ERP Manufacturing Insights

The Last Mile of ERP Implementation

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The Critical Last Mile of ERP Implementation

This article was written by ERP Advisory Board member, Dave Turbide.

The spectacular rise of internet sales – generally called etail” by the business world and omnichannel in the world of supply chain and distribution – has offered great opportunities and similarly striking challenges as companies look for ways to efficiently handle new and different ordering and delivery challenges. The biggest challenge may be the so-called last mile of delivery. Distribution can be very efficient to the final warehouse or stocking location but getting the package from there to its ultimate destination – the customer’s home in this case –is the least efficient part of fulfillment and the biggest challenge for etailers trying to keep costs down and make a profit.

There is a last mile of a sort for system implementation, as well. Like etail delivery, it is about getting the product (the ERP system) into the hands of the customer (the user). In this case, it costs very little but is an essential link in the process of getting the system truly embedded into your company’s processes and environment.


What Actually Happens on the Production Floor?

Why do workers do what they do? Because it is their job to do what they were hired to do and what their supervisor says they should do, and they are rewarded for doing so. That reward might take the form of a raise or promotion, or simply continued employment, a well done” from the supervisor, or the satisfaction of meeting expectations or a quota of some sort. These are all types of measurements. These measurements are often built into the employee’s job description and compensation plan.

For example let’s look at Joe, a 10-year employee who runs a machining center on the production floor. Joe’s compensation package includes incentive pay for meeting production quotas expressed as units produced per shift worked. This plant is a three-shift operation and a new worklist is produced early each morning with a list of open jobs scheduled for that day and maybe the next. Joe, as the first shift operator, is handed the new worklist as he arrives at 8 am and his first task is to select a job from the list and get started. He is motivated to pick the job that gives him the best chance of meeting his primary objective of producing a certain number of units on his shift which, incidentally, generates the best throughput, efficiency, and utilization numbers and that pleases the managers and accountants on up the line.

Joe’s company embarks on a process improvement program that includes a switch to a new planning and scheduling system. Joe still gets a daily work list but the new list includes a priority code assigned to each job on the list and Joe is instructed to work the jobs in a priority sequence. Doing so will improve on-time completion and timely shipments to customers. Joe has been trained on how the new system works and what the priorities mean.

The next day, however, the first (highest priority) job on Joe’s worklist is one that is particularly difficult to run; it will not generate good numbers for Joe’s daily production report. The third job on the list, however, is a dream. It always runs smoothly and produces good numbers. Joe will run the third priority job and let the second shift operator worry about the tough one. Who can blame him? That’s how it is being judged (measured and rewarded).

At the end of the month when all the reports are distributed, the management team wonders why the new system has not delivered the gains in on-time completions and improved shipment performance that they expected. Investigations reveal that the production team, in general, is not following the priorities that the system has developed causing late completion of the important work while less important work is often completed early increasing on-hand inventory.


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What Actually Happens on the Production Floor?

The Critical and Last Step of ERP Implementation

That last critical step of ERP software implementation has not been addressed. The workers have not been tied into the system’s recommendations with appropriate measurements and incentives – the last mile of ERP system implementation.

How are production workers measured and rewarded? Do they have real incentives to fully utilize the plans and controls your company put in place when they implemented the ERP system or is there a disconnect between plans and actions? 

This article was written by ERP Advisory Board member, Dave Turbide.

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