OVERHAULING a core manufacturing, financial and distribution software is a major and critical project. When it goes wrong, it can severely impact business performance and profitability.
Faced with an outdated ERP system, Form-Rite Australia, re-engineered all its business processes before implementing a new system using Axapta ERP software from Microsoft and integrator, Eclipse Computing.
Privately-owned Form-Rite turns over $10m annually, has a full time staff of 50 and specialises in general and medical plastic packaging and point-of-sale displays.
“To implement a new ERP system without reviewing all your business processes is madness,” said Form-Rite’s general manager, Harry Houston. “The business landscape is littered with the corpses of failed ERP implementations but companies continue to avoid doing the homework on their business processes before starting their projects.”
Before beginning its ERP implementation, Form-Rite’s staff worked together reviewing the company’s business operations. They analysed, flow-charted and then re-structured business processes and created a ‘wish list’ of features the new ERP system should have.
Form-Rite’s old legacy system didn’t provide the company with clear visibility of inventory and product costs and lack of integration created unnecessary planning and administration work.
“Our competitive edge is that we consistently deliver on-time and at agreed quality levels. With our old system, project management, MRP and accounts were poorly integrated. This made achieving our 95% delivery target labour-intensive at an administrative level,” said Houston.
With the new system, Form-Rite re-organised its account structures to be more user-friendly and, with better integration between business functions in the new ERP system, it was easier to streamline processes.
Houston explained, “There was a significant reduction in sales order processing, purchasing and financial administration times as the new system generates a list of requirements for all orders, invoices and remittances. We can now give an accurate date for delivery on a job within 24 hours of receiving an order.
“Additionally, we used to have eight indirect staff in production and administration and now we only need four. We get our product out the door more efficiently and we’re more price-competitive without sacrificing customer satisfaction.”
Houston identifies the following as key to the success of any ERP implementation:
• Do an in-depth analysis of existing business processes. Build a flow chart covering every aspect from receiving a customer query to receiving payment and all steps in between. Review this and build your new model.
• Choose your new ERP system for the functionality you’ll need in four to five years’ time. Software cost is only 10-15% of the total project cost so go for the best fit and get the functionality you require.
• Ensure your IT implementer and service partner has practical knowledge of manufacturing requirements and is committed to on-going service and training.
• Have an external, experienced ERP specialist to assist in evaluation and advise on realistic project management, but not to do the work for you.
• Ensure that the senior management champion is totally committed to the project and understands the issues surrounding ERP.
• Avoid modifications…your business isn’t that different!