Why you should be capturing data with an ERP system
6 minutes read
As a business owner, it’s always good to think big. Examples include thinking about creating a completely digital supply chain, using artificial intelligence to make decisions, or impressing your customers with augmented reality.
However, before you can implement these types of projects, you must start with the basics: gathering data with your enterprise resource planning software package (ERP) system.
François Desjardins, Senior Business Advisor, BDC Advisory Services, explains what the advantages are and how you can go about it.
If you’re relying on Excel spreadsheets, post-it notes and human memory to manage processes, your company won’t be able to tackle big digital projects.
Reason 1: An ERP is a backbone system for connecting company departments
“If you’re relying on Excel spreadsheets, post-it notes and human memory to manage processes, your company won’t be able to tackle big digital projects,” says Desjardins.
If you don’t already have an ERP system, there are strong reasons for considering one. It is a digital foundation—a backbone system that controls the company’s data. Spreadsheets are simply not as effective in managing day-to-day operations.
“Often, departments in the company, such as purchasing, manufacturing and accounting, list their data but their systems don’t talk to each other,” says Desjardins. “To access data from another department, you have to request that it be extracted into an Excel file: this is not a streamlined or real-time process. Having a backbone will connect the various departments in the company.”
However, be warned that when you acquire an ERP system, you must anticipate the first-year costs of implementing, configuring and integrating the software with the company’s various databases. On top of that, there is the cost of employee training.
Single data entry by all departments saves time and prevents errors.
Reason 2: Accumulating data with an ERP helps you cut down on waste
With an ERP system, migrating to a centralized IT system makes a huge difference in your daily work. “Single data entry by all departments saves time and prevents errors,” says Desjardins.
Patience is required even after the system has been implemented. “Often, the company’s management does not see much improvement after a year,” says Desjardins. “You have to give the system time to operate within the company and to extract the relevant information.”
But there are tangible benefits to the data. When data from various machines are available, they provide a wide range of accurate information. For example, a manufacturer could discover that they had underestimated the amount of normal wear on a part.
“For example, you may find out that one drill bit can drill 650 holes, not just 500,” says Desjardins.
Reason 3: An ERP helps you manage your employees and avoid downtime
At the beginning, companies can feel overwhelmed by the influx of all this data from their ERP system.
Don’t worry. According to Mr. Desjardins, this is the learning curve to figuring out what data is useful and how to use it.
“For example, we can know exactly when to change parts before they break and optimize equipment performance by adjusting its speed, pressure, temperature, etc.”
“Artificial intelligence enables us to program machines to make production as efficient as possible and, most importantly, to avoid downtime.”
A data-driven business can also easily adapt if an employee is absent, or if an order arrives early or late. “The system allows us to automatically reassign tasks among employees to meet production deadlines and immediately identify when machines are available to ensure optimal use of resources” says Desjardins.
Reason 4: Using technology attracts the next generation
In addition to productivity improvements, a central computerized system provides other benefits. In particular, it attracts the next generation.
“When there are staffing shortages, a company that does everything manually with Excel spreadsheets and Post-it notes finds it difficult to attract and retain young people who are used to doing everything in a digital environment,” says Mr. Desjardins.
Reason 5: Data helps you become active rather than reactive
A company needs real time access to data from its various departments to move toward bigger technological projects, such as creating a digital twin in which all the company’s machines are connected or using artificial intelligence to drive decision making.
Then, as the company moves forward on its digital transformation, it can include more information on its suppliers and customers.
“The more data we have on the various stakeholders, the greater our insight into the issues,” says Desjardins. “This allows you to run your business with a good idea of what’s coming rather than operating in reactive mode. Because the ultimate goal is not to buy technology, but to achieve results.”
Tips for leading change
Developing a good change management strategy is essential for this type of project. This starts with training people upstream so that they feel involved in the change process.
“Management is important, but it takes people who work on the floor with a different view of things who can tell you if something isn’t working on the floor,” says Desjardins.
Someone needs to lead the digital transformation in the organization and monitor it closely to ensure that it is successful.
Staff must also be trained to help them understand the value of the new tools and how to use them. Also, we must always bear in mind that some people are more reluctant than others to adopt digital advances.
“Many company managers think that everyone will use the new tools immediately. In reality, many will avoid having to use them by dropping in on coworkers and taking the opportunity to give them information on paper. Someone needs to lead the digital transformation in the organization and monitor it closely to ensure that it is successful.”