Maximizing Return on Investment Using ERP Applications

PROCESS UNDERSTANDING REVEALS COMPLEXITY

A corollary of the statement in the subhead above, when applied to a functionally organized business (nearly all are today), is that if process thinking evaluates the connections between “things,” it is unlikely that all of the “things” will belong to the same owner. Thus, as functions in IT applications become integrated, as they do in ERP applications, these ownership issues will inevitably be across multiple departments, further complicating the process of defining and designing these processes.

The following is a basic example of this process. If your goal is to reduce finished goods inventory that belongs to distribution, and there appear to be issues with the sales forecast, which belongs to sales and marketing, we need to be sure that we put in place a process to effectively deal with these boundary issues. Another example is the case of vendor selection for materials. If the procurement function has initiated vendor certification programs as part of the incentive for vendors to participate in market share distribution, then typically an algorithm will be established determining whom the next order goes to. If manufacturing, for various quality or operability reasons, prefers to have material from one vendor, rather than another, the issue can put the two departments at odds with each other. In this case, it will likely also be part of the yearly objectives of procurement to institute vendor certification, while it will be an objective ...