Supply chain management is on everyone's minds lately. The COVID-19 pandemic led to many supply chain failures. Those who didn't experience failure have seen increased problems, especially small businesses.
Using a new enterprise resource planning (ERP) system and integrating supply chain management into it can be a great solution. However, this often fails at the adoption stage. Without help, companies spend money on the software and then flounder when they try to use it. Here are some reasons why supply chain failures occur and what you can do about them.
Companies may implement an ERP because they are told it's a good solution, but without doing their homework, they can easily end up solving the wrong problems. You need to meet with stakeholders to identify pain points before choosing an ERP. Make sure that the capabilities of the software match your needs.
Putting together a highly detailed and accurate inventory of system requirements can help. List exactly what you need, and don't compromise until and unless you absolutely have to. Ensure you know whether you want to deploy in the cloud, on-premises, or hybrid. Have a very solid idea of what your goals are, and it will be a lot easier to choose and implement your system.
The biggest reason why ERP implementation fails is that the leadership has not bought in. Full buy-in at all levels is vital for achieving operational excellence. In many cases, the decision is made in a siloed manner with no attempt to even bring management in.
This means that the people deciding how to use the system may not care about whether or how it is used. They might cling to old, outdated working practices, ignoring the new software. Or they might try to use it in the same way they used the old one, not employing features that would make their lives easier.
This is, of course, fixed by having a proper buy-in and communication strategy before implementing the software. However, only just under a third of companies communicate about the product before selecting it, meaning key stakeholders are not consulted.
Worse, you can even get into a situation where nobody quite knows who the key decision-makers are. Who bought this thing anyway? When the system isn't working as advertised (or is, but people don't know how it's supposed to work), nobody knows who to go to about it. People who were never consulted and have never bought in may simply decide not to use it because they don't understand it, it doesn't work, and there's nobody to sit down with and have a proper discussion.
Companies that do implement ERP successfully say that change management is key, along with due diligence and support from management. Accountability is central to all of these.
Another major issue, especially with smaller companies (who have particular challenges developing a world-class supply chain), is not allocating enough money.
In these cases, the company has budgeted for the actual cost of the system and any necessary hardware upgrades or purchases. They have forgotten that this is only part of the cost.
There's no funding left for communication or buy-in, for training, or for IT time to fix compatibility issues. The system is never used to its full potential because nobody knows how or because it doesn't work on the supply manager's Mac. You simply haven't planned for all of the costs involved or have assumed that buying the software is enough. That cost is only one element. Furthermore, 65% of the time, improvements to usability cause companies to go over budget.
The last issue is IT not spending enough time testing the system and finding bugs. People then encounter bugs and avoid using the feature...or the software altogether. Or they report the bug, and IT maybe fixes it a few weeks later.
If people are working around bugs, then, by definition, they aren't working efficiently. Also, it may be that the system is not tested on enough devices. Perhaps it was tested on high-end Android phones, but somebody needs to access it from a "budget" phone, at which point they discover it won't run because their phone doesn't have the latest version. Or it wasn't tested for accessibility.
Insufficient testing inevitably results in, at best, slowdowns and downtime while people fix the bug. At worst, it can put people off using the software altogether.
If you address these issues, though, then your ERP will be fully adopted, and you will gain the full benefits of modern, streamlined supply chain management to help your company thrive. So make sure you know your requirements, get everyone to buy in, communicate properly and plan for training and testing.
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