Experience May Be A Liability!
in college, I mastered FORTRAN (an obsolete language used in engineering
schools) and became pretty proficient, if I do say so myself. How far will
this experience carry me if I go to work at Microsoft? AOL? eBay?
this may sound like a ridiculous scenario, a similar situation is taking
place in industry today. The "experience" many companies are depending
upon to improve their supply chain management may just be as outdated as
my FORTRAN experience!
would think of depending on DOS "experience" to effectively use Windows
NT? Who would depend AOL 2.0 to get online today? No one! Yet an analogous
situation is evolving when it comes to new software investments.
companies are spending big bucks to install new tools such as ERP packages
to squash the dreaded Y2K bug. Most of them are also expecting to also
see dramatic operating performance improvements -- inventories cut in half,
costs slashed, customer service improved, etc. But the emphasis has been
on software selection and installation. I predict most of these companies
are in for some very big disappointments. In fact, this has already started!
They are depending on version 3.0 supply chain management experience to
use the new tools and improve company performance.
Practices Only Yield Old Results!
of the leadership in most companies have "experience" -- version 3.0 experience!
Here are a few examples. They typically:
- Take annual
physical inventories to correct inventory records that have been saturated
with errors all year.
- Stage material
to find shortages.
Hot Lists and expedite, ignoring shop order and purchase order due dates
in the formal system.
- Make and
buy large lot sizes to reduce costs.
- Use clout
and leverage to get better supplier performance.
- Allow past
due, front-end overloaded master schedules to perpetuate and "keep the
- Make as much
as they can to maximize utilization and get favorable overhead absorption
to artificially increase profits.
- Use standard
lead times to make customer delivery date promises.
engineering and manufacturing bills of material.
the veterans that survived got very good with version 3.0 thinking. If
they use new Y2K-compliant tools and 3.0 experience with the new software,
what results will they get? Answer: Same as they got with the old tools!
They will just spend more money doing it and challenge the "experienced"
people to learn how to run the business the old way with new tools. Not
a pretty picture! If any of these 3.0 tactics sound familiar, beware!
Alternative? Version 6.0 Thinking
many other companies have taken the time to update to v6.0 thinking for
running their business. They invested in education to upgrade the "experienced"
people into a new way to do their jobs and run the business. Here are a
few examples of v6.0 thinking. They typically:
- Use the proven
5-Step SOP process to integrate sales, manufacturing, new product launches
and financial plans into a single plan.
- Use demand
management and deploy total quality principles and techniques to focus
on reducing demand variability.
- Measure demonstrated
capacity and use it to validate the credibility of schedules.
- Insure due
dates always equal need dates and meet schedules 100% on time.
- Deploy a
cycle reconciling process to find root causes of inventory inaccuracies,
implement corrective action, maintain accurate records and eliminate non-value
added physical inventories.
- Use Available-to-Promise
(ATP) to make realistic delivery promises to customers and deliver 100%
- Quickly and
accurately create bills of material for customized products using configurators.
- Improve supplier
performance with Win/Win partnerships.
- Tap the enormous
knowledge of every employee to simplify all business processes, reducing
costs without demoralizing "downsizing" actions.
- Reduce lot
sizes to "as required" by overcoming obstacles such as lengthy set up
--- and there are many more!
you have upgraded your systems by investing in new ERP software, do yourself
a favor. Make sure the people running the business (at all levels in the
organization) are also upgraded to Version 6.0 thinking. It is cheap insurance
to guarantee your investment pays off. If you aren't implementing new software,
upgrade to Version 6.0 anyway!
you'd like a printer-ready electronic copy of our ERP Readiness Test, email
us and we'll email it to you right away. Use the Readiness Test
to evaluate whether or not your organization is ready to launch new software!