The ProblemI hope to stop the insanity of your day to day responsibilities and in the process de–mystify your enterprise system as it relates to the human beings that interact with the computer software and do their best for your company. Even if you feel you have a well running enterprise there may be something that you can gain from the contents of this book. Have you ever wondered about some of the following statements during the course of an average day on the job?
· why can’t I get my orders out the door on time?
· we are a product driven company and can’t get our products out the door?
· we’ve implemented JDE and yet still don’t have visibility into our shop floor
· our sales orders at an all time high and our on–time deliveries at an all time low
· our inventory is going up and our on–time deliveries going down
· how do we know when someone has fat fingers while entering an order
It is the intention of this white paper is to help you to gain visibility to the details of your enterprise system….to see the proverbial needle in the haystack. Most managers today view their enterprise system as a black box, some dark hole where information goes in and then comes out somewhere else in the enterprise cosmos. Most modern Executives do not thoroughly understand how their Enterprise System functions, they simply want their employees to stop complaining and do their jobs. A modern ERP System which is properly installed may seem to some members of an organization to cause them more work; however, if the entire process is examined you will usually find that the overall efficiency of the organization has been increased or downstream tasks have been completely eliminated.
I have experienced, first hand, countless installations of software that were completely botched by the installation consultants, by trying to make some pet employee happy, or trying to satisfy the individual workers who interface with the software demanding that they have some unnecessary information or process and not educating the enterprise on the overall health and information flow required to maximize the benefit of the software installation.
JD Edwards, as it is for the other Large Enterprise Software Packages like PeopleSoft and Oracle, is like the nervous system of a human being, information flows upon predetermined routes and if this happens unhindered by the surrounding environment, the entire organization will function correctly. This means that the more you tamper with the core process imbedded in the software the more problems you will have in running your business smoothly. Modern Executives believe their business’ are unique, and that somehow they are special and require custom programming and modification. Although this may be gratifying to the ego of the founding members of the organization, it really doesn’t stand up to common sense or scrutiny.
Software companies, like Oracle and Microsoft, spend an enormous amount of their profits on research and development. It is easy to throw stones at them because we might think that we know how something “should” work; however, if we stop and think of software as a living organism that needs to function in a precise manner, then we can get over our own resistance which ultimately is causing our organization all of its problems. Why not view the software with an open mind? Why not think that perhaps the ten thousand engineers that developed the interfaces might have actually known what they were doing? Why not try and understand the software as well as we understand our businesses? After all, it is usually one of the largest investments that any large enterprise will ever make.
Too many enterprises are implementing software without understanding its full functionality. Too many consultants are just trying to make users happy and not doing their job. Now you are probably wondering what that means, so I will spell it out plainly. Your organization made a commitment to implement JD Edwards to save your company money. Why else would some sane person commit to spending millions of dollars only to end up with the same inefficient system as was in place before the implementation? This is the problem is it not? Think about it for a moment.
The ProcessAre you thinking about it?.............
The consultants come in to assist you in your implementation. They interview the employees and assess the situation. Each employee can only see their own sphere of influence and their own individual processes. Each employee is only concerned with the job that they have and probably only understand that job from the way they have always performed their job. Eventually, the consultants try to make the employees happy because if they don’t the employee will go to management and complain that they now have more work than ever before. They will say things like, the old system handled this much better than this new system. The executives, who can’t be bothered to understand the biggest investment their company has ever made, say to the consultants that this is not acceptable. My accounts payable clerk can’t possibly be expected to do that.
At this point the implementation has failed and any hope even for moderate success is doomed. The consultant, who doesn’t want to lose this great opportunity for income, will find a way to make each of the employees happy at the expense of the overall organism called ERP. The consultant will try to modify or shortcut some process which may be vital for the correct information to flow to the rest of the organization and they may not even know they are doing this.
The ImplementationLook, I want to be perfectly frank with you. All ERP software works fine. But time and time again I have seen failed implementations because some of the lowest paid employees in an organization have complained about the “complexity” of the system. The investment was made for R.O.I. But what is R.O.I. Also, consulting companies now talk about T.C.O. So are you gaining R.O.I. and reducing T.C.O. from your E.R.P? This is the insanity of our world today. Too many T.L.A.’s (three letter acronyms) and too many people nodding their heads and saying yes!
How much overhead will be reduced by implementing this software? Of each department interacting with the software, which will be affected the most? What processes will be eliminated my implementing this new software? These are questions that get lost during the implementation, yet if they aren’t held as goals they will never be accomplished. It is not popular to perform cost cutting on the ‘indirect labor’ force; especially if the consultants are asking for their assistance in doing the implementation.
I once entered into the complexity issue with the Vice President of Marketing and Sales in a very large Manufacturing and Distribution Company. At some point in the interview process he said to me that he felt the enterprise system should present the information simply to his team members. He said, “It should be like at Burger King, we should have a picture to select instead of these complex numbers and then everyone’s job will be easier.” So I asked him how he expected to present the one hundred and seventy seven thousand pictures (which was the size of the Item Master at the time) in a concise and easy to understand set of different pictures to his team members.
· The Sales Department wants more finished goods.
· Finance want you to reduce inventory.
· Production wants more raw materials.
· Purchasing can’t seem to support manufacturing.
· Inventory accuracy is causing everyone problems.
· Customers are complaining about deliveries.
· Planning and sales are fighting over the forecast.
· Vendors are complaining that your aren’t giving them enough lead time.
· Work orders are never finished on time. Obsolete inventory is increasing.
Modern Manufacturing TheoryIn 1990, Eliyahu M Goldratt
[i], the famed Israel–born physicist turned business consultant, and the originator of the theory of constraints published a book titled The Haystack Syndrome : Sifting Information Out of the Data Ocean
[ii]. Early in the book Eli says something rather profound about modern computer systems, “I think we should cut out the middleman and hook up the computer printers directly to the paper shredders.” This book, along with others who picked up on Eli’s simple idea gave birth to the idea’s of “paperless environments” as well as modern Business Intelligence software.
Effectively managing enterprise operations in today’s demanding business environment is a difficult task. Market demands require flexible agility to deliver perceived value in the eyes of the customer. Economic pressures call for continual process improvement in the seemingly elusive goals of the “lean enterprise,” “constraints balancing” or “just in time inventory.” We live in an era which has been consumed by “TLA’s” (three letter acronyms) and competing management theories. While working for TRW Automotive I began to call this phenomenon “buzzword du jour” as the theories and policy changes were coming faster than their implementations could be completed. The real question we should be asking ourselves is, “what value will this particular change or enhancement deliver to the bottom line of the organization. Whether production is driven from discrete work orders, repetitive schedules or demand pull signals, any disruption in the execution process is extremely costly. In the two short years at TRW I estimate that top management spent about seventy percent of their time in meetings talking about new programs and only thirty percent of their time in direct work with the staff and the tasks of running the business.
When the inevitable finally occurs and either customer demand changes, equipment malfunctions, or material shortages occur, it is important that every key person in the organization has immediate access to “real time” information allowing the free flow of decisions or changes to be communicated across the entire enterprise. Meeting these and other challenges requires only to embrace the very basics of enterprise execution theories that will allow every organization to leverage real–time information and ensure goods or services are delivered according to stringent customer demands. These basic theories address all of the challenges any enterprise organization faces today, and once completely embraced by the entire enterprise they also empower you to configure new processes as you continuously improve operations through the principals of Lean Execution® which have evolved through my own introspection during my thirty year involvement with Manufacturing and Distribution.
The ResultsOn page one hundred of Business @ the Speed of Thought
[iii], which was written by Bill Gates, he says; “Machines generally reach customers within three to five days of order. Dell’s business model is based upon the evils of inventory. The more Dell can reduce its inventory, the more it frees up working capital to drive into other revenue generating activities. Dell’s reduced inventory translates to a savings of hundreds of millions of dollars in assets. At the same time, the requirement for greater customer service means that you never want to be out of stock either. Only information technology can provide the means to balance these needs. ‘Physical assets used to be a defining advantage,’ Michael says. ‘Now they’re a liability. The closer you get to perfect information about demand, the closer you can get to zero inventory. It’s a simple formula. More inventory means less information, more information means less inventory. We’re trading physical assets for information.’”
Utilizing core Oracle JD Edwards Enterprise Software along with Lean Execution® methodology will empower any enterprise to create a “paperless and information rich environment,” and gain immediate benefits such as:
· Reduction of enterprise cycle times
· Reduction of order lead time
· Reduction of indirect labor costs
· Reduction of direct labor costs
· Reduction of data entry time
· Reduction or elimination of paperwork
· Reduction of work in process (WIP) inventory
· Increase in equipment utilization
Implementing Lean Execution® techniques enables critical information to flow throughout the organization—including the often–forgotten areas of distribution and manufacturing. This requires that the information is within the control of those who actually produce your goods or services. “Paperless and information rich environments” have been created for a few forward–thinking enterprises, producing dramatic gains throughout their entire organizations. Now you will learn how the same results are possible for your enterprise.
for more information:
Lean Execution and Lean Enterprise Intelligence System for JD Edwards Enterprise Software[i] Eliyahu M. Goldratt (1948 – ) is an Israeli physicist turned business consultant, the originator of the theory of constraints (abbreviation: TOC). He claims that he applied the scientific method to resolving some permanent problems of organizations. He obtained his Bachelor of Science degree from Tel Aviv University and his Masters of Science, and Doctorate of Philosophy from Bar–Ilan University. He is the author of several business novels: The Goal introduces TOC's accounting and process improvement aspects; it is considered by some to be an important work on the topic of focused performance improvement. It was followed by: It's Not Luck applies TOC to marketing. ritical Chain applies TOC to project management and illustrates the so–called Critical Chain theory, and Necessary But Not Sufficient applies TOC to Enterprise resource planning (ER) and operations software.
[ii] The Haystack Syndrome: Sifting Information Out of the Data Ocean by Eliyahu M. Goldratt, Hardcover: 262 pages, Publisher: North River Press (January 1991), Language: English, ISBN–10: 0884270890, ISBN–13: 978–0884270898
[iii] Business @ the Speed of Thought: Succeeding in the Digital Economy (Paperback) by Bill Gates, Paperback: 496 pages, Publisher: Business Plus; 1st edition (May 15, 2000), Language: English, ISBN–10: 0446675962
