THE BEST OR THE REST
Which makes better sense – a ‘vanilla flavour’ all-in-one ERP package or specific ‘best of breed’ applications? Ruari McCallion listened to the arguments

While there’s no doubt that ERP systems have helped to dramatically improve business management, there are those who would argue that they have failed to deliver on the ultimate promise: a single, seamless, end-to-end system covering planning, administration, ordering, scheduling and execution across the board. The best are outstanding in their areas of core focus but, as companies have found, they can’t be good at everything. People, as they do, will find ways through and around obstructions – if in doubt, ask yourself: are all the departments using the core system, as intended and all the time? Dig down a little and you’ll nearly always find something non-standard going on, somewhere, often in vitally important, core sectors. It isn’t resistance to change; everyone has to meet performance targets and strives to do their best in the circumstances. Once upon a time, the leading vendors effectively locked-out third-party plugins but they are now much more likely to include interfaces that will allow specialised software to communicate with the ERP backbone.
“People and businesses want different things but they have one thing in common – they’re determined to get the best for their company,” said Malcolm Stork, of Demand Management, which produces Demand Solutions software. “The pharmaceutical industry, for example, needs high standards of quality control and, while they use ERP systems from mainstream vendors, they tend to use specialist software providers for QA.”
A pretty rigid structure makes a lot of sense in the financials area, which is ERP’s core competence, but other functions need more flexibility and demand planning is at the top of that list. It’s a modeling and decision support environment based on ‘what-if’ scenarios. Variables are of the essence, ranging from the effect of the European football competition on beer sales to the impact of a typhoon in the Pacific on commodity deliveries from Central Asia. It requires high levels of data visibility and flexibility to enable planners and management to recognise changes and respond quickly to make the best quality decisions. But the last thing an organisation wants is for ‘what-ifs’ to directly impact into the central ERP before review.
“ERP is, fundamentally, about managing transactional activities and calculating the impact of forecast changes on production or financial statements,” said Stork. “Working off-line allows the best decision to be made and allows information to be presented against a variety of backgrounds. When undertaking forecasting, most companies load in sales history and use statistical algorithms. But EPOS sales information, which can also be viewed in DS (Demand Solutions), tells you how fast your products are selling out, which clearly has a bearing on what can be sold in. DS can also allow customer forecasts to be brought into the equation and that’s a significant benefit.”
Christmas is an especially busy time for Leanin’ Tree Inc, which publishes and supplies greetings cards, gift mugs and specialist stationery to retailers. It has been using DS since 1992.
“When we bought the SAP ERP system we talked with the IT department about going on the SAP forecast system. We only needed a quick look to see it wasn’t as robust as Demand Solutions. We knew DS worked, so why change?” said Leanin’ Tree Materials Manager, Lloyd Peirce. After switching from a labour-intensive, expensive and inaccurate manual system to DS forecast management (FM), Leanin’ Tree now uses only one warehouse, even though business has grown. Lead times are down from 13 weeks to five days, for in-house products; stockouts are virtually unknown. Its analysts can drop in 42 weeks of historical demand information, which is applied by DS FM to 20 formulas. From there, the forecasts are fed into the company’s SAP ERP to generate a manufacturing schedule.
“Generally, we don’t have any problem with integration,” said Stork. “It may take a day or two to configure files but DS is designed to be as open as possible, and the major ERP vendors now recognise that openness is actually a selling point for them, too.”

Industrial Focus July/August 2008