Implementing a new ERP system is not a decision manufacturers take lightly. Manufacturers do not simply walk into a store and purchase an ERP system. An ERP implementation can take several months to more than a year, and more likely than not includes working with a partner to help with the process.
Knowing an ERP implementation will be a massive undertaking, your company may wonder when’s the correct time to pull the trigger on such a big change. It’s understandable: With the amount of money, time, and resources it’s going to take for a project of this scope, making sure everyone’s ready should be a top priority,
Here are three ways Practical Software Solutions offers to determine if your company is ready to make the change to a new ERP system:
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1. The pain of staying is greater than the fear of change
When implementing a new ERP system, whether its an upgrade or a completely new platform, manufacturers need to understand it’s a pressure-packed process. As a Sage partner, Practical Software Solutions knows from hundreds of implementations over the years that there is no stress-free project.
Most people have a negative reaction when first finding out something is changing. It can be as small as a passing feeling and as large as fighting something tooth-and-nail to keep the status quo. Aside from crunches like deadlines, database transfers and major purchases, the changes a new system brings can cause stress too. It’s a normal human reaction, but sometimes that fear can throw a wrench into a project, grinding it to a halt.
However, the issues and costs a manufacturer faces being on an outdated system is usually enough to push people past the fear and into action. When a company reaches that point, that’s the first step in knowing that you’re ready for the change.
A great way to see past the fear is to use a whiteboard to list ways your company is struggling with your current system. When multiple people see things like “Too many inventory stock-outs,” “Constant errors and omissions re-inputting data,” and “Support ending for current version,” written together in big letters on a white board, they can get a broader idea of the overall problems instead of just their individual issues. This may help those who are fearful of change see the reality of not moving to a new ERP system.
2. Customer or regulatory requirements change
Just like B-to-C businesses, B-to-B businesses must adjust to the needs of their customers. And sometimes, your customers’ needs might alter the course of your own business.
Let’s say your company manufacturers exhaust header gaskets for the automotive industry. You’ve carved a nice niche for yourself, using the best quality composite materials to produce the industry standard.
But let’s say several of your customers come to you after reading an article that said latest tests proved a solid vibranium exhaust header gasket was more efficient than your proprietary composite. (This, of course, is complete nonsense since vibranium doesn’t exist in the real world. I’m using a made-up scenario so I don’t accidentally rip off someone else’s proprietary idea.)
Doing the quick calculations in your head, you realize this may be the perfect opportunity to expand your business. You’ve been planning this for a few years, but never knew quite when to bite at the chance.
You’ll have to open a new warehouse and perhaps even a second base of operations to manufacture the new gaskets. And since most of the customers who want the new gasket are halfway across the country, you figure you should have your second location closer to them.
This is a prime example of customers’ needs changing forcing changes in your own business. It’s a big enough change to warrant an upgrade to your ERP system as well. You’ll now need to switch to a system that has multi-state and multi-warehouse capabilities.
Other times, it may be the government forcing that change along the supply chain. Take the trucking industry, which greatly impacts the manufacturing industry. Recently, truck driving regulations changed requiring more automation to track hours, mileage and other variables. Having an ERP system that can parse the data and turn it into useful information can be invaluable to a manufacturer.
3. If leadership isn’t driving, followers won’t change
As mentioned earlier, overcoming the fear of change is a difficult obstacle when thinking about changing to a new ERP system. However, if this fear is coming from leadership, it will be next to impossible to implement a new system.
Oftentimes, upper management may not know or understand all of the reasons for needing to switch to a new ERP system. They may only think with dollar signs instead of with their heads. They may think that since the company’s going just fine with what you have, there’s no need to change.
Company leadership must all be on board to successfully implement a new ERP system. All it takes is for one person rowing against the rest to send the ship off its course. All it takes is for one leader to react negatively to sour employees to a project.
If you see your company’s needs far outweighing its fear of change, enough customer requirements have changed and if all leadership is on board for this large of a project, you’ll know new is the correct time for your company to implement a new ERP system.