Are You Getting the Most Out of Your ERP? (Probably Not!)
ERP. If you got it, you probably don’t love it. But you know you need it.
When it comes to ERP systems, many manufacturers have a love/hate relationship with their solution.
But why? At the end of the day, it is absolutely critical for managing what you produce. Is it caused by gaps in the solution? Shortcomings in the implementation? Shortsightedness in the vendor? What is the root cause of the pain?
In today’s episode, Paul Tedford, CEO at Synergy Resources, shared his insight on how manufacturers can get the most out of their ERP system, from selection to implementation and beyond. If you feel some of the love and hate for your own ERP system, this episode is for you.
Join us as we discuss:
- The evolution of the ERP system
- Addressing and fixing the gaps in most ERP implementations
- The future of ERP systems
And we ask a special question to Paul based on the classic hit from Naughty By Nature. Take a listen to find out if Paul is down with ERP.
Experiencing disruption on the frontline? We can help. Request a demo today.
Check out the full episode below:
Paul: When an ERP is properly configured and implemented around the right processes for each type of manufacturer, it usually improves efficiency. It becomes the hub of data used for business intelligence and other innovative solutions. We’ve seen it help drive topline and bottom line growth for many of our customers.
Josh: Welcome to Conquering Chaos, the show for manufacturing leaders. In each episode, we are connecting you to the manufacturing leaders of today who are driving the innovations needed to futureproof the operations of tomorrow. If you feel like your time is spent fighting fires and trying to control the everyday chaos, this show is the show for you. My name is Josh Santo, I’ll be your host.
Welcome back you Conquerors of Chaos. Today we’re talking ERP and we’re covering the whole spectrum of topics you need to know about getting the most out of your ERP. We’ll explore what an ERP is for common gaps in implementation and how integrated technology can increase the value you get from your ERP. If you don’t have one, if you are in the middle of implementing one, or even if you’re an experienced ERP user, you won’t want to miss the takeaways provided by our guest. By the way, is an industry expert in ERP assessment, selection, implementation, and optimization.
He started as nearly 20 years in the space working for two manufacturing companies which actually helped him pay for college, then found himself providing tech support for Lilly Software, which is an ERP company from New Hampshire. Throughout his career, he’s found himself helping manufacturers achieve business goals with innovative manufacturing-specific ERP software solutions and services, but it does not stop there.
He and his team also help industrial leaders optimize their lean manufacturing approach, supply chain management, warehouse and inventory management, and production scheduling among other services. Currently serving as the CEO of Synergy Resources which provides world-class ERP software support and services to manufacturing companies. Please welcome to the show, Paul Tedford. Paul, thanks so much for being here today.
Paul: Thank you for having me on, Josh. I really appreciate it and looking forward to the conversation.
Josh: I am too. I got to be honest, I struggled with how to work this in, but I really want to throw out a reference to a very popular 1990s song and ask you, Paul, you down with ERP?
Paul: You know me.
Josh: There we go. We’ll get into the actual episode and give everyone time to digest that cringeworthy moment that we caught live but Paul, I would love for you to start us off, tell us what it’s like to walk a day in your shoes. What’s your day-to-day look like?
Paul: Usually I get out of bed around five o’clock in my 11-year-old boxer, Sophie follows me downstairs, let her out grab a cup of coffee. That’s a little bit different than pre-pandemic. Pre-pandemic I was typically waking up at 4:00 AM jumping on a plane flying to visit some customers maybe two or three times a week. Things have changed. I’m a little bit fortunate now to be able to spend time at home and my wife, Jennifer, who also works from home and my son Jake, who’s moving into college tomorrow which is interesting life event, and my daughter Lily.
We live in New Hampshire, Southern New Hampshire, about 40 minutes north of Boston. I really enjoy on a personal level spending time with my friends and family outside, whether it be hiking in the white mountains or skiing in the white mountains in the winter, or playing softball as a weekend warrior. After feeding the dog and grabbing a cup of coffee, on the work days, I spend usually about the next three hours focusing on new ideas we have for helping customers meet their goals.
The rest of the day is typically split between visiting customers. I still do jump on a plane, just not as often as it used to be, or drive down just to meet some customers or virtually. Brainstorming with them with our incredible staff and partners on innovative new solutions that drive meaningful results for manufacturing companies.
Josh: That’s great. That’s quite the time. I love always when our guests share what it looks like outside of work because at the end of the day we’re all people and the people got to come first and then what we’re able to do together that comes from just taking care of the people. I love that you share just a little bit about how you take care of yourself and your family outside of work. Softball, I love playing softball as an adult so I’m with you right there. I also notice you and I have some similar interests in that we’re both political science majors who’ve found their way into the tech industry serving manufacturers.
Paul: Interesting. That was the quickest way I could get out of college. It’s getting that critical science degree. [chuckles]
Josh: Mine was the result of not being sure of what I wanted to do, but knowing that I wanted to change the world somehow, which is very millennial of me but–
Paul: Very common.
Josh: Anyways, we’re talking ERPs today. Now, I’ve been fortunate enough to spend time with many different manufacturers on the factory floor, implementing digital technologies that they can use to optimize frontline workflows and processes. One technology that always comes up is the ERP and it makes sense. It’s the single source of truth for many manufacturers, but I couldn’t help but notice how many people seem to have a bit of a love, hate– mostly hate relationship with their ERP sometimes. I’d love for us to dig into this together. To do that, Paul, can you talk to us and set the baseline what exactly is an ERP?
Paul: For those that don’t know ERP is a software solution that helps companies manage sales, operations, and finance in one system. It typically includes, depending on what type of company you are, sales and estimating engineering, shop floor control, capacity planning, material planning, supply chain and procurement, warehouse management, financial and so much more. When an ERP is properly configured and implemented around the right processes for each type of manufacturer, it usually improves efficiency.
It becomes the hub of data used for business intelligence and other innovative solutions. We’ve seen it help drive topline and bottom-line growth for many of our customers. We do have some that love.
Josh: [chuckles] You do have some that love. Well, I’m sure that’s because they’re working with you on getting it to that point. It’s like a relationship. It takes the work to put into it, but it’s very rewarding [chuckles] afterward. Well, look, ERP is not new. In some cases it is being used– It’s commonly used but what was– before ERP what problems was it really set out to solve?
Paul: ERP really goes back to the sixties when from IBM really wrote the material requirements planning model or algorithm for manufacturing company. I think the name of it was John Case. What it did is it basically, at the time, most people made standard manufacturing products. Those standard manufacturing products basically said, “Hey, I’m going to make a hundred of these widgets next month, so what do I need for all the materials, raw material, sub-assemblies that go into it? Tell me what I need.” That’s really what MRP set out to do is to get the materials on order.
Those manufacturing companies weren’t missing a screw to make a $50,000 piece of capital equipment. That was the sixties when everything was standard. Then in the seventies and early eighties, manufacturing started to involve into the Burger King. Depending on your age, remember the commercials have it your way. That custom manufacturing style and support this MRP2 was introduced that included both actual and planned orders into that material planning algorithm. Before it was just basically a forecast, not looking at actual orders.
Interestingly, you mentioned that I’d worked at two manufacturing companies to put myself through college.
One of them had a home-built system that– and they manufactured inground vinyl pool liners and pools. The other one was a company my dad was the controller for– and he had me come work in the summer on the shop floor. Doing production and they had a can production facility which is all gone overseas since then.
In the winter he’d have me come in and help implement act as an MIS person at the time. Help implement the MRP2 or the early ERP which we’ll get into in a second on big mainframe computer with five-and-a-quarter-inch floppy drives back when they were actually floppy. [chuckles] That was around that time in the late nineties or I’m sorry, late eighties, early nineties. Then later those continued evolution of that custom manufacturing engineer to automate to order assemble to order. There was a need to manage the capacity and plan for capacity in the shop floor so rough cut capacity planning, finite planning, or advanced planning and scheduling is another way people say it or APS. Those functions were added as well as functions for sales, marketing, of course, financials, engineering inventory, and that was renamed ERP or enterprise Resource Planning.
Since then, ERP’s evolved a bit. In the 2000s we had that move to the cloud, as you’re aware, and in the 2010s and 2020s we’re really seeing ERP become that digital platform. That hub of that platform so it does all those things we talked about, but now those best of breed solutions or other innovations that people are using the buzzword digital transformation or industry 405, the ERPs now are capable of that with their platforms.
Josh: That’s so interesting. I always love exploring how technology evolves over time to meet the different needs of the people it seeks to serve. I appreciate you taking us through what it looked like in the sixties to seventies, eighties, nineties two thousands in the trends there. I’m admittedly not an expert by any means on ERP or even who the major players are, especially within the manufacturing industry. I would love it if you could just share with us who are some of the most common ERP providers that you find in your work with manufacturers.
Paul: Yes. The tier one space, which is more the large enterprise, many people have heard of those companies. SAP, Oracle, Microsoft has a big ERP practice, and Infor, those are really the major players in the tier-one space.
At Synergy we really focus on small and medium-sized businesses, so those companies are between 5 million and 250 million, they’ll scale up to over a billion, but they usually start with us as a small, medium businesses. As such, we’ve partnered with more of the products in the tier two space, which is, Acumatica, who’s one of the fastest growing ERPs as well as Infor CloudSuite Industrial and Infor VISUAL, we feel really fit that manufacturing market well.
We carry all three products and implement all three products because we find if you’re a white manufacturer and new to ERP and need to get into it quickly, ease of use is more important sometimes. If you’ve been doing ERP or more complex ETO make-to-order, assemble-to-order, you might want to go into one of those Infor products so gives you an idea.
Josh: It does, and you talked about with the background, it’s clearly an established industry and one thing that is typically true around software solutions that have been around for quite some time is they all start to look the same. Is there any noticeable differences or criteria that you look at when recommending this might be the best solution for you? It could be SAP, Oracle, or like you said, sometimes depending on size, Infor Cloud Suite. What differences have you seen between these major players?
Paul: It gets down to some of the things that you just mentioned, it’s some companies, depending on where they are if they’re an ETO make to order, they have different processes. If they’re high volume, low volume manufacturing they have different needs. Depending on what their needs are, their company goals, are they trying to grow, is about being more efficient and more profitable, but don’t want to grow are they have, adding a separate entity or a separate site, will depend on what features or functionality they really need.
It’s all about the complexity of the business, the type of business, the size of the business. Have you used ERP before? What’s the goals of the company? It’s really depending on those things depends on what we recommend or what we see customers really choose and look at.
Josh: Got it. I know it can be difficult, like as a consumer, I’m sure everyone can relate to this when there’s a lot of different options and they’re all high quality, you run into that paradox of choice where you have a bit too many choices and you’re not sure. It always helps to have the expert share, here’s what you want to look for, here’s why. Let’s talk about you, let’s talk about your needs, let’s make sure that you’re getting the exact thing that you want.
If Netflix could come up with that for me, I would be so happy because I spend hours just scrolling, trying to pick something, and if someone were just like, “Look, Josh, you like comedies, you like these adventures, you like these types of actors, here’s what you should watch.” Oh, thank you. Same thing with an ERP. You’re trying to grow. These are your needs around your work process, this is how you manufacture the product, these are the considerations you have to take in and consider, and here is the ERP that’s recommended, so I love that approach.
You mentioned this a little bit earlier about some of the benefits of ERPs, but I’d love if we could really dive deep into this. How do ERPs open up areas of opportunity around price, around quality and around delivery?
Paul: The old adage was that you could really have two of those. You can have great quality and fast delivery, but it’s going to be expensive, or we can have cheap and fast, but quality might not be there. However, today, especially in markets like aerospace or medical, you may need to have all three of those to be competitive. Having an ERP that can help with all three of those is important, and like you said, ”It’s so hard to find an ERP.” There’s hundreds of them out there. Some of them are what I call vanilla ERP that aren’t really met for manufacturing, or their manufacturing focus just for a job shop but for companies that have a job shop plus field service, it might not be a fit so it’s really hard to find that.
Good point. I digress a little bit there by getting back to that PDQ question. We recently implemented engineer supporter custom capital equipment company that had two sites. One was out in the Midwest, one in Mexico, and prior to that implementation, the CEO told me they were managing everything out of Excel, including their bills and materials, including their routings. They certainly had a financial system where they had their GARAP processes in there, but that same CEO he told me that not doing that was like running their business with dirty glasses on.
I really like that statement because where they came from– they just went live last year and where they came from it was a night and day difference, so because they didn’t have those bills and materials and routings in the system, their costs just floated into accounts based almost on gut feel or what they’ve always thought they were.
They estimated based on that same gut feel and typically standard markups, your labor, your material in Excel spreadsheets.
What they realized was that, after doing digging in a lot manually that certain jobs weren’t getting enough margins, and others they felt they could be more aggressive on pricing so they could win more business or more market share. By having that bills and materials and routings and actual cost for material, labor, overhead outside services, they were able to see which products or what– even though they’re custom they could see which product families or jobs that they were losing money on and adjust those to get the margins they needed. As well as being more competitive on those other projects or jobs that maybe they were getting a really high margin on but didn’t realize it.
Maybe they wanted to take on more market share, increase that volume, and ultimately the revenue. That’s an example of how they use the system for pricing and having that cost data to support that, and then in regards to delivery, that’s where I have a real passion for is that, making sure customers– that Amazon effect
everybody wants something in two days nowadays, so even in the B2B world, they want it quick, especially with the supply chain issues of the last couple years.
That same lack of bills and materials and routing made it difficult for them to really track set up times, run times, or understand where they’d have capacity constraints, either people or machines, or a lack of even material today, tomorrow, next week, or next month. Now, they can use those improved processes and that data to decrease their lead time, increase their on-time delivery and ultimately increase that satisfaction.
That’s, example of a real customer that just did that with delivery and they reduced their lead time by about 35% on most of their jobs, and they at the same time is increasing on-time delivery. I’ll get into the other part of that in a second that’s really ties us all together, but that’s delivery and then quality. It’s obviously that you can track things like rework and non-conformances, and ultimately all the other things around quality assurance, but the goal there is to really to continuously reduce that cost to quality. How can we continuously improve? Again, I mentioned that the fun part is that you can put all these together. By having that ERP system, which is really the foundation because they always want to continue to improve after that, they can actually look into the future and see, let me back up. What they used to do is they basically say, “We’re going to be late.” They blanket approve overtime across the whole shop floor, every department, every part of the company.
Now, what they can do is they can look into the future next week and say, “Hey, we need overtime just on these machines or in this assembly group or whatever happens to be.” Not only are they able to increase their delivery, but because they can focus that over time where they need it, they’re increasing their delivery, they’re reducing their cost, and they’re ultimately increasing their profits on there. That gives an idea of how. That’s just one example, but how you can do that PDQ, we call it price delivery quote, and how ERP can help that.
Josh: I think that example that you provided of running the business with dirty glasses is spot on because you’re seeing things and you think you have an accurate view but there’s smudges and there’s smears that are ultimately impacting the decisions that you made. One of the examples you provided is that blanket overtime, whereas if you can see crystal clear, if you have that visibility you need, you can make the precise decisions that you need to make that are in line with your overall goals.
I think that was such a good way to see it running business with dirty glasses. I love that. Look, Paul, you just sold me on ERP. You did. With the examples you provided, it’s clear that ERPs can be very powerful tools for running your operations. If, and this is big if, if they are being used with the right strategy for the right purposes. This is a bit what you alluded to in the selection of ERPs. It has to be, is this the right strategy? Is this the right purpose?
It’s one thing to have an idea, to visualize, to think this is the right strategy, this is the right purpose, it’s a totally different thing to implement that idea. In a lot of cases, the implementation of an ERP might not be optimized yet. They’re pretty complex solutions that can be difficult at times to effectively maintain especially with limited resources. A lot of times you may find that ERP implementations may have gaps. Paul, I’d love for you to talk to us about what are some of the most common gaps that you have seen with ERP implementations?
Paul: Around ERP implementations and even ERP software itself there’s certainly, some systems are common gaps across multiple systems or implementations. There’s always this discussion around best-of-breed software with ERP or just use one vendor, one ERP for everything that you’re doing. What we find is that there’s always going to be a solution that might be best for a certain company based on their goals of the company.
For example, almost every ERP in the market today comes with a CRM. Customer relationship management, and that might be a good enough system for 70% of the customers, but some of the customers might have greater needs. They’re going to go out and look for a best-of-breed solution like salesforce.com, Zoho, Sugar, you name it. Some of the gaps we see depends on the company’s needs.
What we’ve looked at in our company is to make sure that based on the 1400 customers that we’ve helped implement and finding the common needs that they have and maybe the common gaps that we’re seeing, is going out there and filling those gaps. For example, we’ve built an innovation center at Synergy, which I’ll get to in a little bit. That has allowed us to integrate best-of-breed solutions that connect to machines on the shop floor or to supplier collaboration portals.
I’ll say supply collaboration portals that actually work because there’s certain ERPs that have them out of the box. It’s in the marketing, but our customers or other customers we talk to end up using if they don’t actually do what was promised, so say it in a nice way. These gaps can cause increased manual data entry in the need for a data cleansing or rework. Without that clean data like we talked about earlier, you’re not getting those benefits of delivery quality and pricing.
Josh: Just to play back what I heard, some of the examples were this idea of a need for tapping into the machines. That machine connectivity because that’s going to help eliminate some of the necessary non-value-added tasks that are prevalent throughout frontline workflows and processes. You also called out the supply chain collaboration portals with the emphasis on that work as opposed to what it sounds like in some cases what’s being sold and what actually happens isn’t the same thing, which is a big problem and that’s going to leave some people out to dry.
Then you called out the need for cleaning up that data because even if you’re gathering data, whether that’s in an Excel spreadsheet or some other means, if it’s not cleaned up you still have those dirty glasses on. On this topic of cleaning the ERP data, it sounds like that’s not the norm. What do you think has prevented manufacturers from getting clean data from their ERP?
Paul: We could start with– some of the issues come with change management, some of them come with having the right best-in-class processes for whatever that company is trying to do. In regards to specific things that cause that data not to be clean part of it is on these small medium-sized companies. They’re dealing with having a lean workforce, maybe a shortage of skilled labor. They’re doing a lot of work with maybe not as many people as they should have.
They have their day job, they’re making parts, they’re trying to ship, they’re trying to make sure they have that price delivery quality that their customers demand. Sometimes they just don’t have time or forget to put the right data in whether it’s just updating a date that the supplier gave them on a PO line. It could be that they had their bill of materials inside of a CADD system and then they had to reenter that manually into the ERP and they in fact figured part number and order the wrong part and that cause supply chain issue.
Not a supply chain issue, but a delivery issue, and then you also have human beings being human beings. None of us are perfect. We all do sometimes fat fingering into the system. That could be a case where that happens. Then last but not at least hits, something could go wrong or somebody thinks they’re on one order and they’re typing in something to another or something of that nature.
Something can always go wrong and people are being hectic. I think those are some of the reasons why and if without having which we could probably get into a little bit later, Josh, is why without having the other systems talk to each other, you’re putting a lot of impetus on human beings that are very busy entering data.
Josh: That’s such a critical component that your data may not be clean because at the end of the day, we’re humans. We have a lot on our mind. We have a lot that we’re being tasked with especially in this industry where there’s too much to do and not enough people to do it and that’s going to increase the likelihood for errors. A simple mistake like you said could end up costing 1,000s, maybe more which is a pretty big deal.
A source of tainted data for lack of a better word is potentially the human error, but it’s not the root cause. The root cause would be the fact that somebody has to take this administrative activity into their own hands and take some data point that they captured most likely on paper or maybe an Excel and then put it into a system record. Minimizing the input of data is something that I’ve worked with a lot of manufacturers on. What have you seen as the best way to automate the data capture and the data sharing that’s needed to reduce manual inputs into an ERP?
Paul: That’s a great question, Josh. Looking at some of the things that you’ve done with enabling the people on the shop floor to have that ability to– where they’re doing their job, look up data and enter data real-time instead of having to go back to a computer or remember something or put on a sticky note or a time card. That can be one of the big reasons of how to make sure you’re getting that cleaner data, or take away the need for putting in data at all. If you’re integrating to those machines, for example, some of the tools that we work with in the IoT tools not only can connect to the machines and tell you what your OEE is, and have you put down to time reasons in so you can continuously improve on that parade chart of downtime reasons. You can actually automate downtime reporting.
Nowadays they’re getting smart enough with machine learning and predictives that it can look at every time the spin will start slowing down like this or there’s a vibration or it’s this time of day. You can automate that downtime reason. If you even have to put it in or automate the job starting. You just set up this machine, you loaded it with this CNC program, I can read the header of that, see what part it’s for, and look at the ERP data as well, what job’s supposed to be next and automatically clock into the job so you’re not clocking and clocking out manually, and counting manually.
Then sometimes even setups, it doesn’t work everywhere, but we’ve seen where people that are doing the setups that can count that setup time automatically instead of trying to track that as well. Those are some of the things that get us really excited because it’s taking that data that’s in the hub of the ERP, marrying it up with these best-of-breed solutions, and negating that need to enter data.
The third thing I’ll mention, there’s a lot of things we could talk about, but the third thing is offloading that data entry to somebody else. That’s where those supplier collaboration comes in or customer collaboration on portals. You could have them do that work for you. You have an RFQ instead of calling up the vendor and typing in the lead times the price when they could get what quantity and lot sizes and, then call the next vendor. You could just put an RFQ into your ERP, have the portal automatically notify the supplier, they put the pricing in the lead time, et cetera, and you can make your decision that way without ever having to enter in RFQ data. The same thing happens in POs.
PO line data. You put a PO in the system, it shows up on that thing instead of having to call and put sticky notes out there, you have that ability to have the supplier put that data in for you and you’re not doing that. There’s a lot of other examples we talked about like that CAD one I mentioned. Integrating the CAD to the ERPs so you’re not having to reenter in the bomb in the CAD into the ERP system and worrying about those areas.
You really got me thinking, Paul, and I’m going to play back a little bit of how I interpreted it. It’s the more that you can get to this ideal state where as soon as the data point is generated, as soon as the data point is captured, it needs to be made available into the system of record with no intervention in between. Some of the ways in which those data points can be generated is, you mentioned the sensors attached to the machine, or the IoT, and dependent on machine connectivity how can you tap into the machine itself?
If that machine is generating and recording data, there will be some use for it some way somehow. Our goal should be how do we drive those connections? For example, you brought up with Parsable, you’re absolutely right.
There are some limitations in how you can capture or generate specific data points. One of those ways is the fact that us as people we are not connected to the digital world, and data points are details of the digital world.
To do that we rely on technology like our smartphones and tablets, or even wearable devices to be those points of data origination that can then be used for some of the things you talked about. Understanding what is the actual runtime of a particular task based off the different variables that are the human activity behind it. You got me thinking, and I know I’m rambling a little bit, but the other idea that you sparked in my mind when you started talking about the suppliers.
How instead of you as the manufacturer entering data from the supplier into your system, how can you streamline that process to where the supplier is providing that information? Maybe even taking that one step further and talking about something that’s a little bit controversial and hard to swallow for a lot of enterprise. Not even just enterprise, just any manufacturer to begin with, is sharing data with other companies because the supplier most likely has their own system of record that they’re using to do a lot of the similar things.
Is there a way to connect those two? As opposed to the supplier then entering something, as soon as that data point is originally generated, it’s then made available in all of the different places that it needs to be made available on. I know that was a bit of a long ramble, but that’s some of the topics that you got me thinking about Paul, that I hadn’t considered before.
Paul: We love that supplier example. It’s taken a lot of work off our customers’ hands. Having it pushed onto them so it becomes even more collaborative and that gives you more time to do other things. To improve your supplier performance and have more time to look for maybe vendors that have better price delivery or quality. Better supply chains absolutely.
Josh: We had another guest on his name was Hernan Saenz, and he talked with us about the importance of digital traceability and how that helps companies achieve their sustainability goals. When we start thinking about ESG environment, social governance, how can you make sure that all aspects of your operation or compliant with these goals that have been set out? If you’re working with another company that isn’t compliant, that’s a reflection on you as well.
His argument was the only way to really make that happen was to embrace this data-sharing approach. It’s capturing the data that’s needed in an automated way and making it available to all of the parties and all of the systems that need to have that data point so that you can monitor your goals. You can make sure you’re living up to the consumer’s expectations or even federal regulations in that case.
A lot of good stuff to think about. Okay. It’s been helpful to explore some of those common gaps. Now, when you talk to us about the background of ERP, you mentioned some of the big benefits that come just from implementing an ERP. When you think about solving for these gaps that you just took us through, what improvements could a manufacturer make by prioritizing these implementation gaps?
Paul: Interestingly enough we talked about that supplier portal. We’ve actually– because we’ve implemented 1400 customers and because of our background and our values of integrity and things of that nature and meaningful results as one of our core values is that we’ve actually set up an innovation center that I think I mentioned a little bit before, which is not having a billable person out on the road, which is what most companies like ours are doing is everybody’s a billable consultant or in sales.
We’ve taken some of our top technical minds and put them into that innovation center. Our customers don’t have to spend $60,000 to $80,000 funding these integrations of the ERP to the best-in-class products. We’ve already typically thought of the workflows that are required back and forth between the products. With that and with reducing the cost for our customers, they’ve been able to receive those benefits, which I think have been a little bit harder for the SMB to get to because of the cost in the past.
That’s one of our really passions and missions is to get it into the SMB so they can improve their business and realize those results you just asked about. Some of the things that we’ve seen are the PDQ that we mentioned upfront. Improvements on pricing, improvements on– because their rights pricing, they’re either increasing their market share or their volume in their revenue or they increasing their profit because of the delivery. We’ve had one customer that actually said they bought a core of that because of the improvements they were able to make around delivery performance because they were able to reduce lead times while at the same time increasing on time delivery at the same time cutting out overtime a hundred percent, which they never thought was possible. That’s just not software. That’s the process. That’s best practices and the software together.
Then we talked about the machine monitoring, so having that OEE data from specific machines, one of our customers that they were a screw machine shop mostly, they increased capacity on their shop floor so much that they could handle 2 million more dollars in revenue. They increased that capacity so much without buying another half million to a million-dollar machine, so that was a huge benefit. Then we talked about that supplier portal I’ll just give you an example of that. We had a big customer out of Canada who’s one of our early adopters of the supplier collaboration portal.
They were actually able to increase deliveries by 35% from their supplier’s on-time delivery which is huge for them during COVID and being able to collaborate more in the supply chain portals. They saved one to two hours a day per planner and procurement person by having that supplier collaboration portal. Those are real metrics from real customers and those are some of the impactful things that we really love here at Synergy, and I know you do too. That’s really fun to see those things.
Josh: Super impactful and I love that you called out the importance of the small to medium-size manufacturers because that makes up manufacturing. Yes, there’s major players but most manufacturing is done at the small to medium size. Well, look, we’ve explored the past and the common present of ERPs, but this wouldn’t be a comprehensive exploration of ERP without looking at the future in manufacturing.
Discussions of the future often invoke images of a smart factory. You mentioned it before digital transformation.
There’s concepts like digital twin technology, connected worker, robots, cobots and so much more. Paul, I’d love for you to talk to us about the future of ERP. I know we covered a little bit of this but let’s dig into how integrated technology can help with digital transformation initiatives.
Paul: There’s a lot of technology out there that people can take advantage of. It really depends on again, where our customers are when we start working with them or where we are already working with them in your customers or anybody on this journey. Getting that foundation in place is really important. Then being able to do continuous improvement and in the future that might mean looking at some of these newer ERP platforms that have low code application platforms so you can do low code, no code change to the software without it affecting upgrades and things of that nature.
Automated workflows, robotic process, automation, and the list goes on chatbots, AI, ML. All these new things are being enabled by these new technologies, these best-agreed solutions as well as the newer ERPs that are built on that platform that LCAP low-code application platform. We see that as being very important for those innovations that are going to be happening in the future. As we talked about you mentioned as the SMD market, it’s been slow adoption and I think that’s been a lot of reasons. We talk about cost as being one of them. Some of these tools like the IoT tools 10 years ago, that was really the fortune 500 companies that were able to afford that, get installed get, that working.
Nowadays we see that for 9 out of 10 of our new customers want IoT and are going to implement that with the ERP. The combination of that cost lean workforces, which we talked about struggling for skilled labor and the supply chain struggles have really not allowed these companies to focus sometimes on that future being able to use all these technologies to really improve their business. That’s where I think consulting companies and companies that focus on specific manufacturing industries. That know the best in class processes and also know the ERP that will right fit into that as well as the best in class.
Not just tell them that the supplier portal’s going to work out of the software out of the box because it might not. You might be the best in class solutions. You really get where you’re going, and then can help with that change management and has a way to help those companies with saying, “Hey, you’re busy. You’re got that lean workforce. You only have a certain amount of time, you’re making parts, you have your day job, what can you do today with these new technologies, and then what you can do for continuous improvement.”
I think you asked, I might have been rambling there a little bit and gone off a little bit there Josh, but I think you asked about how people are going to use these new technologies in the future. What we see is you might not use all of them day one, it might be more of a let’s look at where you are today and then let’s see what’s going to give the most value like that Eisenhower Matrix, highly valuable, urgent, work on those things first.
Get that foundation set, get the couple of quick wins, and then we use that what we call a prescriptive execution model of best practices, best process for your industry. The right ERP, the right ecosystem products and technologies, change management, and that continuous improvement methodology to make sure that we’re able to take advantage of some of these technologies.
Josh: Look, have no concerns about rambling. I don’t feel like you rambled, but I’m also a rambling man myself so I can certainly empathize with that. If I were to play back what I heard and how I would summarize what you said. The theme that really comes to my mind is the future of ERP being accessibility, making it more accessible. That’s through reduction in cost as the technology becomes more prevalent, the low code, no code nature. That’s one way of increasing the accessibility of such a solution.
Then you said, this focus on partnership and tapping into expertise that all comes together to make it a more accessible experience. That’s how I took it and I think you’re spot on. Now, I’ve got another question for you. When you think about ERPs in the future of ERPs, will it be the situation where there’s the ERP is the one system to rule them all, or do you think it’s going to be more of an ecosystem approach?
Paul: That’s a great question. What this industry’s been– you look at all these different ERP companies out there and some say ecosystem approach and some say we want to be everything to everyone. I think it’s a little bit of both. I think depending on where you are in your journey and what your needs are, there are certainly some ERPs that can meet a lot of the needs that people have. Especially with some of the extensibility and new technologies that are there where you could use automated workflows set up, what if this then that automatically happens.
For example, I just set out a job and it automatically alerts somebody to go pick the material bring it to you that thing. Maybe that’s not out of the box with the ERP, but you could build that in with the tools, that alert.
I think that’s there but we talked about earlier with salesforce.com you don’t see these ERPs competing with salesforce.com and then there’s certain people that do things like the digital frontline possible does that might do it better than other ones.
You have the source days of the world that do the supplier collaboration portal so well and they even onboard the suppliers so that’s not a risk. ERP companies, I don’t think can handle doing all the be everything to everybody on those best things that we just talked about. I think the ERPs will really focus on, what we’ll see going forward is the foundational things, quoting, estimating sales, taking sales orders in the inventory planning, and things of that nature and the financials we talked about earlier.
When it gets into E-commerce, they’re going to have to rely on companies like Shopify for example. They’re going to have to rely on those best of resolutions when they have the needs and they are at a place in their journey as a company where those best-of-breed solutions will help them. I see it as both, to be honest. I think that some companies that could live on just the ERP and what the ERP vendor offers but the beautiful thing that I think is the extensibility in the ERPs today allow them to have the best-of-breed solutions connect much more cost-effective and easily than it used to.
Josh: The saying that comes to my mind based on what you just shared is, jack of all trades, master of none. You can find those ERP systems that try to do a little bit of everything but maybe it’s barely getting to a passing grade and some examples you provided it’s not getting to a passing grade. The key call out that you made is, you may not need to do all these other things. What is that core thing that you need to do? A single ERP system might be exactly what you need, whereas, the more complex your business is, the bigger the growth, the higher velocity of the product, and the demands that are on your business in your workforce.
You may be looking at a need to really embrace an ecosystem approach in which the solutions that you choose have to be specialized for that particular problem that they’re trying to solve, but continue to work together and share that data seamlessly so that there’s no really extra processing that has to happen of a single data point because it’s captured in one system but can’t be sent to another system so somebody else has to take it and process it is a nightmare.
That’s how I would summarize some of what I heard from you and it’s very much in line with what we’ve heard from other interviews with people on the topic of digital transformation. How there’s not going to be one tool that rules them all. You have to embrace this ecosystem approach to hit all of the different opportunities to take care of all the inefficiencies that are really prevalent throughout your operation.
This is separate from some of the topics that we’ve discussed. It’s still on ERP. One of the common stereotypes of an ERP implementation is the amount of time it takes to implement an ERP. I’d love to hear, especially since you’ve got so much experience implementing ERPs, what’s a record amount of time you’ve seen with an ERP implementation?
Paul: [chuckles] That’s a good question. I’m not saying this is the right way to go, but we had one company that was publicly traded and they had a mandate, they had to be live in eight weeks. We got them live in eight weeks. Now did they use everything? No, but they used all their AR sales cycle, their purchasing cycle, their bills of material inventory, and finance. We did get one company live in eight weeks. That’s not the norm, that was a lot of work. They were more of a start-up public company so they didn’t have a lot of the data. They didn’t have any data migration needs, things of that nature. That’s really uncommon, very far on the outside of what the norm is [chuckles].
Josh: I’m shocked to hear that, eight weeks. I was honestly expecting you to at least give me six months but eight weeks. Wow. That’s a good point. The complexity wasn’t as complex as you typically see. What would you say is an average implementation timeframe?
Paul: Yes, the average is more four to seven months. It really depends again, on the size of company, number of employees, number of sites, how similar the processes are between those sites. You could go from anywhere from four months on an average for some of our customers and some of the products that we implement up to a little bit over 12 months, but the average is usually about four to seven months.
Josh: Even that is honestly shorter than I was expecting you to say from an average timeframe because I just hear these nightmare stories of like, “Look, we’re three years into an ERP implementation, we’re five years into it.” It speaks to the importance of finding someone who can help you understand what’s the best selection for you and the best way to get that rolled out. I’m going to put you on the spot here. Do you have a favorite ERP? If so, which one is it and why?
Paul: Yes, so I tipped my hat I think on that earlier in the conversation saying that we are in for an Acumatica house. I’ve been in the ERP space since 99 as we talked about. I’ve had almost every role you can imagine from tech support to database administration and migrations and report writing, as well as being an operation consultant. You’ve mentioned master of some, jack of all trades, master of none. I think the none is some of those areas I’m certainly a none on and some of them with some on but I’ve had enough knowledge on the ERP world. We’ve actually gone out and for our customers, looked at– I think I’ve evaluated 20 ERPs myself, so I know how hard it is for companies looking at ERPs.
We picked for deep manufacturing engineer to order and MTO with really complex requirements, ATO or mixed mode with make-to-stock, those are the Infor products. Then for companies that have light manufacturing or they have distribution and construction, so for example, a precast concrete house that will manufacture the precast but then they’ll actually do construction out in the field. Acumatica does both those things really well, where a lot of other ERP systems that are focused on manufacturing won’t have construction.
It really depends again, on your needs and there’s a lot of good ERP systems out there and there’s some bad ones. I think the biggest thing– those are my favorite ERPs but that’s obviously bias [chuckles]. The biggest thing I feel is that the partner is probably as important and sometimes, depending on the company, if you haven’t had a lot of ERP experience, probably more important than the software you choose in some cases.
That change management aspect and helping with that and aligning those businesses processes to the business goals and making sure the company is matching towards that single direction. Like you said, we’re doing implementations in a shorter period because we focus more on the small-medium size. When we do implementations for a $200 million company, it is over a year long, especially if they have multiple sites.
When we’re working on companies that are under 100 million, we try to get it so they have their day jobs and we didn’t want them to forget what they learned seven months ago by the time they go live. You want to condense that implementation a bit and we have a good process around that because of the best practice playbook. Those are my favorite ERPs because we have that best-practice playbook around those [chuckles].
Josh: Well, I appreciate you sharing. It’s always great to hear from an expert on what they see as being best in class because like we talked about before, I certainly don’t have that experience. The normal person does not have that expertise. Being able to tap in and leverage your perspective is essential. I feel like I’ve learned a lot in this conversation. I genuinely mean that Paul. I’d love for you to tell us how our listeners can continue the conversation with you.
Paul: Sure. Great. Yes, so if you’re growing in your current systems, maybe you’re struggling with you’re thinking yourself as I don’t have a platform for growth, feel free to visit our website. It’s synergyresources.net and Synergy Resources is plural. That’d be the best way and then you can always contact me email@example.com on LinkedIn and I’d be glad to either talk to people that are already going through an evaluation and help them out and not try to sway them to my favorite ERPs.
Certainly, because I know how hard it is and I love helping manufacturing. Like you said in the beginning, small, medium-sized manufacturing is the heartbeat of our economy, without that there’s really no service economy and just great people that we meet in manufacturing. I love helping them out. Honestly, if anybody wants to reach out on LinkedIn or phone call, email, feel free. Thanks, bro. Thanks for mentioning that, Josh.
Josh: Absolutely Paul. Thank you so much for joining us today.
Paul: Thank you for having me. I really appreciate it. You do a great job at this summarizing what I said in my rambling so I appreciate your help there.
Josh: Look, you’re the one that’s dropping all the knowledge so this is all coming from you. Again, really appreciate it, Paul. Thank you.Listen to find out if you're getting the most out of your ERP!