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apics changeA recent article by Brian Dominguez, CPIM, a change consultant and General Manager at MDMOTO Group, in the Jan/Feb 2016 issue of APICS Magazine reminds us of just how hard change can be.  As John Kotter noted twenty years ago in the Harvard Business Review, 70 percent of change attempts fail outright.  Studies point to human resistance and company culture as key reasons.

Software implementation projects are a great example, and with their very dynamic designs, it’s no surprise that the Standish Group’s 2014 “Chaos Report” found that only one in six such projects finish on time and on budget, and that only one in eleven large businesses reach their implementation targets.

As Dominguez points out in his article, “Clearly change is difficult [and]… does not occur without conscientious planning and support from the top down.”  Too often, he notes, change projects are driven by quantitative, empirical and rational approaches to a problem – when in fact those methods “fail to take into account that change is driven by a qualitative environment and may require a different technique to gain buy-in.”

Kotter therefore advises business leaders to follow 8 guidelines that he says are essential for fostering change:

  1. Create a sense of urgency
  2. Establish a powerful guiding coalition
  3. Create a vision
  4. Communicate a vision
  5. Empower others to act on the vision
  6. Plan for and create short-term wins
  7. Consolidate improvements and produce still more change
  8. Institutionalize the new approach.

There’s a lot more to the article than that (like how small wins are important because they reduce anxiety and resistance to change while building a sense of self control), but as you can see, if the emphasis is not on the human elements of the change at hand, and the careful communication and handling of those elements, then the chance for failure is pretty high.

It’s worth five minutes of every manager’s time to review Kotter’s 8 points, and keep the human side of change foremost in one’s mind for any change initiative you may be contemplating.  And that most assuredly includes software implementations.

(APICS Magazine can be found here.)

nanu nanuPhysicist Nils Bohr once famously said “It’s difficult to predict – especially the future.”  True enough, but it’s not difficult to see the future coming on strong in the field of nano (all puns intended for those old enough to remember Robin Williams’ stint as Mork from years past) – as in nanotechnology.

Ten years ago, there were just about 50 nanotechnology-based products listed in the Woodrow Wilson Center’s Consumer Products Inventory (CPI).  Today there are nearly 2,000 including:

  • 900+ health & fitness products
  • 300+ home & garden products
  • Over 200 automotive products
  • Over 100 more each in food & beverage… coatings… and electronics

These nanoparticle products are defined as having one or more components that utilize nanotechnology – the very small scale control and restructuring of matter at the molecular or even atomic scale.  Most of these nano products consist of particles from 1 to 100 nanometers – a nanometer being a billionth of a meter: a newspaper page is about 100,000 nanometers thick.  There are over 25 million in an inch.

Materials at these levels are known to have significantly different properties than they do at larger scales, as noted in a recent article in the Jan/Feb 2016 APICS Magazine entitled “Starting Small.”  Their relatively larger surface areas at these small scales cause inert materials to become active, thus affecting their strength and electrical properties.  Nano particles also have a penchant for affecting optical and magnetic properties of their environments.

Why does this even matter, especially in the world of supply chain and ERP?  Because, according of a report to the Royal Academy of Engineering and the Royal Society, nanotechnology will usher in “the next industrial revolution, a wholly different approach to the way human beings rearrange matter.“

Nano dates back to Richard Feynman’s speech to the American Physical Society in 1959 entitled “There’s Pleny of Room at the Bottom,” wherein he described a process scientists would be able to use to manipulate and control individual atoms and molecules.  Modern nano was born 20 years later when scientists in 1981 were first able to actually see atoms.  (When some of us were in high school, teachers could only hypothesize about them, but they’d not yet actually been seen.)

Today, nano is popping up everywhere, including…

  • Lightweight, ultra-strong materials for boat hulls, sporting equipment and automotive parts
  • Space saving insulators
  • Catalysts for chemical manufacturing processes
  • High-performance electronic devices like transistors and computer chips
  • Dental implants, and to fill holes in diseased bones
  • Improving the absorption rates of new drugs
  • Scratch-resistant eyeglass lens coatings
  • Fabrics to make clothing stain resistant and easier to care for.

The whole field is growing, and will continue to grow.  And as APICS notes, as with most disruptive technologies, the potential benefits are attractive enough for scientists and engineers to keep pressing ahead.

erp checklistWe often like to share the opinions of others when it comes to ERP system selection and implementation.  And so, while no simple “checklist” will take the place of an intensive due diligence when selecting or upgrading a company’s ERP system, we thought the following offering from the folks at Rand Group (an ERP seller that serves the Southwest out of Texas) offered a sensible starting point.

First, take note of a sidebar they wrote, which really sums up the importance of making the distinction between “Must Haves” versus “Want to Haves” and “Wish List” items:

Having any more than 3-7% of your requirements categorized as “must have” will eliminate all 500 commercially available business software solutions.”

That being said, Rand Group recommends you start internally:

“Define your organization’s corporate goals, objectives/ metrics, and strategic imperatives, followed by a review of business requirements and challenges that are preventing your organization from meeting its objectives.”

Then, work with your consultant or provider to create an appropriate, high-level ‘scope document’ that separates those “Must Haves” and that can provide the following information:

  • A prioritized list of each department’s critical needs and requirements, including a wish-list.
  • A description of how information flows and is shared between departments.
  • Current manual and automated data collection systems.
  • Organizational goals (e.g., improving customer service (with metrics), shipping all orders within 24 hours, etc.).
  • Transaction volume data (e.g., number of customers, orders, invoices and vendors).
  • Financial data and reports required by accounting, auditing and banking stakeholders.
  • Reports and analysis required for management and day-to-day operations.
  • Integration requirements with in-house systems and desktop applications.

Use the results, Rand Group recommends, to then analyze the offerings of interest to you, to determine comparative fit and capability, noting how well a chosen solution “addresses each of your prioritized business objectives and requirements.”

Their advice provides a great starting point for system selection.

 

backdoor keysAn article in January 11th’s Wall Street Journal by tech columnist Christopher Mims does a very good job of breaking down the arguments surrounding allowing secret government “backdoors” into encrypted messages that we post every day from our various devices.  He makes his point clear at the start of the article when he says “I’m going to say this as plainly as possible… If we compromise our computing devices in a misbegotten attempt to stem criminal behavior or terrorism – as some… have suggested – then we deserve what will follow.”

It’s tempting, he notes, to think that if only companies like Apple, Google (now Alphabet) and Microsoft would create backdoors to all our encrypted data, that only law enforcement or the government knows about, they could take action when needed.

It’s a complicated topic, and our space is too brief to give justice to Mims’ full screed, but he makes a strong case.  We already live in a world where our defenses are breached regularly he begins, noting how the Chinese government could probably compile a dossier on the web-browsing habits of every U.S. citizen.  “State actors are outgunning besieged corporate IT departments,” he notes, leading to hundreds of millions of dollars of damages annually.  Hence his comment from our title that no encryption is good enough.

As a result, many tech-providing companies today are using encryption even they cannot decrypt.  And the fact is, as Mims points out, you can’t ban math – which is to say, encryption is well understood by a lot of players these days.  The notion that the FBI won’t be able to foil a terrorist plot if a messaging app is encrypted is an arresting one, but it defies the larger logic.  Sophisticated attackers will always move to whatever channels are available to them, and there will always be channels available.

Former NSA Director Michael McConnell recently wrote: “If law enforcement and intelligence organizations face a future without assured access to encrypted communications, they will develop technologies and techniques to meet their legitimate mission goals.”

Basically, that amounts to what today is called “lawful hacking,” which says that there are “vulnerabilities in the system, and it is better to exploit those than to build in other weaknesses,” as outlined by a group of academics in a recent paper on cryptography and security.  It’s an acknowledgement that our PCs and phones are in fact inherently quite insecure.

It’s a debate that will likely rage on for a good long time among well-intentioned people.  And a byproduct of course of our advancing technologies, which sometimes, aren’t so advanced as we’d like to think.

avalara_slsTaxChgs16From time to time we like to share relevant insights from our partners at Avalara, providers of sales tax solutions to business.  They do a great job of understanding the taxation landscape across every state and jurisdiction in the country.  We have clients who use their services, and we like to let our readers know about the latest news and trends that may affect your business.

Following are a few highlights excerpted from a recent report from Avalara, which you’ll find here.  Efforts proceed to ‘level the playing field’ between on-line and brick and mortar stores, by imposing sales taxes on Internet purchases.  Among the proposals being considered or debated today in Congress:

  • Marketplace Fairness Act of 2015 (MFA) – Just like the old one, only different

Similar to the MFA 2013 proposal, this legislation would grants states authority (should they meet certain criteria) to require non-exempt remote sellers to collect sales tax. If passed, the MFA would broaden state authority to require remote sellers to collect sales tax regardless of whether that business has a physical presence within those states.  The bill faces potential legal hurdles, among other changes, so it’s a long way yet from a done deal.

  • Remote Transactions Parity Act of 2015 (RTPA) – harder to pronounce than MFA but friendlier to small business

The Remote Transactions Parity Act (RTPA) of 2015 is similar to the MFA in that it would allow states to apply sales tax to remote sales. As with MFA, the 23 member states of the Streamlined Sales Tax (SST) initiative would be authorized to require remote sellers to collect and remit sales tax soon after legislation is passed. Non SST member states would have to adopt and implement certain minimum simplification requirements. 

  • Online Sales Simplification Act (OSSA) – everybody pays

OSSA is quite different from the MFA 2015 and the RTPA. Most notable, perhaps, is that it does not provide for a small seller exception and it would allow states to require in-state sellers to collect sales tax on all interstate sales.

  • State by State Changes (Midwest edition):
    • Sales tax in Chicago over 10%. Cook County commissioners have approved a 1% sales tax rate increase, raising the sales tax rate in Chicago to 10.25%. The additional sales tax began 1/1/16 and is expected to bring in approximately $474 million annually,
    • Illinois: One county says to the other: raise your sales tax, we’ll raise ours. In an unusual case of quid pro quo, councils in both Normal and Bloomington, Illinois, decided to increase home rule sales taxes from 1.5% to 2.5%, which will bring the combined local rates to 8.75%. During a summer retreat, the Normal Town Council proposed a 1% sales tax rate increase that “would be contingent on Bloomington also raising its sales tax.”
    • Iowa: Computers may get exemption status like machinery.  Expanding the items eligible for Iowa’s machinery and equipment sales tax exemption to include computers would have a positive impact on jobs, according to the Iowa DOR. Manufacturers would reduce their sales tax burden by an estimated $5-$6 million annually between 2017 and 2020, which could create revenue for job expansion
    • Michigan: Save money being safe. State proposes gun safety tax exemptions.
    • Minnesota: High cost of smoking gets higher. Tobacco products sold in Minnesota are going to get more expensive with excise and sales taxes on cigarettes increasing.
    • Wisconsin: Wisconsin is hiring more auditors according to the department’s Auditor Recruiting Video. The Department of Revenue is looking for 102 additional auditors and 11 agents to help uncover more than $80 million in annual revenue for Wisconsin.

When ERPAs we begin a brand new year it seems appropriate that a blog devoted to business, tech and ERP should “start with the end in mind” as we often say around here (stealing from Steven Covey).  When it comes to ERP, the key business question to ask of course is: Why?  And the answer should be: Money.  As in money saved, leveraged or otherwise brought to the advantage of the implementing firm.

So today we’ll take a look at some comments we came across lately in an article here entitled “When Will I See a Return on My Investment in ERP?” by Matt Lind of Archer Point.  We’ll highlight of a few of the areas where Matt believe companies can extract value and ROI from their ERP investment.

To begin with, Lind notes, pay attention during the early process of business analysis and workflow mapping.  During that process, companies frequently discover ways to improve inventory management.  While the goal during this time may be mapping your processes, Lind says that “scrutinizing procurement and warehousing can improve planning and control of inventory levels to reduce costs even before roll-out day.”

Sometime during rollout, or perhaps sooner, you should have a feel for how labor allocation is working within your organization.  This can help with labor forecasting, and in finding ways to reallocate or eliminate overtime, sometimes in the front office, sometimes in production.  For example, he notes that in manufacturing, it’s typical that indirect labor produces nearly half the cost savings because companies frequently don’t know how much indirect labor goes into their production.

A lot of features that are necessary but were previously expensive add-ons are now available immediately with today’s more modern ERP systems – another potential cost-saving source.  Web access, enhanced security, ad hoc inquiries and dashboards for making informed decisions (i.e., real-time data analysis) are fixtures of today’s systems that once would have added significantly to ERP costs.

Virtually always, companies find that the process of ERP implementation eliminates a lot of redundancy, repetitive entries and other forms of what we would call ‘administrative waste.’  Another area of potential savings can be in the reduced labor required for compliance efforts.  A CRM system integrated with your ERP will help manage pipelines, help with close ratios, increase salespeople’s efficiencies and improve your overall sales management – all leading to increasing top line opportunities.

With the more agile and extensive capabilities of today’s ERP systems, companies become more agile and less rigidly structured than what was required with previous, less robust systems.  As well, reduction of errors is a nearly universal benefit, along with the general sense of having more time to devote to the more important tasks, while the system manages the tedium that used to require more human input.

Lind also notes that Panorama Consulting recently estimated that the typical payback time for Microsoft Dynamics NAV is around two and a half years.  (SAP and Oracle tended to the 3+ year range.)  As Lind finally concludes in his article: “The large investment to purchase and implement an ERP system may seem daunting, but it is small compared to the return on investment that it will produce for years to come.”

And that, we find after 25 years of doing this, is why we continue to find new customers every year.

 

 

supply chainOne of the reasons clients (and we) prefer systems like Dynamics NAV over what are sometimes called “best-of-breed” systems (a financial system, linked to a warehouse and inventory management application, linked to a sales/contact application, etc.), or to a “bespoke” (i.e., custom-developed) solution is that all the data typically lies within a single database repository as part of a fully integrated system.

As a recent article from MS Dynamics World that makes this point also points out, distributors (including of course manufacturers who distribute their own products) face some common pressures.  Analysis of global supply chain businesses indicate that key among those pressures are some of the following…

(We’ll quote Marty Kemp, a UK Dynamics salesperson in an article found here):

  • Global supply chains generate longer lead times and therefore greater variability of supply
  • Supply chain efficiencies and data accuracy need to be increased
  • Knowledge of shipment data, both inbound and outbound, is more critical
  • The pressure to lower supply chain costs that erode precious margin is constant
  • There is pressure to efficiently manage inventory at various points along the supply chain
  • They need the capability to work with a limited number of partners within the supply chain more effectively

As Kemp notes, with a single-database solution such as NAV, a user can track the demand from sales and sales forecasts, view stock replenishment and production demand, and utilize its MRP capabilities to create and review suggested purchase orders.  With its intrinsic visibility of inventory over time (viewed graphically), orders can be manipulated to dynamically reflect any changes in order or delivery dates.  Inventories can be managed at their leanest levels without needing to compromise customer satisfaction.

And with built-in BI (business intelligence) capabilities and analysis built into the core solution, managers can make timely decisions across a range of business requirements.  Dashboards and KPI indicators allow nearly instant, on-demand views of key business criteria.  This is above and beyond the various Excel and other reporting capabilities inherent in the solution.

Warehouse management is yet another daunting and expensive task best handled by an integrated solution.  By taking advantage of precise inventory management, SKUs can generally be better managed, and reduced, thus optimizing overhead, space and costs.  Real-time status capabilities make it possible to keep customers apprised of availability on the fly.

These are just a few of the key supply chain advantages accruing to users of today’s modern, integrated, unified data repository types of systems, like NAV.  Taken together, they account for tens and hundreds of thousands of dollars (depending on company size) of annual cost reductions – not to mention real-time analysis and improved customer service that will help a company stand out from its peers.

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