You hear a lot of talk these days about sustainability, most of it in the areas of agriculture and natural resources. But have you given thought to the sustainability of your business, especially its profitability and competitiveness? If not, you should.
As the speed of business continues to accelerate, the forces that erode productivity and revenue grow stronger. Among others, a more powerful market demanding new products faster and cheaper, and customers expecting levels of service beyond what’s promised are putting enormous levels of stress on systems, manual and electronic. Offsetting these forces and positioning your company to successfully take on the next challenge, and the one after that, is the very essence of sustainability.
Where some smaller manufacturers are still creeping along with completely manual processes, most have some level of automation implemented. Some are running multiple systems for financials, sales, production, etc., while others are running an enterprise-wide ERP system. Regardless of how sophisticated the environment is, every company faces real challenges.
Disparate systems are usually not integrated so any boost in productivity is at the department level only. Sales might be giddy that the ordering process is automated, but if production and accounting can’t see the orders, any benefit is limited to sales. Manufactures simply cannot optimize performance with disparate systems that don’t communicate.
The average age of ERP systems is 7 years old. In technology years, 2009 is the horse and buggy era; the iPhone was a two years old and Cloud computing was in an embryonic state. Simply put, if you’re average, your on-premise ERP system is almost ancient and definitely not providing the productivity or financial benefits it once did.
No company has automated every process. Most common among manual processes are proprietary ones that a company considers a competitive advantage and cannot do without, and processes that the core system doesn’t do, or doesn’t do well. A major problem with manual processes is that the data they produce is housed on spreadsheets, legal pads and notebooks, making it virtually impossible to report on.
Whether you resemble one of these or are among the manufacturers that are still completely manual, unless you have plans to update and move to a completely digital process environment, the future of your company could be at risk.
If that sounds like hyperbole, I assure you it is not.
The digital age started more than 30 years ago, but the technological advances made in the past few have been exponentially bigger and more impactful than any that came before. Today’s most successful manufacturers are taking full advantage of the promise of digital. For example, tablets and smartphones make it possible to submit customers order from the field, compressing the order to fulfillment time. This would not have been possible just a few years ago. If you’re not taking advantage of the benefits of this technological leap, you need to be.
The answer is to move to a completely digital process environment and to do so in such a way that your systems are integrated and nimble enough to change quickly as market forces demand. Companies that implement a digital process strategy — whether on premise, cloud, or hybrid — are in a far better position to achieve sustainable competitiveness and profitability as technology continues its march forward.
This is about more than technology; it’s about having the right technology to fit the way you do business. Whether you choose an end-to-end ERP system or go the route of having multiple systems based on functional area, what’s most important is that you address all of the processes executed under your roof.
ERP will still not address every process, so you need to have a system that supports the majority of the processes executed, is flexible enough to allow the integration of 3rd-party applications and won’t make upgrading impossible if some customization is necessary.
The functional area model is a bigger challenge, requiring deeper due diligence and oversight to assure that each system can communicate with each of the others and that reporting from each department can be standardized for roll-ups to senior management.
Successfully transforming yours into a sustainable enterprise is a complex journey that begins with an objective, thorough, department-by-department analysis of your business as it is and your business as you would like to be. Engaging an outside consulting organization to lead the project dramatically increases the success rate by cutting through the natural bias of each department lead, clarifying your vision and assuring the plan is not delayed by other priorities.
Moving to a fully digital process environment will increase your competitiveness and profitability as we continue to move through the technological advances of the digital age, and certainly increase your business sustainability. However, taking advantage of the benefits means getting involved sooner rather than later. To continue waiting is to allow your competitors to get farther ahead, putting your company in a more and more precarious position.
David Warford is a Managing Partner at KnowledgePath Consulting, Inc.