The Challenge of Manufacturing with SAP
SAP has been extremely successful in providing its ERP solution to a wide range of companies, industries and markets; and yet I usually encounter users dissatisfied with the way their manufacturing and production planning is reflected in the system.
This is the first of a few posts exploring this issue and what can be done about it.
One of the biggest advantages of an integrated system is that they are based on “best practices” so the business implementing not only gets an IT system to handle its transactions but also a push – subtle or harsh depending on the case – to do things in a way that is proven to be efficient and had been tested in thousand other companies.
Best practices can be very convenient for standard activities, like accounting and basic logistics, where “bad practices” may be historically ingrained in the processes, sucking out money and creating all kind of troubles. Is the reason why implementing and ERP brings more improvements and savings than just the result of automation and integration of processes. If there are justified nonstandard needs (like local legal reports) they can be usually configured without much sweating.
Production in a manufacturing environment can be much more complex. The variations are wider and the specialization can require calculations or decision rules that are not similar to any other company.
This is accentuated because in many cases manufacturing is the core of the business, its signature and competitive advantage. The company’s products and the way they are produced set the business apart from the competition. Implementing standardized procedures based on best practice can strip the company of its uniqueness, an inconvenient situation at best and dangerous, in extreme cases, to the business survival.
This is not SAP’s fault as it offers a wide range of options to tailor the system to the company ways. These include the use of standard functionality outside the scope of the initial implementation – but that you are paying for; as well as many places where you can safely add code to adjust the system behaviour.
So why are these options not used as frequently and efficiently as they should? The reasons are multiple and make for interesting analysis.
Additional complexity requires more work and creativity than repeating or maintaining a cookie-cutter implementation, so there are incentives for firms, consultants and IT teams to avoid customization in detriment of the business. Rotation of people with the knowledge in conjunction with poor documentation and spaghetti code increase the risk of problems – in particular during upgrades.
There is risk involved for sure, but business is an exercise of taking risk, tackling it and enjoy the rewards. And yet, many companies opt to bury their head in the sand with a non-negotiable “keep it standard” policy while hopelessly waiting that the nest upgrade, version or solution would solve their business specific problems.
The tailoring of the system shouldn’t be feared but managed. It can be done right and it will give your business an colossal advantage as an outlier in a ERP universe where most other companies flock towards the mean.
That is a best practice worth having.