We all know connectivity, cloud and integrated solution have been the buzzwords for the last few years, but there are still a lot of companies who haven’t upgraded or updated their tech stack – this is the story of one such company. Earlier this year a large manufacturing & distribution client ask us to project manage their ERP implementation and technology overhaul. While a lot of clients assume we only sell solutions, we also help clients manage business transformation and change management projects for other solutions. This was one of those situations where we went in expecting one situation and not only were surprised with what we found, but incredibly impressed with the impact of their new integrated solution.
Client Challenges
IntelRise’s client’s current IT infrastructure included numerous disparate systems. Their systems included an outdated ERP software, a warehouse management system, and an archaic manufacturing information system. In essence, the client was parsing data from various systems onto spreadsheets to manage and run their business. As you can imagine, utilizing all these separate systems into one business created a copious number of interconnected and complex manual business processes.
The client’s previous systems forced them to rely heavily on Excel to solve their complex business processes and make decisions with static data. An example of this manual process was around inventory management, where the client would combine data from the warehouse management system and the outdated ERP to establish inventory levels and try to meet their demand for their open customer orders. The manually intensive and time consuming process was done daily, and ultimately led to them unable to build their products effectively or deliver products to their customers on time.
Supply Chain Inefficiencies
In addition to having an Excel dependency, their supply chain wasn’t effectively managed. They had to create a manual procurement tracking board for this process. By “board”, we don’t mean an online tracking board – we actually mean a board on the wall where post its & magnetic stickers were moved from column to column as they went through the supply chain.
As soon as we walked into our client’s office, we saw firsthand the chaos these manual processes were causing for the business and staff. They were extremely time-consuming and labor-intensive. As well, the unstandardized processes lacked accountability, reliability, and accuracy, and the icing on the cake was they didn’t show any real-time insights into their product margins or costs.
Lack of Accuracy & Insight
An example of their lack of accuracy was that one of their main suppliers, who supplied them with 60% of their products, was located overseas in China. Being in separate geographic locations and time zones made communication difficult, but that was manageable. Since this subsidiary in China supplied a key component of the overall product, it was a big problem to not have visibility of the component supply and demand, with everything being managed in Excel. By manually tracking the in-transit inventory and anticipated shipping information outside of their systems, on that post-it board, they overproduced and shipped product more frequently from China to make sure they had enough to complete the product assembly in the USA. The lack of an integrated solution and lack of of supply & demand visibility regardless of geographical location, led to a significant customer order backlog. Ultimately it also led to the loss of a few key accounts due to the inability to deliver on time or accurately forecast delivery of products to their customers.
Managing the cumbersome and often error-prone manual processes for our client’s disparate systems wasn’t the only issue. Accurate standard costing and their financials were also a very big concern. At best, their costing was inaccurate and at worst, we found it completely non-existent. Any demand planning and forecasting were also done via spreadsheets resulting in unexplainable variances and visibility concerns. Their month-end close process was particularly lengthy and a dreaded task that would sometimes result in unpredictable and unfavorable results.
Culture Concerns
Finally, at a huge disadvantage to the organization, and the people working there, the culture had a silo mentality. This was probably caused at least partially by the fact that each department used different systems and worked with different processes. We all know a siloed culture doesn’t work well and will, eventually, erode efficiency, weaken motivation, and impede the achievement of organizational goals. Getting staff to work more collaboratively was a big driver for implementing one single integrated system into their business.
Our Approach & Impact
So, you must be wondering when we’re getting to the good news part of our client story. How did implementing a global, fully integrated solution fix all these challenging issues our client was experiencing?
For starters, the client is now better able to manage by exception instead of reaction. They’re able to focus more on the business’s strategic goals rather than reactively putting out fires because they have confidence and security in their new systems. They know their fully integrated ERP system will effectively manage their supply chain, reporting, forecasting, costing, and processes, without their intervention.
Visibility & Data-Driven Culture
The client now has increased real-time visibility and access across entities. This empowers better, more informed business decision-making. They also gained enhanced audits and controls which guarantees their data integrity. All of this not only puts the right information in the right hands but also drives a data-driven culture within the organization while improving significant long-term business decisions. Poor business decisions based on inaccurate or erroneous data were having a dramatic effect on a company’s goals and bottom line, which we witnessed firsthand with their previous multiple disparate systems.
Standardization & One Source of Truth
They now have one system to manage, and that one system is their single source of truth. No more manual processes unsuccessfully trying to link multiple systems of information and data together. Month end is now able to be done in a few hours and inventory is available in real-time, across all locations worldwide. They’re equipped with executive dashboards and modern operational & financial reporting capabilities.
As well, their improved standardization of product costing and business processes are resulting in fewer errors, a lot more team collaboration. With everyone using the connected systems, the team silos are going by the wayside and different departments have a much better understanding of how they all impact each other. Although this business transformation takes some time to settle in the organization, the client is well positioned to increase productivity and continuously realize efficiencies across all areas, along with a much happier team.
Summary
Having one integrated solution that’s scalable, versus having multiple disparate systems, connects staff and all operations into one cohesive and efficient team, which is pivotal to transform processes and culture for maximized productivity and profitability. This client’s success story plainly illustrates why employing a full-featured ERP system is the platform for growth and scalability for any business.