My past blog post offered ERP project teams the steps it takes to implement an ERP system for true transformation.
In my post entitled “Transforming Your Business is the Final Step of Implementing an ERP System,” I made the case that once the foundation for business transformation is built, the challenge going forward is to leverage this state-of-the-art software tool to achieve the return required to pay for your efforts to date and take the business to an exponentially higher level.
Creating the environment for this transformation journey is critical, as is obtaining the ERP education to make it happen.
When we consider the steps it takes to implement an ERP system for true transformation, additional effort is needed to set the business metrics that can track success.
Establishing Key Performance Indicators
When assessing the steps it takes to implement an ERP system, measurement is vital.
So far, we’ve defined our vision and created a limited number of clearly defined goals. How will we determine the success of our journey as we proceed through the year? To accomplish our goals, we’ll need some measurement milestones throughout the year.
These milestones should be based on realizing the opportunities that were quantified in your Business Case for Change.
At the corporate level, our key performance indicators (KPIs) will likely be focused on financial metrics. Some examples include:
- Revenue growth
- Market share
- Inventory value
The Steering Team should review these corporate level KPIs at least once a month. Members of this team will be able to connect efforts in their own areas of responsibility. Many times, these KPIs are shared regularly with everyone in the company.
It’s important to keep these metrics at a high level of the organization.
We don’t recommend keeping them secret during an ERP implementation, but most mid-level and lower levels of the organization just want to know that the company is financially stable and is growing. Too many high-level details are just confusing and not helpful in making daily decisions.
At lower levels of the organization, KPIs should be focused on aspects of the business that can be impacted and controlled, such as:
- Schedule attainment/On-time delivery
- Process cycle time
- Inventory cost and accuracy
- Employee turnover
KPIs covering these measures should have aggressive monthly targets and weekly “flash” reports to keep everyone on-track.
Just having monthly targets is not enough, though.
The most effective use of these KPIs that I have experienced involved a formal monthly staff meeting. This meeting was chaired by a senior member of the Operations team and involved plant managers or area managers reporting on their team’s performance.
Meeting the monthly goal target resulted in a pat on the back. Missing a monthly target or reporting a continuing negative trend required the manager to clearly define the three actions being taken to turn-around the unit.
These meetings were required attendance for all plant/area managers. Needless to say, providing a performance report to your peers was highly motivating. Having your three recovery actions scrutinized by your peers was something you’d rather avoid. The results were impressive.
Working through the steps?
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Finally, as part of an enterprise software implementation, pull together the first three steps with a solid communication program.
Most companies have a monthly newsletter. This is a good start, but only a start.
I’ve seen companies produce interim communiques showing continuous improvement success stories with lots of pictures, or special reports highlighting extracurricular activities of team members. These could be electronic or printed. There are pros and cons to both.
Formal small group meetings between team members and senior management are good, but need to be clearly defined and must result in a commitment by the senior managers to address any questions or concerns that are raised.
An even more significant communication tool is managers at all levels just meeting informally with the team, at lunch, in break areas and in their work areas.
This informal communication helps to build a feeling of transparency and trust throughout the organization.
Considering the Steps It Takes to Implement an ERP system? Learn More
Ultra’s team of independent ERP consultants is often called in to help guide business process transformation when looking at the steps it takes to implement an ERP system.
Forward-looking teams are now evaluating how enterprise systems can be used to drive true business process transformation.
Contact Ultra to consider your next steps.