Value-Chain Report -- Supply Chains & ERP: Getting The Most Out Of Your Investment
Dec. 21, 2004
Enterprise Resource Planning (ERP) systems are nearly universal within larger firms and have been adopted by many mid-market companies as well. A very high percentage of the Fortune 1000 have ERP systems in place and many of these are "full suite" implementations encompassing financials, planning, order management, procurement, production, HR and other functions. Although the widely anticipated Y2K dilemma may have accelerated the need for transition from non-compliant legacy systems to Y2K-ready ERP systems, most organizations implemented ERP in anticipation of achieving significant benefits, including:
- Focus on deriving measurable value from redesigned end-to-end processes by aligning ERP capabilities with supply-chain process priorities. Apply Pareto logic: Supply-chain processes that add little or no value through differentiation, such as preparation of shipping documents, should be aligned with standard functionality found in the ERP system. Any customization efforts should be directed at the 20% of supply-chain processes that create competitive advantage.
- Focus on communication, training and management of organizational change. Any significant process and/or systems change that impacts the supply chain will impact a company's organization structure and engender some degree of organizational resistance. The objective is to ensure that users are truly prepared for the new approach.
- Focus on stakeholder value. All aspects of the supply-chain-related ERP initiative must come together in a strong business case that defines how priorities are assigned and how stakeholders will measure value received. Executive sponsorship is a key element. Any investment that is expected to significantly improve a company's competitive position must have the support of top management. In turn, the executive sponsors must empower the implementation team to make the decisions necessary to ensure success.
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