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ERP High Level Thinking is Not Thinking About ERP At All

By Scott Shumway, President of Cropper Medical

Since all companies that install new systems were able to operate before the implementation of the new technology, there must have been “rules” that allowed them to live and operate prior to the implementation of the new technology. Therefore, once the technology has been successfully implemented, it is important to ask if the rules that were previously written, that enabled the system to operate, have been changed or abandoned.

If we are behaving under the same rules that existed before the implementation of the new technology, it is safe to assume that the technology has not provided any benefits to diminishing the limitations. Therefore, if we don’t drastically change the old rules, there can be no real increase in benefits.

So what process do we need to change in order to capture the benefits that new technology (or ERP systems) brings? Additionally, it must be clarified that the benefits that we are looking for are bottom-line benefits.

Insightful Questions

Before implementing a new technology or system, we must ask some important questions. This is like buying a new car. What are we going to do with the new vehicle?

· What is the main power of the new technology?

· What limitation does this technology diminish (be precise and use relevant data)?

· What rules helped us to accommodate the limitation? If we do not identify the rules (and often they are unwritten rules), then we will most likely not receive any benefits from the change.

For example, if an old system focused on the local optima rule and measured the productivity of each worker, this system would produce clots and huge piles of WIP that are falling all over the shop floor. Instead, the new system should focus on the global optima rule and allow workers to sit idle in order to create flow.

· Finally, we must ask, what rules should we use now? Sometimes these are not the opposite of the original rules. This question is the catalyst to finding the real benefits of the new system (if any).

​Changing The Rules

Can this ERP system improve capacity (throughput) to affect margins? If so, how (be specific)? Or is this “improved capacity” caused by other “rules” that are changed for the new system. In other words, do we need to change the rules, not the system?

If the change to the rules is based on local optima rules, then the local optima rule must be qualified. Bear in mind that it is not a bad decision to implement local optima rules. This is far better than any random decision. However, local optima rules are worse than holistic decisions or global optima rules.

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