ERP is a tool that is there to improve efficiency and give you the tools to make informed decisions. With that said, the purchase of such a system should be viewed as an investment rather than a cost and so you should expect to see a return.
Deciding how and when to track your ERP’s performance is key. If you do it too early, your results will most likely fall short as the system has not been fully implemented. Do it too late and you may find that you have not been getting the most out of your system.
– When to start measuring your ERP’s performance. As mentioned above, you have to time this stage correctly. The implementation of ERP systems will vary from company to company due to a wide range of factors. Generally, the complete implementation of ERP should have happened around 3-6 months after the original installation. The two main factors that influence this time scale are the amount of time your company can allocate to the project and also the size and scale of your operations.
– How to measure your ERP’s performance. Generally speaking, different companies will have different ways of measuring their ERP’s performance. With one of the main benefits of ERP being that it helps save time, reporting back on how long certain things are taking to do is a good start. For example, you could report back on things such as how long quotes are taking to be produced. As and when people are comfortable with the system, this quotation lead time should reduce considerably and quotes should become more consistent. For people on the shop floor, reporting back on things such as non-productive analysis and employee efficiency are good indicators to the performance of your system. The MRP allows you to group purchase orders and so you should gain more purchasing power along with having better stock utilisation. Having logs of quality control issues will also be of huge benefit as there is nothing more annoying and costly that someone making the same mistake twice.
ERP is a tool that is going to give you a ROI over a period of time. Measuring its performance can be carried out with reports and efficiencies, but ‘old fashioned’ techniques, like simply asking your employees for feedback and their experiences with the system can be just as informative.
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