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I have been fortunate to support companies over several decades with the implementation of enterprise systems and best-of-breed, value-added, bolt-on specialty applications. My current focus is on Demand Planning (forecasting, replenishment, and distribution planning) and APS (Advanced Planning and Scheduling) or factory planning systems. The Demand Planning solution supports retail, wholesale, distribution, and/or manufacturing companies. The APS solution benefits discrete, process, and ETO (Engineer-to-Order) industrial companies. My typical target market is divisions of Fortune 500 companies, or SMEs (Small to Medium Enterprises), with the accent on medium.

Recently that changed when I took on the responsibility of installing an APS application at a small manufacturing enterprise, hence the term MAP Manufacturing, for Mom and Pop—literally. A highly successful company with an average growth of 13 percent per year over the past several years, this is an implementation challenge, but why?

After software is initially architected, designed, and coded, it undergoes an ongoing enhancement evolution as you migrate the solution to additional client companies operating in different vertical markets each with its unique requirements. With a global installed base the software requires additional function to cater for regional and national challenges. Features are addressed and improved over time. The net result is a functionally rich, highly sophisticated system with solutions in search of problems to solve. With a disorganized, out of control implementation, facilitated by an inexperienced consultant, users can face a nightmare trying to get an overly complex solution working by forcefully attempting to use unnecessary function. Keeping it simple works.

Client companies usually have knowledgeable user personnel steeped in clear understanding of generally accepted production, inventory control, planning and scheduling principles. Consequently the amount and depth of education required ahead of re-engineering the business process is less demanding prior to configuration, implementation, and training.

Most companies have a stable enterprise or home grown system in place. These systems may not have the function and solution support to take the company to the next level of performance required to allow them to remain competitive in the market place. The net result is customer service levels are not that great in terms of on-time deliveries. Inventory turns are on the low side compared to competitors, profitability suffers due to lack of productivity, and there are a host of challenges including inventory shortages, ripe for addressing immediately. Ultimately a focus to re-engineer business processes and re-visit needed management support with improved software applications will allow companies to regain their competitive advantage as the corporation reinvents itself to become highly productive with enhanced collaborative strategies. After addressing issues such as demand planning, balancing demand and supply, we begin to achieve realistic ATP (Available-to-Promise) dates, and ensure that our vendors are in lock step with our plans. Marketing and Sales are held accountable for orders, and operations responsible for delivering a quality product in the right quantity at the right time. Sales, inventory turns, productivity, and profitability all increase. We encourage companies to formalize their Sales and Operations Planning (S&OP) process.

Working with a small company presents very interesting challenges, and therefore opportunities for improvement. Firstly I found in this situation that the “enterprise” software was an inexpensive accounting package with a bolt on report generator application to print production information by work center. Lacking was the function to plan material replenishment, other than relying on someone’s memory. Raw materials need 6 week lead times. Forward visibility was restricted to available orders with probable additional shipment details going out a few weeks, but less than 6. The net result was carrying large quantities of safety stock with a respectable 9 inventory turns, but still suffering stock outs. The owner had set a target of 12 turns and wanted to free up cash tied up in inventory to allow investment in other areas of the business. The good news is that on time delivery was in the 90 percent range, although this metric was not measured on an on-going basis. It was more gut feel. However, as a tier 2 and 3 supplier to automotive, late deliveries are not tolerated and expediting is the order of the day.

The accounting package has a proprietary database that restricted us from directly interfacing to our APS solution. Fortunately there is an available software package that allowed us to load the tables into an Access or SQL database. These tables include: items, customer, and vendor. It had full provision for accounting information, tax and other data, but not much support for a manufacturing company to plan raw and packaging materials or the shop floor. BOM (Bill of Material) data was present, but somewhat hidden among the inventory record detail, and did not conform to standards commonly found in enterprise solutions providing routings, resources, and operations data, etc. Detail such as lead times, and order quantity does not exist.

The hardware and operating system software in use is not new. This is not an insurmountable issue, but follows cultural norms. I have written in previous blogs that many of corporate America’s publically traded companies’ still use very old “green screen” applications because of budget constraints. This lack of investment in technology is a key factor in America’s slowing productivity improvement over the past decade, currently not much over one percent.

When working with larger companies, they are usually well versed in production and inventory control principles. They may not experience high levels of inventory record accuracy for example, but likely have the infrastructure in place to record receipt and issues of material as it moves into receiving, through the production process into finished goods inventory. They may not practice inventory cycle counting, and live with consequences when caught in an OOS (Out of Stock) inventory situation. These issues can be addressed with remedial training. With smaller companies, generally, these business processes are not yet part of their DNA.

It is difficult too in working with smaller companies to communicate with understanding the role that they need to play to make introduction of a new solution successful. As these small companies grow in size they have relied on successful methods that supported them since the start. Introducing what is perceived as a bureaucracy is foreign to their way of operating, and their positive “can do” attitudes. Culturally if we have a health issue we see a doctor and expect to take a pill and to wake up feeling better in the morning. If the doctor determines that you are obese and that you need to change your diet and exercise daily, that is not what we want to hear and are reluctant to change. And so it is in business, sometimes you will need to make behavioral modifications and operational changes to support the next growth phase for your enterprise.

Since my introduction to information processing decades ago, I accepted that items, customers, suppliers, etc. were all recognized by an insignificant identifier, generally a numeric code. What a surprise to find when using an inexpensive accounting package that there were no “codes” per se, and mainly descriptive information. In diving behind the scenes and looking at the information in the database, they used internally generated codes to support relationship linkage between tables, and fortunately these indecipherable codes were not visible to their user community.

The game plan forward might be to recommend using our cloud based solution. The major benefit is that the company will not have to get steeped in computer technology, but stick to their knitting and keep producing quality product. It quickly becomes apparent that this is not going to be as simple as it seems on paper. We know that we need to export data from the accounting proprietary database to a commercially usable database. That data in turn has to be transformed to feed the APS solution. The application we need to migrate the proprietary database to MYSQL, SQL, or Access, has to reside on the same server where the accounting package is resident. The server and its supporting operating system software is several years old. Should the client make the investment to upgrade the server to current software? That said, any upgrades may be a reason to run the APS application locally, and not via a cloud because all the fussing with data migration may make a cloud solution less economically attractive. The company will still be accommodated with a monthly expense fee for the solution, and not be asked for the standard upfront capital investment license for in-house processing.

The next conundrum is user training. With a very small administrative staff, where would they find the time to learn the new system? Here again larger corporations are able to find talent within their operation to devote to the successful launch of a new project. This flexibility is absent in small companies.

What I believe helped the owner decide to embrace this project enthusiastically was the cost-benefit analysis presented to him. The increased cash flow could fund 5 more employees, and the increased profitability could pay for at least one new hire. Naturally hiring 5 is totally ridiculous and unnecessary. Employing one extra person would be great, and better yet someone with many years of production and inventory control experience and familiar with planning and scheduling systems. The benefit of family run businesses is that you can request family members to put in overtime to learn a new application while still carrying the standard load required with current duties. The longer term promise is that the day-to-day activities should be less stressful, and shortages a thing of the past. On time deliveries to customers will approach 100 percent. If there are unforeseen problems, customers will be alerted in a timely manner to make alternative arrangements, communicating effectively throughout the supply chain. Converting from manually driven paper systems to a systemic repeatable planning and scheduling solution results in a reliable and dependable process.

To achieve success with this small company, it is essential to limit the number of features and functions activated within the APS (or any best-of-breed add on solution). This client needs to only use the bare essential function and to add capabilities over time as they become more comfortable and can absorb and practice the function at their disposal.

I started this blog asking why working with small companies is such a challenge. I believe that management has very little awareness of the work it takes to get the new solution operational and the supporting effort required. This is no different in working with large corporations, but generally they have been through the mill several times. This company installed their accounting package 15 years prior, and migrating to upgrades was not too onerous. Tackling something entirely new, with the technical and application challenges associated with the needed planning and scheduling solution certainly presents issues on the path to greater flexibility and the ability to grow effectively. Just because you sell an APS as a cloud solution may remove some of the computer technical challenges, but does not remove the necessary day-to-day operational learning curve or the need to upgrade in house computer hardware and software.

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