Balancing Standardization and Customized ERP to Improve Manufacturing Profitability

CXOToday has engaged in an exclusive interview with Chandrachur Datta, Partner, Vector Consulting Group.

1.    Why are companies unable to leverage ERPs to the fullest? What are the challenges in leveraging ERPs effectively?

A: ERP implementations are done without understanding the business as a whole – it is done in parts mimicking the processes as individual items. The method of collecting requirements from all departments and adding it all up is a silo approach which is a real issue. On top of it, within the company, there is limited knowledge about the capabilities of the ERP system.  The Resultant effect is bloated requirements, which eventually no one uses. The costs of implementations go up.

Over time, numerous customized reports get developed by the managers but most of these are not in sync with overall objectives. Instead of binding the various departments together to work towards one common objective, the gap between departments widens.

To leverage ERPs, one must remember it is an enabler and not the solution itself. To improve their operations, companies need to focus on business problems they want to solve and also understand the interconnected nature of these problems. They need to then develop a business solution first. Features or reports come next. Managers need to agree on the solution. Once it is done, requirements become very easy to define.

2.    How can companies improve their operations without changing or re-implementing their ERPs?

A: The answer for this is rather simple – the solution has to be ‘business first’ and not ‘software first’. This entire idea of forcing a software feature in the name of “best practice “ has to stop.  Once the focus is on solving a business problem and developing a solution for that – requirements become clear and restricted. What not to do becomes very clear.

3.    Customizing ERPs is expensive and time-consuming. How can companies overcome the limitations in standard ERP and deploy new solutions?

A: The urge to keep every feature or utility under one package is an unrealizable dream. Components of custom-built plug-ins integrated with standard ones is the way to solve the conflict. You may find that some parts of a solution cannot be implemented given limitations of standard ERP, then one needs to add a non-standard custom developed layer of plug-ins on top of it. These should be organization specific and not standard software. This will allow one to implement ERPs effectively very fast while keeping costs low.

This approach of combining standard ERPs with customized non-standard software can also help turbo-charge existing implementations. Instead of doing a re-implementation in terms of re-configurations, one can build this customized software to overcome feature and implementation deficiencies of current ERP.

4.    Are there any real case studies wherein Vector balanced standard and customized ERPs for manufacturing companies?

A: For almost all our implementations in operations, we find the solution that we design is usually “not implementable” in current ERP, so instead of re-implementation, we take the approach of building these customized plug-ins. In fact, we have branded these custom plug-ins as VectorFLOW. We are able to get clients real ROI for implementations, by improving on business parameters like lead times, inventory, productivity. In a way organizations get their desired ROI from their ERPs and much more after our intervention. We have close to 100 odd clients who have benefitted with this unique approach.