By Jake Rohrer, manager, Wipfli
Significant decisions rarely happen in an instant; they typically arrive after collecting sufficient evidence. Just as a person might consider a new car after months of repairs, replacing an ERP system often is the result of months, even years, of consternation. Rarely do businesses have a tangible, running list of grievances and complaints about their systems.
Rather, these irritations often are informal and undocumented. For plastics processors at various stages of contemplation, the business case for change starts with recognizing the impacts these red flags have on operational performance and profitability.
ERP Red Flags
Platform red flags are the foundational issues that affect the overall structure and capability of an ERP system. Unlike red flags related to specific system functionality, platform red flags are broad and systemic, impacting multiple areas of a business. They are the most glaring indicators that an ERP system has fundamental flaws and may be unable to support a business’s evolving needs. Here are some common examples:
- Frequent Use of Microsoft Excel: Common workarounds for inadequate system design or functionality.
- Overreliance on Microsoft Outlook: Task communication and reminders outside of the ERP.
- Absent Integration: Manually moving information from one system to another.
- Duplicate Data Entry: Manual entry of paper notes into the system.
- Plentiful File Cabinets: Company data that is inaccessible without physical proximity.
- Inadequate Reporting: Spending more time creating reports than analyzing results.
- Performance Issues: Slow system response times, frequent crashes and delays.
- Slow Onboarding: Training difficulties for new users.
- Fire Fighting: Urgent tasks that might be prevented with better foresight.
Do these red flags sound familiar? If reading this list feels like a reflection of current business struggles, it’s a clear sign that the ERP system is holding the company back. When these challenges are unaddressed, they threaten consistent decision-making, create operational inefficiencies and stifle critical thinking.
Unfortunately, ERP red flags aren’t always so broad and easily recognizable. Even if they’re not top-of-mind for the majority of the organization, poor ERP process design still can create substantial headaches. In Wipfli’s experience with plastics processors, there are a handful of common red flags when digging a little deeper:
- Use of “Smart” Part Numbers: An outdated approach to simplify system search and reporting.
- Unreliable Material and Scheduling Automation: System recommendations for purchasing and production are not trusted or used.
- Informal Labor Time Capture: Manual operator capture of direct labor hours can create data quality challenges.
- Costing Uncertainty: Difficulties setting standards and rolling up actuals for accurate variance reporting.
- Profitability Questions: Major differences between planned profitability and actual profitability on the income statement.
ERP Design Philosophy
Effective ERP systems are a mix of well-designed products and trained, diligent users. For most organizations, the business case for change should start with an honest assessment of responsibility. It is common that organizations could do more with their systems that are in place. For organizations with ineffective systems, fundamental gaps in ERP capabilities are equally common. In some instances, the lack of system functionality available is by design.
ERP design philosophy for software publishers isn’t too dissimilar to that of manufacturers. Both business types must determine a market focus and align their products appropriately. Some ERP products offer a broad approach that allows the system to be approachable to the majority of discrete manufacturers. For plastics processors, the functionality needed from an ERP system may exceed the capabilities of software built for the typical discrete manufacturer. The following use cases are relevant for plastics processors but not for discrete manufacturing on
the whole.
Multi-Cavity Scheduling: Producing parts in multiple cavities each cycle. Specialized ERP for plastics processing manages cavitation settings and scheduling intricacies with appropriate granularity.
Family Mold Management: Producing multiple distinct, related parts within a single cycle. Specialized ERP for plastics processing manages part relationships, scheduling optimization, mold usage and maintenance schedules.
Regrind Inventory and Processing: Managing reused scrap material in the production process. Specialized ERP for plastics processing manages the collection, sorting, washing, shredding, melting and re-processing while tracking inventory availability throughout.
Process Monitoring: Real-time monitoring of the production process and machine conditions. Specialized ERP for plastics processing includes hardware integration for capturing machine status and attributes (temperature, pressure, vibration, etc.) that ensure consistent product quality.
If a business requires support for these scenarios, a typical discrete manufacturing ERP likely doesn’t offer a pre-built solution. Implementing an ERP system that is purpose-built for plastics processing can support current operations while offering industry best practices for system set-up and processing.
While purpose-built ERP solutions for plastics processing offer compelling granular functionality, no solution is a perfect fit across the board. All ERP systems have their red flags that present varying degrees of consequences to a given business – selecting the right system isn’t a “one size fits all.” Consider the following situations when evaluating any ERP system:
- User Experience: Does the system provide a modern interface and system configuration?
- Scalability: As business changes, will the system be adaptable to higher volumes and alternative processing scenarios?
- System Composability: Does the ERP system support tight integration with other third-party systems?
- Implementation Support: What implementation resources (system integrators) are available to tailor the product to the business?
- Publisher Reputation and Reliability: Is the software company in good financial standing to keep pace in product innovation and support?
Ultimately, the decision to replace an ERP system should be driven by a clear understanding of its limitations and the specific needs of the business – both current and future. By identifying and addressing red flags, manufacturers can transform these challenges into opportunities for growth and improvement. Remember, the right ERP system is not just a tool but a strategic asset that can propel a business
forward.
Jake Rohrer is a manufacturing digital strategist at Wipfli, assisting clients with all facets of enterprise technology evaluation, implementation and optimization. As a digital strategist, Rohrer assists clients with architecting a digital strategy and roadmap tailored to their unique conditions. Leveraging his background in Lean Six Sigma, Rohrer specializes in improving organizational processes through applying data and technology solutions.
More information: www.wipfli.com
