Most manufacturing companies are crippled big time without an effective ERP system. Businesses that manufacture products that will later reach its consumers through a chain of retail distribution networks need to efficiently track large amounts of complex data.
The Operation Managers need to monitor shop floor activity to ensure production is trouble free. The inventory needs to be monitored to maintain appropriate stock levels. However this depends on the consumer consumption trends. This bit of information trickles down from the sales department based on which, someone decides how much stock remain on the shelves at any given point in time. But again, the inventory team is dependent on the production team to ensure they produce enough to maintain stock levels. This calls for strict monitoring of the supply chain to ensure minimal to nil interruption in the manufacturing process. Any lack of sufficient raw materials will bring the manufacturing process to a grinding halt, which is totally unacceptable.
But sales is never consistent. There could be spikes of larger demand on one end of the spectrum whilst very minimal demand in the other end of the spectrum. The larger demand could mean an increase in production and increase in stock levels, where as a dip in demand could mean ease up on the production. Either of these cases potentially has a huge impact on cash flow.
Without a healthy cash flow, all of the above will cease very quickly. It’s only a matter of time before the business runs into major debts or at worse even close down.
Whilst the entire team is doing their part mostly oblivious to the reasons and just working hard to make a living, there sits a team of top level executives watching the whole show from an eagle’s perspective. Their job,…
- Carry the pressure
- Ensure a healthy cash flow
- Understand customer spending trends and forecast demands
- Anticipate stock levels needed to cater to potential demands
- Ensure raw material supply doesn’t exceed requirement, thereby blocking cash
- Determine whether they can fulfil an order prior to acceptance
There are many more intricate details of a business that are not covered here, but you get the gist of it. Every area of a business is inter-dependent.
Now, one can sift through a myriad of excel spreadsheets and try to understand the “eagle’s perspective” of the business, and then make a “gut-feel” decision. Alternatively, one can make a well informed intelligent decision smartly.
This is why most large corporations have invested in Business Intelligence tools. A good BI and CPM tool extracts all business process information from the underlying ERP system and presents it to the management in an easy to read dashboard format, which enables them to make some critical decisions based on real evidence and intelligently.
Can you imagine how much more you could do with your skills if you spent a lot less time sifting through spreadsheets? What if you could get business critical information in seconds as opposed to hours? How would you utilise the extra time?
Consider an individual who looks healthy on the outside but is really sick on the inside. It’s impossible or at the least extremely hard to determine the cause of the sickness by merely looking at the symptoms. The doctor most times isn’t taking chances and making decisions on “gut-feel”. Instead the doctor relies on technology like Xray’s and MRI’s and blood tests. The doctor is now able to hold up the Xray, pin-point the cause of the problem and take a well-informed intelligent decision on the appropriate treatment.
So also a BI & CPM tool is an Xray of your business, allowing you to pin-point areas which need special attention and help you make well-informed evidence based intelligent strategic decisions.
Santosh Chandran is the Business Development Manager for BOARD Management Intelligence at Olympic Software. He regularly blogs about business intelligence and corporate performance management. You can follow him on Twitter or on LinkedIn. Please contact him directly if you would like to find out how BOARD can improve your business results through better decision making, phone 09 980 3964 or email: firstname.lastname@example.org