Lean Manufacturing and ERP, Enterprise Resource Planning, are 2 of the most common improvement technologies that manufacturers count on for performance improvement. However, multiple studies suggest that the failure rate of these technologies is high – greater than 70%, and arguably as high as 97% for Lean.
Presenting at Incrementa’s Online Summit on October 26th, for which Registration is free, consultant Steve Jackson of Vancouver-based Synchronix Technologies Inc. will explain 3 proven tactics that small to mid-size manufacturers can use to turn disappointing results into a solid ROI.
“We have this absurd situation today where business owners and managers are being pushed from all angles to implement improvement technologies that have an appalling rate of failure stretching back more than a decade in the case of Lean and more than 30 years in the case of ERP,” says Jackson.
“You can argue over definitions, and there is no dispute that there are some impressive successes, but this track record of disappointment would be considered an automatic disqualifier in almost any other field unless those launching the projects knew with certainty how to avoid failure.”
There is certainly no shortage of opinions as to the cause of the failures. Some are authoritative, for example this one from Industry Week.
But Jackson points out that while many experts offer suggestions as to the cause of the failures, their collective opinions would have more credibility if the failure rate was declining. He notes that the experts pointing out the causes for failure are often the same experts leading new implementations.
“The reality is that the failure rate is not improving,” says Jackson. “If you Google for lean failure rates you’ll see the same poor performance being reported year after year.”
“And I have research articles published before the Internet even existed that highlight the rate of MRP failures, and those rates 30 years ago are virtually identical to those being reported for ERP systems today.” MRP, Material Requirements Planning, is the 50-year-old technology that remains at the core of modern ERP systems for manufacturers.
Online Registration is free for Jackson’s session at 1 PM (PST) on October 26th.
In his presentation Jackson intends to highlight the trap that business owners and managers find themselves in.
Because the technologies are overwhelmingly considered to be ‘proven;’ and because the consultants involved are usually experienced and genuinely expert at the technology; and because there are indeed some very impressive success stories; the blame for failure inevitably falls on the management team, staff, and employees.
“Unfairly so,” says Jackson.
“What’s missing from the discussion is any recognition that there are many circumstances and many environments where key parts of the Lean solution, for example, simply do not and will not work well, no matter how committed the management and employees are. And the performance improvement elements of ERP will almost never generate the nature and scale of business improvements that everyone assumes they will.The expectations for ERP are wrong from the outset. The company can do everything right. The ERP consultant can do a superb job of helping them choose a system and implement the system. But the ROI will still not be there; the Business Case will not be met and the customer is naturally frustrated and unhappy.”
Over 32 years of performance improvement consulting, specializing in manufacturing businesses,Jackson has identified 15 different channels that small- to mid-sized manufacturers can exploit in order to take advantage of the effort and expense already invested in the improvement programs that have so far proved disappointing.
“I will be discussing 3 of these channels in the Summit,” says Jackson. “One of them typically finds immediate acceptance. Managers slap their heads when they realize how it was simply hidden in plain view. Another, though, concerned with the measurements that manufacturers use every day, contradicts the belief system of almost every manager in every manufacturing business.”
And the third channel?
“I’m probably going to sneak a 3rd and a 4th channel in there,” says Jackson. “There are 2 channels that in combination can easily make a 6-figure difference to a small or mid-sized company’s monthly performance. That’s a 7-figure annual boost, with no additional operating expenses. A prior investment in Lean technology and the availability of a typical ERP database aren’t essential to get these results but they can help make these improvements happen very quickly.”
So, Jackson isn’t an unyielding critic of Lean and ERP technologies after all?
“Not at all,” he says. “These technologies and others are all extremely powerful when used correctly. More powerful still when used together. In the right environment the success stories of Lean in particular are not just impressive; they can be genuinely inspiring.”
He continues, “If I had my own manufacturing business I’d use the concepts that I advocate of course — known as Theory of Constraints, or TOC — but I’d also have Lean experts in house, Six Sigma experts in house and an ERP system in place. These technologies are not either/or, which is how they are too often considered. But I would deploy all these technologies in an entirely different manner than most companies I encounter today.”
Jackson’s session, scheduled for 1 PM on Wednesday October 26th, is one of 19 sessions planned by Incrementa Consulting for the week of October 24th – 28th.
All Registrations are online, with free Registrations for any session.
Author: Lisa Smart
