Implementing a new ERP system can be challenging for small manufacturers looking for new enterprise solutions. In fact, the challenge is felt by companies or all sizes, industries and complexities, but more so with small manufacturers.
However, the ERP landscape has significantly changed over the past decade. Today’s small manufacturers have a number of options to choose from when evaluating ERP solutions. While previously shunned by traditional ERP vendors, small manufacturers are today being approached to take up various tailored solutions. EPR vendors have realized the potential revenue stream that the small business segment can generate, and are providing a host of best-in-breed and niche solutions for smaller manufacturers.
Still, despite the well intentions of ERP vendors, smaller manufacturers are often inadequately equipped to handle the complexities and challenges of implementing an ERP system. In particular, the organizations lack the infrastructure, skills and experience needed for successful implementation. Most of the manufacturers fall into various implementation traps such as slippage of project timelines, budget overruns and lack of business benefits realized.
Below are three common mistakes any small manufacturers make when trying to implement an ERP system.
1. Deviating from the Initial Business Plan
When working with an ERP consultant or vendor, some small manufacturers try to skip over the business analysis. The organizations don’t see why it’s important for the consultants to learn about their business processes.
While ERP vendors may have the technical or software skills needed for ERP implementation, they don’t know your business processes in and out. If vendors don’t understand how your company works, they cannot provide the best guidance, advice and implementation solution. As a result, there may be backtracking and delays, which can cause your company more money and stifle output.
Moreover, small organizations usually have unrealistic expectations in some areas of implementation. For example, they may think they have the necessary resources required for successful implementation or that they won’t waste time in re-engineering business process. Such thoughts can contribute to the failure of the project. Any business should have realistic expectations of an implementation in terms of resources, budget and time required to ensure success of the project.
For a successful implementation, small manufacturers should work with consultants that have implemented similar solutions for other organizations in the industry.
2. Outsourcing ERP Implementation to Consultants
Most small manufacturers work in a lean manner and have little bandwidth to take on the requirements of an ERP implementation. With a limited bandwidth, the organizations usually resort to hiring consultants to take care of everything.
While having an ERP consultant fully manage the implementation seems like a noble idea, it also means higher costs for the organization in the short term. For implementation projects to be successful, there must be some minimum level involvement and commitment from executives and team members of the manufacturing company.
There is no right or wrong number on the extent of internal and external resources required for a successful implementation. You need to find some sort of balance for your company.
3. Not Ironing Out Disputes
Many times, there is a functional group leading the implementation of the ERP. There has to be a team leader who will propel the implementation and encourage adoption by other members. For instance, the sales department may need better customer reporting and therefore push for a new ERP implementation. However, if the production department does not see any benefits it will get from the implementation, its members may not fully support the project.
A successful ERP implementation requires all departments to be fully involved in the process. This means disputes must be resolved to bring everyone on board. Change is hard, even among employees of the most entrepreneurial organizations. In fact, smaller organizations may have a difficult time adjusting to the discipline required by ERP systems since they are used to being nimble.
Managers should consider organization change management when implementing ERP. Critical activities such as communications, training and organization readiness may not take as much time and resources like is required of large companies, but they are still important.
The above are three common mistakes that small organization make when implementing ERP.
