my sharp stick to point out areas that needed improvement to my prospects but I am doing much better now. Dan’s role and title is VP of Sales. 

Jerry Tiarsmith joined Manufacturing Practices as VP of Operations. As a member of the armed services, he served in the surface warfare and special operations units of the Navy. He also spent four years as an Army infantry officer. Jerry uses this experience to help clients create a viable team vision. Following his military service, Jerry worked for the financial management company Morgan Stanley Dean Witter. This experience taught Jerry to understand clients’ needs. Jerry’s experience as a college instructor enables him to follow the mantra of Manufacturing Practices to help clients align tactical approaches to achieve a strategic vision. As a volunteer, he helps veterans, the community, and his church. This highlights the Core Values of Manufacturing Practices to practice responsible corporate citizenship.

Welcome to Manufacturing Practices, men.

We walk the same walk internally that we use with clients. With the end in mind, we meet one day a week to achieve a common understanding of what ERP is and is not. We also use that day to create a common language and a focus on our policies.  We are creating a set of standard processes for executing our policies with potential and signed customers.  The benefit of this is that these efforts enable us to achieve an alignment of responsibilities, commitments and expectations for Manufacturing Practices. After achieving consensus of what our goals are, the effort to perform the education, develop our marketing and sales material and strengthen our procedures is simple.  We all understand that this journey will never end.  We continue to make improvements along the way, just as our customers do when we focus our tactical approach to achieve their strategic goals.

Good leaders intuitively understand that decisions, and not their conditions, determine outcomes.  Leaders thrive on change, they relish the challenges change presents, and they respond accordingly.

Let us examine the decision-making ability of a fighter pilot engaged in aerial combat to create a common frame of reference.  It is a given that there is a more rapid pace of change in this scenario.  There is the nature of operating in a three-dimensional environment with the ultimate consequences of battle between modern aircraft probably greater than and more impactful than those made in corporate offices.  The pilot relies upon extensive flight and aerial-combat training, complex computer systems that receive a constant stream of data from on-board combat systems and flight controls, then synthesize and analyze that data to produce firing solutions to defeat an equally determined enemy.  

The evolution of these complex systems is traceable to the ideas and theories of Colonel John R. Boyd, USAF (Ret.), as both a Korean and Vietnam War veteran.  Boyd first developed the Energy-Maneuverability Theory (or E-M Theory) that allowed for the quantitative comparison of existing and planned aircraft with respect to all factors affecting performance (i.e.; weight, thrust, lift, etc.).  The upshot of Boyd’s work is that he rescued a flailing production program for the F-15 fighter and generated interest in the development of a lightweight fighter, the Air Force’s F-16 and the Navy/Marine Corps’ F-18 Hornet. 

Boyd developed a decision-time cycle logic bearing the odd name of “OODA" loop based on his fighter pilot experience in the Korean conflict and his interest in E-M Theory.  E-M Theory considers time as the ultimate parameter and that an entity, from the simplest to the most complex human organizations, operates in an environment of continuous change to which it must respond.  OODA loop decision cycle consists of Observation-Orientation-Decision-Action steps. Boyd hypothesized that the pilot who cycled faster than his opponent did gained the advantage and defeated his opponent.  Over the last fifty or so years, Boyd’s theory became ingrained in military strategy, business strategy (the Shewhart cycle of Plan-Do-Check-Act), and used by courtroom litigators with the addition of game theory and cognitive science.

Yes, this is interesting, but how does it relate to you?

A properly implemented ERP System does for a company what both the OODA Loop and E-M Theory do for a fighter pilot. At Manufacturing Practices, Inc., we assist Manufacturing companies select, implement and properly deploy Enterprise Resource Planning (ERP) systems as a holistic management decision-making support system. Such systems enable those business entities to process business data faster and provide a distinct competitive advantage in the complex and fast-paced environment of change.  With our approach, no fighter pilot experience, OODA Loop training, or E-M Theory education is necessary. Our proven approach focuses teams on what works and how to make it better.