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Selecting the Right ERP Solution

Selecting the Right ERP Solution

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Our CEO & Founder, Mark Harrop, delves into the process of enterprise-level solution selection. Mark focuses on the positives as well as the pitfalls, hoping to help prospective customers of ERP to understand the market, and to select the solution that’s right for them.

No matter the size of your business – from the SME to the multi-national – the goal of solution selection is to find the right ERP system for your unique needs.  ERP is a mature market, so you are likely to find a large number of solutions that cater broadly to your requirements, but discovering one that has the right depth and support can be a challenge.

Bill Isherwood has already written about the difficulties inherent in solution selection, so I want instead to look at the positives: the steps that you can take to prepare yourself to navigate the ERP landscape and emerge on the other side, with a solution that meets management approval and can provide significant return on investment for your key stakeholders.

Enterprise Resource Planning (ERP) has its roots in the mid-1970s, when a proliferation of MRP (Manufacturing Resource Planning) and MRP II solutions were being adopted by leading manufacturers, brands and private label retailers.  At that time, MRP solutions were geared primarily around material requirements planning, but in the intervening decades suppliers have built a host of functionality on top of that framework, creating what we now know as modern ERP.

That functionality included things like trend analysis, merchandise planning, bill of materials (BOM), supply chain management, regulatory compliance, human resources, purchase order management, company financials and more.  In essence, modern ERP can assist companies in practically any industry with virtually every aspect of running a successful business.

It was only a matter of time, then, before vendors realised the value in tailoring their ERP solutions to support different verticals – retail and consumer goods amongst them.  The first solutions targeted primarily at our industry emerged in the mid-1990s, and today you can find hundreds of suppliers who cater either directly or indirectly to the retail, footwear and apparel market.

Here at WhichERP, our supplier listings contain more than 55 of what we consider to be the major vendors offering solutions to fashion, footwear, consumer goods and textiles companies.  You will recognise some of them as being some of the world’s largest suppliers – the likes of SAP, Microsoft and Oracle.  You will also discover other, proprietary solution providers like Infor and J D Edwards that also operate in what we term the “upper market”.  For clarity’s sake, we define upper market businesses as those suppliers with revenues in excess of $500 million, and these are few and far between – particularly in comparison to the hundreds of smaller companies who equally claim to cater to the RFA market.

And if the ERP market itself is vast, we must also bear in mind the sheer number of third party to solutions to which your chosen solution might be asked to integrate:

  • Product Lifecycle Management (PLM)
  • Extended PLM
  • Adobe Creative Suite (Illustrator, InDesign and PhotoShop)
  • Computer Aided Design (CAD)
  • Computer Aided Manufacture (CAM)
  • Advanced Planning
  • Visual Merchandising
  • Material Planning
  • Colour Planning
  • Store Planning
  • Sustainability & Compliance

The list goes on, and in fact the total number of extended solutions to which ERP might be expected to interface can range as high as 50 or 70 within a large, multi-brand, multinational enterprise.  None of these would be considered an afterthought in their own right, so neither should they be given short shrift when it comes to evaluating which ERP solution will best fit your existing technological environment.

In many respects the digital revolution has transformed the retail and consumer goods industries for the better, but it is difficult to deny that the huge range of choice when it comes to technology has made the task of selection considerably more difficult.  Not only do a company’s solutions needs to co-exist, but they also need to share a common pool of what we call Master Data (also known as big data).

 

This sort of interoperability and cross-platform communication often gives rise to the question of which solution should come first in the implementation order: should you start with PLM to cover your product development bases, or pick ERP straight out of the gate, so ensure that your financials are in order?

Here at WhichERP, we believe the answer is neither.  Both should be given equal weight, but more importantly, both should benefit from an initial master data project encompassing the entire digital landscape, from PLM to E-PLM, and from SCM to ERP.  Beginning your selection project this way can help to avoid a great deal of unnecessary re-working of your ERP configurations and customisations – not to mention the tens, if not hundreds of thousands of extra dollars that it will cost your business to put things right if data cleansing isn’t properly conducted.

A master data project can also provide your business with the perfect opportunity to properly quantify your need for ERP – whether you’re replacing a legacy solution or adopting something new.  Editorial Board member Nancy Winslow writes elsewhere about best practices in selection and implementation, but there are a number of common mistakes that I have personally seen jeopardise ERP selection projects in a number of cases.  These include:

  • Not aligning selection criteria to the overall business strategy.
  • Failure to properly scope the project, including a full end-to-end understanding of the enterprise and the needs of its supply chain partners.
  • A lack of understanding as to how master data will be integrated across the digital environment.
  • A poor understanding of business challenges and process maturity objectives.
  • Inadequate change management and communication – neglecting to properly address the chances that the project will bring to people’s working lives.
  • Accepting what we refer to as “lock out documents”, which are Refer For Information documents written by the suppliers rather than created by the customer.
  • Underestimating the time involved in defining and delivering project plans and methods (including business case, requirements, challenges, drivers, RFI and Refer for Proposal (RFP) stages).
  • Allowing the shortlisted suppliers to dictate the content of demonstrations, rather than adopting the best practice of asking them to show you a “day in the life” of your business as it would be under their solution.

All of these mistakes share a common theme, which is a lack of preparation and scientific method.  It’s important to properly understand your business and to apply proven, scientific metrics in order to evaluate the solutions available to you.

As I mentioned earlier, there while there are fashion-focused ERP solutions, that are equally many (indeed, probably many more) that cater for fashion only as one of a number of different verticals.  When it comes to choosing a solution, you must remember that apparel, footwear, home furnishings and consumer goods organisations each have their own complexities that a solution will need to account for.  These are things like product types, sizing, regional variations and so on.

A presentation from even an industry-specific supplier might, though, be quite focused on the one market sector where they have had the most success and experience.  The supplier may have proven themselves in retail, wholesale, brands or manufacturing, but what counts is that they understand your particular language.  You may produce only footwear; you might be a lingerie brand; your collections could be driven by home furnishings and textiles.  Whatever your unique product makeup, you need to ascertain whether or not your shortlisted suppliers understand it in the kind of depth you require.

A typical supplier demonstration will often show an ideal set of processes that best suits the supplier. As you know from conducting your introspection and preparation, those ideal processes will more than likely not be suited to your unique requirements.  Instead, you should seek to influence the way your suppliers’ presentations are structured, and ask them demonstrate their understanding of how realistic process maturity improvements can help to meet your immediate and longer-term challenges.

In order to aid the suppliers in producing a “day in the life” demonstration, you should aim to provide a detailed script, supporting use cases, data flows, file types, formats and examples.  These should be give equally to every supplier who will be demonstrating, since this allows you to level the playing field, and give each vendor an equal chance to demonstrate their competence.

 

Although cost is an obvious consideration, you may be surprised to learn that purchase price is not typically considered to be a dominant factor when it comes to selecting an ERP solution.  Other criteria often take precedence – criteria such as:

  • Solution maturity.
  • Breadth and depth of processes.
  • Baseline functionality.
  • Future proofing.
  • Underlying infrastructure.
  • Database support.
  • On-site implementation vs. hosted cloud deployment.
  • E-commerce support.
  • Existing customer base and client references.
  • Supplier insight.
  • Resources in your chosen territory.
  • The long-term financial viability of the supplier themselves.

In almost direct contradiction to that, though, is the fact that ERP purchasing decisions are often made by just one individual, or by a single department within the organisation.  The pitfalls of this approach should be immediately obvious, since it goes without saying that what works for one person or one product type (footwear, for example) may not work for others.  Imposing an ill-suited solution across the entire enterprise can have serious consequences for the business – not only in financial terms, but also in the various departments’ and stakeholders’ confidence in management.

It’s for this reason that the most forward-thinking retailers and brand choose to use the services of an objective and experience third party.  They recognise that despite their best efforts, they lack the kind of detailed knowledge and expertise that is required.

When we at WhichERP undertake an ERP selection project, we’re often told that we now know more about our client’s extended supply chain and business than they themselves know.  This is not wholly due to our experience, but rather to the fact that as an independent party we can look at your business in an entirely new and objective light.  Expert-level advisors – whether WhichERP’s or those of another proven consultant – are able to evaluate the full range of solutions available to a client, as well as painting a more complete and more detailed picture of their unique requirements than the client could manage themselves.

It’s important to remember, though, that when soliciting the help of a third party advisor, you must make sure that they have no affiliation with an ERP supplier.  In many cases, you’ll find that the consultancy also operates an implementation practice, and is very closely linked to putting in place products belonging to one particular vendor.

One key area in which a fully independent advisor can assist is helping you to understand the full scope of the package offered by the supplier.  It’s estimated that almost 80% of ERP implementations run late or come in over budget, and this is primarily due to the client’s not understanding the supplier’s offer in sufficient detail before contracts were signed.

A typical example of this might see a supplier offer 20-40 days’ service for the purposes of data gathering and migration.  As an independent advisor, I know first-hand that there is a tremendous amount of work involved in mapping cleansing and uploading business data at that level.  At a cursory glance, the customer could be forgiven for expecting the supplier, therefore, to handle all data gathering and migration.  The truth is that the vendor will provide upload tools, but then expect the client to actually map, cleanse and import (typically using Excel or XML) that data into the new solution.

The importance of this becomes clear when we realise that ERP, in order to be successful, requires far higher levels of data integrity than most companies have ever even considered – and this is before we take account of the sheer volume of data coming from disconnected extended-PLM solutions such as:

  • Inventory records.
  • Bills of materials.
  • Supplier information.
  • Compliance data.
  • Costing information.
  • Legal documentation.
  • Quality control audits.
  • Bills of labour.
  • Material management data.
  • Sizing and grading rules.
  • Block patterns.
  • Colour management data.

The impact of data integrity really cannot be overstated where ERP implementations are concerned, and this is just one of many areas where employed an expert, impartial advisor can help to avoid delays and the otherwise inevitable Statements of Work (SOWs) that can be added on to your final bill from your supplier.[/half_last]

 

Finally, the most important part of any effective ERP selection process will be the use of a proven solution selection methodology.  I have already touched on a couple of these major aspects, but to close this article I want to look at them in a little more detail.

Adopt a structured approach

Given the potential impact of a delayed or failed implementation, it almost goes without saying that any retailer or brand should structure their selection process clearly and transparently.  This structure should be presented to all internal stakeholder before the selection process event begins, and everyone affected should understand the various stages that will be involved.  From gathering requirements and setting process weighting, to the “day in the life” presentations and final scoring and selection, it is vital that every team member who will be impacted by the implementation understands that the decision will be made objectively and co-operatively.

Ask for focused demonstrations

As I mentioned earlier, there is limited use in one or more suppliers presenting an entirely generic demonstration and you then attempting to map this to your own business needs.  Instead, you should ensure that each supplier is provided with sufficient information to allow them to conduct a bespoke demonstration that takes full account of your requirements.

You must keep in mind, though, that this will involve a significant amount of preparation on the part of the suppliers, since they must cater to your entire business – ever division, brand, and product portfolio.  It is incumbent on the client (and their advisors) to assemble this information, and to ensure that it is distributed equally to all shortlisted suppliers.  By creating this kind of level playing field, you can guarantee that user scoring will be both fair and uninfluenced.

You may also find that one or more of your shortlisted suppliers is unwilling to conduct such a demonstration, explaining that they have a set script and will not deviate from it.  Here at WhichERP, we consider that to be the simplest way of eliminating those suppliers who do not put enough stock in your unique requirements to actually show you how they might meet them.

Remain objective

Selecting the right ERP solution is a complex process, and one with significant consequences on an economic and human resourcing level.  It is not a decision that can be taken lightly or made subject to outside influence and, due to the sheer number of factors that must be weighed against one another, it is one that requires a multi-criterion approach.

Scoring methods must be agreed in advance, and every other selection criterion that is either made public or weighted behind the scenes must be taken account of simultaneously – no one consideration should outweigh any other, unless the business as a whole has taken the decision that it should.

 

Involve all key personnel

Not only should an ERP selection decision be made according to well-defined and publicised criteria – it must also take account of the wants and needs of all key stakeholders within the enterprise.  It requires the leadership of senior management, and the participation of virtually every department within your business – not to mention your international supply chain partners.

Representatives of all brands, departments, processes and users should be involved in the project initiation phase, where the decision making process is agreed.  From that, a project team should then be formed that will manage the entire process from selection to go-live and exert considerable influence over its outcome.

As I hope I’ve explained, choosing the right ERP solution is neither quick nor easy, but with adequate preparation and introspection, it becomes much easier to make a decision that is suitable for your business and your near-term goals.

I hope that you have found this brief guide helpful, and I invite you to explore elsewhere on WhichERP: we have some fantastic articles from apparel industry experts and ERP professionals – all of whom will happy to field any questions you might have.

Please feel free to contact either myself or a member of the team.

Thank you for reading.

Mark Harrop

CEO & founder.

 

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