What i Enjoy Most about ERP Consulting

What I enjoy most about consulting is the opportunity to view in depth the way different businesses run in a large range of industries all over the world. By working with many companies over a number of years it becomes possible to gain a feel of what is genuine “best practice” particularly if the experience is focused in a specific vertical industry.

Linking a detailed understanding of the functionality of the software with this “best practice” knowledge and then transferring this knowledge to the customer is the most enjoyable part of the job and also significantly contributes to a successful implementation.

Think of your ERP Consultant as more than a ‘System Configurator’ or ‘System Implementor” you just might be surprised with the extra value they can deliver for you and your company.

Looking forward to working with (some of you) in 2010!

Get More out of Training

Training is one of the key deliverables in any ERP implementation, if new users are comfortable with how to perform their daily duties with the new software then success is very likely.

I do a lot of training in my role. There are a few simple things that a customer can do that I have found greatly facilitates a good training session.

1. Make sure you put on a good lunch

Actually this isn’t important, but I do like good lunches, sausage rolls if given the choice.

2. Have an appropriate venue.
A separate room with a door that closes, desks, chairs, projector, whiteboard, have the room preferably air-conditioned. Off site is the ultimate. A place that is free from distractions is critical, there is nothing worse colleagues drifting in and interrupting attendees or attendees working on other things while they attempt to learn.

If you can set up a room without external internet access even better (though the Facebook / Twitter / Outlook junkies will start to shake after an hour).

People should have their own computer (no” looking on”)
I have done training with none of the above and it makes it hard.

3. Quality Training Manuals
These provide structure for the sessions and ensure no topics are missed. Manuals are also useful for following up after the course and for writing notes in.

4. Make sure the trainer only goes as fast as the slowest person in the course.
Once people fall behind they get flustered, make mistakes and this then feeds on itself. The less competent people need more help, while they might get a bit bored the quick people can most probably learn on their own anyway.

5. 5-7 Attendees per Instructor
Any more and it becomes very difficult to manage the different learning paces and styles of the attendees and answer all questions thoroughly.

6. Use it or lose it
Make sure that the attendees immediately (or within a week) go and apply what they have learned in their production or configured systems.

7. Schedule a follow up course in 6 to 12 months time
People forget, and staff turnover.

©Duncan J. Kennedy 2009

Better Quoting (lets sell it for more than we paid for it)

We sold it for less than it cost us to build it?

While not the most glamorous of topics, having a process that builds a quote (and therefore a selling price) that has a profit margin is important.

How does this possibly happen? The purpose of business is to make a profit?

In my travels as a consultant, I typically see a number of causes for inaccurate quoting and pricing leading to low (or negative) margins at sale.

Typical causes are:

• The price used for the materials in the quote is out of date, inaccurate or non-existent (it might be a new part, the estimator is using historical prices, a standard cost or the price may be highly variable)
  
• Pricing, quoting and then the subsequent build is done in disparate and disconnected spreadsheets/systems and/or on the back of beer coasters
  
• They are selling ‘non-standard’ ‘make-to-order’ goods leading to a philosophy that ‘everything is different’ leading to different sales people quoting exactly the same item at different prices to different customers
  

So we have clearly identified some problems, what are some potential solutions?

Use price lists
Ring your suppliers up; ask for a contracted price (with an expiry date). If the item is a high value, build a structured request for quote process (RFQ) that allows your procurement staff formally record agreed prices. Make sure this process is completed before purchasing / quoting.

Use standard builds (including subassemblies, if required)
You are in the custom “make-to-order” business so it is different each time? You may however find that if you drill down some of your items may have identical sub-assemblies. Having a standard assembly or sub-assembly (therefore a standard price) enables you to look at delivering a price book that your sales/estimating staff could drag and drop a quote from, with the confidence that the costs are correct and up to date.

Report on the difference between the quoted, planned and actual costs for the materials you have purchased
Being able to tell at a glance via a dashboard or similar the difference between the cost that was quoted vs. the cost that we planned to build it vs. the actual cost clearly identifies problem areas to focus your efforts on.

Have at your fingertips recent purchasing history for the items you are purchasing

Being able to find quickly and easily the details on the following pieces of purchasing information for your items will lead to more informed purchasing.

Have I purchased it recently?
Do I have any in stock?
Do I have any on order?
Do I have any supplier price lists for this item?

Have the details from your quote in the same system that purchasing, scheduling and planning your production is in

No more multiple spreadsheets/applications. Just the one system. This will lead to a better consistency throughout the quote to cash business process.

Okay, so what is next?

Implement an ERP solution that allows you to achieve the above and you are well on your way to increasing your profit through better quoting and procurement

©Duncan J. Kennedy 2009

Kardina Park and Correlation.

In addition to using historic trends when attempting to forecast the future, we can use another method called ‘regression forecasting’.

This method of forecasting calculates the strength of the dependency between two variables with a result of 0 representing no dependency relationship at all (totally random) and 1 (direct relationship). This calculation is called a ‘correlation co-efficient’ (drop me an email if you want to know the maths behind this).

If the dependency between the two variables is strong (e.g. if one goes up so does the other one roughly in proportion) and we know the value of one of them we can use this to drive the value of our forecasted variable.

Great, but how is this useful?

Some example of some things we might want to calculate

• Size of winning margin vs. if a team is playing at home vs. away (i.e. is there a home ground advantage) used for calculating the odds when betting?

• Interest rates and the general economy (Reserve Bank)?

• The selling price you plan on setting for your product and the forecasted number of items sold (Marketing Departments)?

• This quarters Sales vs. Next quarters consulting revenue (consulting executives)?

• The movement in the current price of gold today vs. the price of a gold mining stock on the stock exchange tomorrow (stock brokers, hedge funds)?

• Smoking and lung disease?

• The current temperature in the pacific and next month weather (El-Nino effect?)

It’s often easier to start with items that you already think have a strong relationship, however if you have a large data set (for example the sales history for all items for the last two years) you can use ‘data mining’ techniques to sift through data to pick up correlations that you may not have thought previously existed.

If the predictor value is known (or can be controlled) and there is a delay between the two variables this method of forecasting is especially useful. In this circumstance the forecasting can be done with no (or little) history, especially useful if the history is irrelevant, inaccurate, there is not trend or if the data is simply not available.

(btw Shell Stadium a.k.a Kardina Park is Geelong Football teams home ground, a strong relationship exists between winning and playing at this ground)