In December 2010 SYSPRO USA introduced its “Einstein” strategy, a clever association with the genius of the world’s most reknowned theoretical physicist. The goal of this strategy was simply to make Enterprise Resource Planning (ERP) for the small to mid-size manufacturer smarter by listening carefully to its customers, perfecting its implementation methodology, focusing resources on education, technology and functionality in order for SYSPRO users to maximize business benefits. Albert Einstein is best known for developing his theorey of relativity (E=MC2). In keeping with its theme of “Simply Smarter” ERP, SYSPRO continues to deliver on its strategy by introducing its own theory of ERP relativity: S=MC2.
S=MC2: Relativity Theory Explained
Einstein’s theory of relativity is based on the concept of mass-energy equivalence, recognizing that the mass of a body is a measure of its energy content. In Einstein’s famous equation E=MC2, E is energy, M is mass and C is the speed of light in a vacuum. In the equivalent equation for the theory of ERP relativity, M stands for material, and C2 is cost and cash management. S, of course, stands for SYSPRO. Apart from sharing a common equation however, that is where the similarity ends.
To fully grasp the concept of Einstein’s theory of relativity requires a thorough grasp of physics. The phrase, “You don’t need to be a rocket scientist” does not apply. Indeed you do need to be some sort of scientist to fully understand the meaning and implications of the theory. Not many business executives have the need or desire to understand the relationship between mass, energy and the speed of light. Conversely, every line of business or Information Technology (IT) professional in a manufacturing company needs to know the relationship between material management, cost savings and cash management. And unlike Einstein’s theory of relativity, SYSPRO’s theory of ERP relativity is quite simple. The value of SYSPRO ERP is derived largely from better material management, cost control and cash management.
Einstein’s theory is also based on the laws of conservation of matter that says neither mass nor energy may be created or destroyed, but only moved from one location to another. SYSPRO’s theory of ERP relativity implies just the opposite. Cost savings can indeed be both created and destroyed. True, in the universe of all fiscal entities (companies and banks included), the law of conservation might apply to cash. But better management of materials and cash is truly additive in creating value.
Expanded Materials and Inventory Management
All manufacturers must play a balancing act when it comes to materials management. The goal is to reduce inventory to minimum levels without negatively impacting customer service. This is rarely easy. Having enough inventory available is only half of the equation. Having enough of the right inventory, just in time, is the goal. That means you need visibility into what you have, what you are planning to have (either through making it or buying it) and what you need.
Expanded Cost Controls
Globalization, outsourcing and the volatility of energy costs all play a significant role in presenting new challenges. Visibility in real time has become table stakes for operating globally and yet many companies today suffer from blind spots because of lack of access or timing.
While vigilance and visibility are paramount, it is also necessary today to exert control while nobody is looking. Key Performance Indicators (KPIs) need to be established and tied to operational controls. Business rules must be defined in order to raise visibility when certain conditions either occur or fail to occur. ERP is often cost justified by anticipating a Return on Investment, but all too often those cost savings are not monitored and measured post-implementation. Not measuring cost savings typically results in money being left on the table.
Expanded Cash Management
The “other” C in S=MC2 stands for cash management. The age-old phrase “cash is king” has never been more relevant than it has been since the credit crisis in 2008. At the lowest point of the economic downturn, the only companies that could get credit were those that didn’t need it, making the ability to forecast and manage cash even more important. While we are seeing positive signs of recovery, small to mid-size businesses (SMBs) need to continue to keep a tight rein on cash and credit.
To read my full report, click here: