Introducing an ERP system into your organization can be both exciting and daunting.
Not only does it stand to systematize your operation, but can streamline your entire manufacturing process while providing real-time insights into core areas of your business. Once acting as separate entities, vital areas of operation such as finance, inventory, purchasing, process management, quality control and sales become unified into a single system.
What’s more, an ERP platform can be an important step in starting your journey toward digital transformation.
The end result?
- Increased efficiency and productivity
- Reduced data and communication errors
- Catalyzed business growth and scalability
- Improved value for customers
In short: An ERP system can help you run a better, more valuable business.
However, your overall success hinges on how you approach the entire process. Implementing an ERP isn’t like waving a wand and transforming your operation—there is much more involved than picking a platform and hitting the ground running.
For a smooth transition and long-term success, you should include the following six practices in your implementation plan:
1. Assemble an ERP Implementation Team
Before you even begin to look at ERP systems, you need to develop a clear plan for your particular needs. That means putting together a team of stakeholders and employees from every department and identifying company-wide objectives and long-term goals. You should have concrete data and analytics so you can examine performance in all areas of operation to determine where you currently are and where you want to be. Then, prioritize your goals and outline your ideal timeline and budget.
While there is no standard time frame for ERP implementation, approximately 48% of companies complete the process within five months to a year. Depending on the size of your enterprise and your platform selection, it could range from a couple months to several years.
The most common cause of implementation delays and cost overruns is a poorly defined plan for ERP system requirements. To keep the transition on-time and on-budget and to ensure optimal success, it is crucial that you understand exactly what you need from an ERP.
It can also be extraordinarily helpful to have an ERP consultant on your team for unbiased planning, selection, implementation, and training. Look to your vendors for expertise.
2. Choose an ERP System to Best Suit Your Needs
All ERP systems are not created equal, so it is critical that you select the ERP best-suited to your needs. (This is when all of your detailed planning comes into play.)
While cost is an important factor to consider, a survey by Aberdeen Group found that the top two criteria in selecting an ERP for manufacturers are: (1) Ease of use and (2) Functionality.
If you are transitioning from a fragmented manual process, it is especially important to consider ease of use. The goal, after all, is to streamline your process—not complicate it.
And while purchasing a solution with a lower price tag might be tempting, if the platform lacks the necessary features and functions for your business objectives, you’ve invested a lot of time and capital into something guaranteed to fail. Similarly, you don’t want to overspend on an ERP with all the bells and whistles if you don’t need the features.
For example, many manufacturers utilize SAP—a best-of-breed ERP for large enterprises—while government contractors should look to Deltek Costpoint.
Do your homework and understand what each system offers before making a selection with long-reaching consequences for your business.
3. Implement a Change Management Plan
While it is important for any business to create a strategy for successfully implementing a major change to the organization, it is absolutely vital for manufacturers to develop a change management plan when introducing an ERP system.
Your employees are accustomed to entering and accessing information in a certain way. Implementing an ERP means completely changing the way they complete their daily tasks and routines—which can be disruptive.
Employees from all departments and levels should be well-prepared for the changes. Whenever possible, include stakeholders from these departments in conversations about the impending changes and potential benefits for the company, department and individual.
Remember to speak positively about the implementation process and end-goals while also clearly communicating any potential disruptions or significant impacts it may have on job performance.
4. Clean and Migrate Data
Everything up to this point has relied primarily on planning. You have outlined your goals, selected the best system for your needs and prepared your organization for change. Now it’s time to get things moving.
Data migration may seem like the next logical step, but rather than transferring all your data wholesale and then dealing with it later, consider being more selective and cleanse your existing data before making the migration.
Take the necessary time to review, clean up, merge, or purge some of your existing data. Migrating outdated, irrelevant, or duplicate information can burden your ERP system, and you don’t want to start out on the wrong foot.
To eliminate potential issues, ensure consistency and accuracy in all your data. For example, if you have a street address listed as “E. 5th Ave.” in one place and “East Fifth Avenue” in another, you should select one format and ensure all entries are uniform.
Once you have cleansed the data, you can begin the migration process.
5. Provide Appropriate Training
One of the most critical yet often overlooked aspects of successful implementation is education and training.
Your employees will be interacting with your ERP every day, and they ultimately determine the success or failure of the entire system. That is why it’s vital to view employees as part of the system rather than mere participants.
When training your workforce to ensure everyone is ready for system launch, consider:
- Hands-on training will be the most effective training method prior to “go live.”
- Scenario-based training will enable employees to practice and required task sequences rather than learning functions separately and devoid of context.
- In the early training stages, identify those who quickly adapt to the new system and designate them as ERP superusers.
- Utilize ERP superusers to help train lower-lever users.
6. Test, Launch, and Evaluate Your ERP System
You’re almost ready to complete the transition to your new ERP system. Before you go live, allow ample time to for a testing phase. The testing phase should address everything from specific procedures and, workflows to functionality, reporting, and even thorough test-runs.
Testing is a critical phase of the implementation process and will allow you to work out potential issues without disrupting your business.
Once you’ve made the necessary adjustments, it’s time to “go live” with the system, iron out the wrinkles, and set your business on its way to success.
Note that this is not the end of the line. ERP implementation is an ongoing process. You will need to:
- Analyze productivity and profitability against the metrics you established at the very start.
- Install software updates, schedule periodic system maintenance, and evaluate the success of the system.
- Once objectives have been met, set new goals and prepare to utilize additional features of your ERP.
If you adhere to these six practices when selecting and implementing an ERP system, your manufacturing business should see increased productivity, profitability, accuracy, quality, and client satisfaction.
Just remember: Preparation and planning are instrumental to your success.