ERPodcast – The Post-Covid Digital Future
Episode 13 – Unlucky for Traditional ERP
MFX Up and Under
Late May 2020, as the business world emerges post covid-19 – what are the lessons we take forward – what are the initiatives for an uncertain future – where do we find the tea leaves, the tarot cards, the stock tips, the market whispers – where do we go from here? Given this production is named the ERPodcast from Profit From ERP – you can imagine what direction we’ll take the topic….
Most of the information we’re given these days emanates from the Pandemic Panic – and as any good economist knows, the numbers can lie and often do – – – especially when our source of information is a media rewarded for sensationalism for sensationalism’s sake – – – so we need to look deeper, find the success stories, actual business cases, find the moneyball concepts, the underlying economic theories that we can bring into our daily business lives – so today, On the ERPodcast we’ll take a look at one of the greatest supply chain stories our national media ever ignored. In the software consulting world, we’ve been working non-stop gathering information to guide our clients. Nationally, Thousands of companies experience in today’s market has been compiled. Regionally, hundreds of client companies have added input – that mirrors the research we’ve done through our Profit From ERP website. Let’s breakout a few of the winning strategies – It’s the ERPodcast and I’m your host, Gene Hammons, telling you nothing you don’t already know, just in a way, you might not quite have thought of it before.
The Alliance of Excellence
Today’s Podcast is brought to you by the Alliance of Excellence Software Coalition – a loose federation of software resellers, partners, consultants and resources who share one thing in common. They’re all really good at what they do.
You know, I’ve been in the ERP business for a long time – seen a lot of things and people come and go. When I’ve worked on a very successful ERP engagement – the kind where the software pays for itself in short order? I remember those folks – the partners who implemented and did such a good job and I look forward to working with them again and again. So today, with Profit From ERP, we’re not selling software, we’re not doing implementations – we’re simply helping make sure our clients get the Profit, or the return from their investment in ERP. We don’t sell the software, we don’t sell the services, we simply sell the Profit from ERP – so we have to work with the best in order to give every engagement the potential to work. And another thing about ERP – there’s a great fit for nearly every ERP platform, Infor, Sage, Microsoft, NetSuite, Acumatica, Intacct – I could go on listing for a while. But the point is, with our clients, whatever ERP they need, we’ve likely got an Alliance of Excellence company to work with. .
How does an ERP partner or reseller join the Alliance of Excellence Software Coalition?
There’s only one way. Personal Experience with Gene Hammons and past Experience with Profit From ERP clients. If it sounds exclusive, it is. But it means you end up with the best.
Our job is to connect clients who are planning to improve their business through ERP with the right partners, the right ERP platform. Different industries, different sized clients, different budgets – the fit is the thing. It really doesn’t matter which software you pick, unless you have a good partner, well, there’s a lot of reasons the industry sports an 80% failure rate. So if you’re thinking about a successful ERP project, connect with us at Profit From ERP, and when it’s time to pull the trigger, make sure one of the members of the Alliance of Excellence Software Coalition is right there with you. You’ll be halfway there already.
Welcome back to the ERPodcast . In a massively successful supply chain operation, the Trump administration in a unique public private partnership has gone from a huge shortage of ventilators in the US to a huge glut – at a time when it was first believed our governors would be selecting ‘who must die’ from a presupposed ventilator shortage. It was an astounding turnaround in a critically short period of time. Didn’t get near the press it deserved, because it’s good news – but that’s the thing about the business pages –
- business is a story of accomplishment.
- Doesn’t make headlines usually,
- but those are the real human interest stories as far as I’m concerned –
What humans can accomplish and do accomplish – and from my way of thinking, those are the stories of encouragement, inventiveness, hard work and achievement that we all need to be hearing to come up with a balanced view of our world.
Here’s the other thing – when we take these success stories and scale the underlying economic theories into our businesses, we improve our chance of coming out on top.
Do you have the technology in your current business to be able to do that same thing? I mean, you may not be a multinational company or even a manufacturer/distributor, but let’s take a look at the technology underpinnings – and examine how you could leverage the same technology, albeit perhaps on a more appropriate scale to your operations – to manage some impressive turnarounds in your own business.
Plus over the past few months, at Profit From ERP we’ve talked with hundreds of businesses, all types of industries – because that’s been what we do, since the beginning.
Profit From ERP is a concept I developed over a lot of years with a lot of software companies – I may have told you the story before. I worked with Sage, Epicor, Microsoft, Ross, Lawson, NetSuite, and a few dozen other ERP brands over the years.
One thing that always bothered me – you could take the same software, same implementation team, go into two companies, same industry, same size – and one company would come out of the ERP project with guns blazing – the software would work so well it would actually pay for itself by increasing bottom line profit within one or two quarters. Productivity would shoot up. Efficiencies would snowball on each feature rollout.
Meanwhile, the other company that implemented same ERP, same consulting team, same industry, ahhh, when it came to project success, not so much.
Yes, they’d report that things were quote – better – unquote. Things improved with the new ERP, business ran smoother, less errors, duplication, rework – but no huge success stories.
Why? I wanted to know why one company did so much better than another.
And what I eventually found was that the approach, the methodology of the internal company side-of-the-project made all the difference. I studied that difference. And the common things successful companies did? That became the consulting methodology that formed ProfitFromERP. Like I like to say, nothing new you haven’t heard before, just in a slightly different way of hearing it and I was able to replicate that pattern of success for my clients – now going on 7 years.
So in our post covid or emerging from the covid lockdown era – what are we seeing that’s working? Let’s follow the Profit From ERP original methodology – identify and isolate the factors common to companies who are having success in the covid, post-covid era. .
Take what works elsewhere and bake it into our own businesses, whatever size cake we’re dealing with, we simply adjust the recipe. It doesn’t mean you’ll have a nationwide supply chain of ventilators in 6 weeks – but it may help you have better operations appropriate to your business in 6 weeks.
Back to the Ventilator Story. Late March of this year, the Federal stockpile of ventilators was about 16,000. Average manufacturing capacity was about 30,000 – that is, about 30,000 ventilators were produced in the entire country every year. Early FEMA estimates said we might need 130,000 by April 1 – so we needed more than triple the number we could normally produce in a year – only we needed them in three weeks.
Or so we thought.
Increasing Manufacturing Capacity – A public/Private partnership was immediately formed, with some urging from the Defense Production Act, eventually General Motors, Tesla and Ford and many others got involved – it usually wasn’t about profit for these manufacturers, they were happy enough – keeping what could have been – – idle factories open and workers getting paid for production instead of unemployment – remember, we were in the middle of a lockdown – no one’s was buying cars at the Ford dealership anyway.
Next item of interest – Fluxuating Demand. States at this time were asking for huge inventories of ventilators – 8- thousand of the existing 16 – thousand reserve were sent to New York State alone. You may have heard a bit about this – the state distributed half of the ventilators to hospitals, but held onto half in a warehouse so they could distribute when needed where needed – turned out to be a critical data point.
We also began to see the country was reacting differently in different areas – it wasn’t a nationwide outbreak all at the same time, it was a series of regional outbreaks – so actual demand varied. Only every state was requesting peak capacity reserves of ventilators.
The covid response team formed the Dynamic Ventilator Reserve. We talked about Ford, GM, Tesla – but Dyson got into the act – Airbus in Great Britian, McLaren, Siemens – and the first thing was to connect all the output forecasts from these different plants and combine when and where ventilators would be produced and available.
Here’s the Question for you now, do your current internal systems give you that flexibility to understand production that’s been changed on the fly? Could you connect output data from new suppliers overnight and configure and report it tomorrow? Can you forecast with accuracy when and how many you’ll deliver on what date? Modern ERP systems can – and have the flexibility to spin up new reports and outputs without calling in an army of consultants. On the other end of that transaction – could you take information from suppliers and plug it into your warehouse plans for distribution plotting? Again, not hard to do with modern ERP.
Traditional ERP systems? – – that’s going to take some consultants and some time, they’ll can’t be out here for two weeks and the week after that start developing a plan, add a week for sys architecture, quality and load testing – by the time your Traditional ERP could deliver the actual report, well, apparently you can make half a million ventilators faster than that.
Back to the Dynamic Ventilator Reserve, they looked at demand. Pulling hospital billing records from Medicare and Medicaid, Business Intelligence and FP&A software was able to model an estimate of how many ventilators were actually in use and how many were available at any given hospital on any given day. Can you collect and input actual demand from the retail level in your business to know exactly what’s happening in your customers’s operations?
They could and they did and it meant two things.
One, knowing the demand and supply, ventilator inventories were converted from a let’s-stock for-worst-case-scenario inventories to a just-in-time supply chain. A particular hospital could be assured that if they had unused ventilators, and shipped out excess ventilators to where they were needed, replacements could be promised within 24 to 48 hours – meaning, every hospital in the country became a JIT warehouse for the Dynamic Ventilator Reserve. Because it meant hospitals didn’t need to stockpile ventilators for worst case scenarios that in many instances never materialized – but the system could forecast a shifting capacity through the Dynamic Ventilator Reserve to cover any emergency outbreaks wherever and whenever they happened.
Two, by understanding actual demand from the Medicare billing records – there were now two sets of demand data – what a state had requested and what a state actually needed. Of course governors wanted stockpiles of ventilators to prepare for a run on the hospitals – but with production ramping up and JIT warehouses, there was sufficient supply for today, and adequate supply planned for delivery tomorrow.
Now of course, with the feds shipping partial shipments, the press picked up the story that ‘only a fraction of the ventilators requested were shipped’ but that was the feature, not a bug. That was good news, not bad. It meant we more rapidly increased supply and rolled it out where it was needed most. Compare this to the Toilet Paper supply chain. Where most of the nation’s toilet paper was hoarded by a guy who lives down the street from me. He has a 10-year supply in his garage.
So question to you is, do you have the reporting capacity to analyze actual demand by date in your supply chain? Can you project your customer’s past consumption so that if you need to get a partial shipment out today giving you time to fill the order fully next week?
Do you see where we’re going here?
Modern ERP programs allow you to do these things. They’re meant to give you flexibility in a crisis. And here’s a key point. Very important to understand in the world of ERP.
When we look at ERP demos, we’re not going to see this flexibility to respond to unknown demands – because no one asks for the unknown, simply because it’s not known in the first place
You don’t know what the next crisis in your industry will be. None of us predicted the coronavirus shut down – so why would we have asked an ERP provider to demonstrate how easy it was to allow workers to work from home? I mean, it was probably mentioned in passing, but did we load test our entire workforce banging onto the system from remote locations, unknown machines, Apples, PC’s, Tablets, a few older home systems running Windows 7? That never really came up in the demo did it?
That’s why you need expert advice when selecting ERP – at Profit From ERP we’ve been involved in over 400 ERP projects worldwide. Our partner channel, Thousands. Yes, everything looks good in a demo setting – it’s hard to tell one ERP from the other. You cannot visualize dynamic from a static pre prepared demo. You do know from dealing with different ERP products over many years that some are absolutely tremendous coming out of the box – but future changes are sometimes boxed in by proprietary hardcoded features that integrate 14 separate places within the program – good luck modifying that yourself – That’s why someone who’s worked in the industry for years can help separate the really good ERP, from the really good demos.
You know one of the number one reasons people will upgrade Traditonal ERP? Hourly Consultant Rates. I mean, with some of the older ERP systems, every time you want to simply modify a report you have to call in a consultant. Those ongoing reminders that software consultants are billing out at $225 an hour tend to really get to your people in the finance department who are making considerably less. We hear time and time again, ‘I just want a system I where I can design and pull the report I want now’.
Because we all know what question a report answers – but few of us anticipate what questions a report brings up.
This is like a hangover or at least a holdover from the mainframe era. I mean, back somewhere in the late 80’s when I was with a major healthcare concern – we had to submit requests for reports, wait for weeks for the development queue to get to our request – go through a design and quality control effort. And soon, (soon being 3 or 4 more weeks at that time), we’d get that report. We’d look at the report for about 5 minutes and and and – it would bring up another question. So you’d start the process over again. Shampoo. Rinse. Repeat. It never ended.
Today’s digital ERP let’s you drill down on any number, find out what’s behind everything. And any number you can see, you can report on – without incurring a consultant bill. Sure, some of your people will be better at reporting than others – but everyone can report on anything they have access to see without having to call in consultants.
So to wrap up our ventilator story, last week, the US offered to provide ventilators to any country that needed them. We went from a severe shortage at a critical time to actually having many more than we need. You can question the initial projections and predictive models whether the ventilator crisis was as acute as we first thought. But the main point is, the response to the known data was effective.
What makes this a particularly poignant story – is – at this point , we’re in the same place as that initial ventilator demand estimate. We don’t know what our actual business environment is going to look like as the markets open back up. We can be pretty sure there’s going to be disruptions to supply chains and secondary reverberations from those disruptions – our businesses are going to need to be able to respond effectively regardless of the conditions ahead.
The question many are asking, can we afford to invest in better technology, can we afford to invest in our business with such uncertainty coming? Well, we’re seeing many companies repurpose and refocus their IT spend so to speak, with an emphasis on digital transformation, ERP and other systems.
Interesting article in the Wall Street Journal last week – we’ve linked to it in the blogpost on Profit From ERP – the pull quote is “The only thing better than being essential to the global economy in a crisis? Having the cash to continue to out-innovate your suddenly impoverished competitors.”
And I’d posit, what’s the difference between a company that has no cash and a company that spends no cash? In a lot of cases probably around 6 months. That’s 6 months between when the no-cash company files for bankruptcy and the no-spend company closes up shop.
The article goes on to say, Microsoft, Google, Apple, Facebook, Amazon spent $29 Billion-with-a-B LAST QUARTER on R&D. They spent more than the entire annual R&D budget of NASA in a single quarter – NASA – who’s only trying to get to Mars – but if the question, should you be investing in creating a more efficient, more productive business – we’ve seen time and time again over recessionary economies that the companies that invest, come through the hard time far in advance as those who decided to ‘hold onto our cash and see what happens’.
So to wrap, here’s the thing.
Going through the pandemic lockdown, a lot of companies’ system shortfalls were uncovered. Again, a pull quote from the Wall Street Journal about Hertz, a great car rental company until air travel shut down just after they overpaid for acquiring competitors and new cars – the quote ‘The coronavirus has been the proverbial tide going out, exposing who’s swimming naked.’
Not a pretty sight in this instance.
On a more local level, we talked about last week in the podcast how while some digital companies were innovating in response to the coronavirus lockdown, others were swimming naked just trying to get their VPN systems operational so the workforce could just log in from home.
Guys, there’s a big difference between a digitally transformed organization and a traditional server- based, log in 4 times, fingerprint, secret password phrased – and do it over again every 15 minutes just to make sure – that’s not what we’re talking about when we describe a company that’s been transformed digitally with secure systems to begin with.
MARKET CONDITIONS – What we’ve seen so far as some businesses reopen is margins are tighter and coronavirus costs are higher, for restaurants and so many others, revenues are down as customers trickle back and social distancing limits available capacities.
Tight Margins. Higher Costs. Lower Revenues.
So that runway is shorter as you try and land in the post-covid economy. And a lot of companies that DON”T change are going to run out of runway.
We also know some sectors of our customers will drop off, but there’s opportunities in other customer sectors that will need us now more than ever.
To recognize and take advantage of these opportunities, we need good ERP reporting analysis and number crunching. We need solid FP&A systems to model different business approaches.
We need to be able to serve our customers more effectively, digitally, and efficiently.
And on this high pressure, short runway, we can’t sit still and wait for the tide to go out further exposing us swimming naked with bad data leading us to worse decisions. We simply don’t have the luxury of fake it til you make it.
Yes, we can improve our quality of information with new digital tools, ERP & FP&A software – but there’s no time for ‘trying to get this right’. We need certainty of outcome NOW. That’s why we’re advising you more than ever to turn to Profit From ERP – our selection consulting service is designed to help you set up your ERP selection project – often getting going in under a week, determine key your key requirements and get you connected with the best in the business – the Alliance partners who’ve dealt specifically with the same issues in the same industry so you’re not trying to land a version 1.0 business on a short runway.
It costs nothing to talk about it – connect with us on through ProfitFromERP website or email info@ProfitFromERP.comand we’ll set up a discussion on how you can become more digital, more agile, and more precise in operation, efficiencies and productivity.
Next week on the Podcast – results from hundreds of ProfitFromERP past clients and Thousands of Oracle NetSuite client analytics – along with what some of the leading lockdown escaping companies are doing. Nothing you didn’t already know, just presented in a way you might not have thought about yet.
Right here on the ERPodcast – from Profit From ERP. Like us on Apple Podcasts and forward a link to your friends, and hide it from your competitors.
And thanks for listening, I’m Gene Hammons, Director of Profit From ERP.
Links and assorted sources – some may be paywall protected
Companies helping with ventilators – https://www.nsmedicaldevices.com/analysis/companies-ventilators-shortage-coronavirus/
Not even a Pandemic Can slow the Biggest Tech Giants. https://www.wsj.com/articles/not-even-a-pandemic-can-slow-down-the-biggest-tech-giants-11590206412?mod=searchresults&page=1&pos=1