As an independent ERP consulting firm, we’re pleased to share the successes our clients achieve when driving business process improvement.
A good example of a recent success story, showcasing how technology upgrades drive improvements, comes from Ultra’s engagement with a large specialty steel service center which operates out of several US-based facilities.
The company was looking to improve its operations to gain efficiency and to streamline business processes. Management knew that its outdated legacy software coupled with manual processes and workarounds were hindering their operations and their bottom line.
Moreover, the company has been transitioning from a distributor-centric business to a hybrid model where the distribution operation must co-exist with a manufacture-to-order fulfillment model.
Numerous gaps existed in their legacy processes which had to be overcome to support the company’s value proposition going forward.
Company leadership understood that it was key to team with an independent resource to lead the project. They partnered with Ultra due to our deep and significant industry expertise with business process best practices and enterprise software knowledge.
Ultra proposed improvements in enterprise technology and business processes to deliver:
Select and implement new ERP software that delivers true ROI
Boost business performance
Organizations like the company outlined here have teamed with Ultra Consultants to reduce implementation time, mitigate risk, improve team efficiency and uncover opportunities to maximize the value of your project.
In hundreds of projects like this one, gain value by teaming with an independent consulting firm – an objective partner in business process improvement and ERP selection.
It’s hard to believe we are at the 2019 mid-year mark.
This time of the year, many manufacturing and distribution teams look at business processes and internal systems. Driving a digital transformation is often the goal. This is especially relevant for those organization’s whose fiscal year begins at the mid-calendar year.
Digital Transformation has been described as an investment in technology, business models and processes to drive value for customers and employees and more effectively compete in an ever-changing digital economy.
The mid-year point is a good time to take stock and consider whether it’s the time to align investment in enterprise technology to realize value through enhanced business performance.
ERP and Digital Transformation
The Ultra ERP consultant team is often called to offer independent guidance to our clients, so they can work to drive a digital transformation.
It’s our perspective that a key element of “digital transformation” in the manufacturing and distribution sector is the effective use of enterprise technology to fully streamline business processes.
View a highlight of an educational webinar that looks closer at the topic of a digital transformation.
Why consider a digital transformation? - YouTube
Webinar Highlight: “Why Consider a Digital Transformation”
Thinking about a mid-year digital transformation?
Ultra leads organizations through a proven approach that defines the step-by-step activities necessary to maximize business potential and fully realize the benefits of technology investments.
Please contact Ultra to learn more about leveraging investments in technologies to drive value.
By allocating the right resources, an organization is well on its way to continuous transformational change.
As an ERP consulting firm, we often guide teams to work through enterprise system selection to improve key processes related to gaining visibility into the enterprise.
A common theme running is a desire these organizations have for improved visibility and transparency of information.
The role of an ERP consultant adds clarity in helping the ERP project team understand the types of data that should be tracked, the reporting format that is most useful, and the importance of integrated data visibility.
View highlights from the educational webinar “Improve Decision Making with Actionable Intelligence.” Ultra’s Director of the Center of Excellence, Andrew Bolivar, explains why data visibility is critical.
Today’s modern ERP systems capture, store, and trend a range of information such as quality, production, shipping, financial, supply chain activity and more.
Yet even today, many organizations use a variety of manual methods, standalone spreadsheets and other patchwork systems to track data, and are in a poor position to react to change, optimize business processes such as production planning, or to improve relationships with customers and supply chain partners.
This is where “data visualization” comes into play – making key data actionable by visually aggregating numerous data points into displays that use colors, gauges, graphs, and other visual representations to display trends, averages, unusual results, compliance with goals or expectations, and other “actionable” information for managers and executives.
No matter the sector – food processors, industrial equipment, metal fabricators, distributors or others – the teams we talk to are hungry for real-time visibility into their entire operation to clearly see bottlenecks, adjust and improve productivity.
With access to more timely and accurate information, the assumption is that manufacturers use that data to take the needed action to improve business processes.
A focus on business process improvement is the foundation for successful implementation of an ERP system that improves data visibility.
See additional resources for ERP education to get deeper insight.
Looking to transform your enterprise through effective use of information systems? Contact Ultra for the best way to get started.
As an independent ERP consulting firm, we guide project teams looking to work through enterprise system selection to improve key processes related to inventory management.
We understand that current economic data and events impact the economy, with a special focus on the U.S. Manufacturing and Distribution Industry.
This blog post aggregates key financial information, and provides a perspective to the manufacturing and distribution markets we serve.
Here is Ultra’s monthly wrap up of recent economic data and events that have major sway over the economy, with a special focus on the U.S. Manufacturing and Distribution Industry.
To achieve the 2030 Agenda for Sustainable Development, the international community must embark on a path of collective efforts, including providing support to many developing countries to increase investment in numerous fields. Both upgrading and diversifying productive capacities and advancing communication, energy and transportation infrastructure remain priorities. Several countries, especially among the Least Developed Countries (LDCs), remain heavily reliant on international assistance to advance these efforts. In order to channel the financing needed to close existing investment gaps, concrete actions are needed at the global level.
Estimates of the total annual financing needs to reach the Sustainable Development Goals (SDGs) target range between $4.6 trillion and $7.9 trillion at the global level. The total annual investment gap in key sustainable development sectors is estimated at $2.5 trillion by United Nations Conference on Trade and Development (UNCTAD) and many States must double their current infrastructure investment levels. Given the fragility of investment in many developing economies, meeting these daunting targets requires stable and steady flows of investment finance.
Investment growth slowed sharply in many developing countries in 2014–2015, especially in low-income countries. This deterioration is partially explained by the commodity price cycle, exacerbated by the escalation of conflict in Yemen, the Ebola crisis, and other security issues and political instabilities. Since 2016, some positive trends have been observed, especially in East and South Asia, which also have large populations of people living below the poverty line.
However, investment levels in many developing countries, notably in Africa, remain insufficient to make rapid progress towards the 2030 Agenda. The eventual winding down of the period of ultra-cheap global liquidity is raising additional concerns, in particular in countries where corporate debt levels are elevated and where corporate borrowing has not been matched by investment into productive assets, as funds were channeled instead into financial assets or real estate.
Private businesses, facing a range of short-term options, hesitate to commit funds to long-term investment projects, while households often focus on their immediate needs. Private capital flows, which provide the largest share of cross-border finance, declined sharply in 2015–2018. Foreign Direct Investment (FDI) flows to developing countries which have been weakening since 2015, contracted by 30 percent by 2017 and fell further to $1.2 trillion in 2018 – the level seen immediately after the global financial crisis.
Official Development Assistance (ODA) flows to low-income countries and LDCs should play an important role in these efforts. ODA flows account for more than two-thirds of external finance for the LDCs. Globally, just over 11 percent of total bilateral ODA is directed towards investment projects. The ODA inflow ratio (excluding humanitarian aid and program assistance) to gross fixed capital formation in selected low-income countries exceeds 20 percent in at least 15 countries, highlighting the importance of ODA as a source of financing to help close investment gaps.
In 2018, ODA provided by members of the Organization for Economic Cooperation and Development (OECD) and the Development Assistance Committee (DAC) amounted to $149.3 billion, representing a decline of 2.7 percent in real terms over 2017. To compare, the volume of global remittances sent by migrant workers was about three times larger. Only five of the DAC members met or exceeded the 0.7 percent of Gross National Income (GNI) target.
Since 2010, the concessionality of bilateral ODA has also declined, as reliance on concessional loans increased at the expense of grants. In 2016–2017, loans made up 15.2 percent of ODA, compared to 12.4 percent in 2010–2012. Over 60 percent of ODA finance provided for economic infrastructure and services is in the form of concessional loans, mostly in the transport and energy sectors. While this expands available financing, it also increases the risk of currency mismatches for loans in foreign currency and may contribute to a further build-up of external debt in developing countries.
The absorption capacity of the ODA-receiving countries should also increase. Channeling ODA flows to productive investment will require a complex system of interactions between public and private stakeholders to develop and deepen domestic financial systems and mobilize domestic finance. The quality of domestic institutions is crucial for the efficient absorption of resources. 1
Global Manufacturing Activity
The performance of the global manufacturing sector continued to weaken at the end of the second quarter. Production fell for the first time since October 2012, as new order contracted at the fastest pace in almost seven years. Business optimism slumped to a series-record low.
At 49.4 in June, the J.P.Morgan Global Manufacturing Purchasing Manager Index (PMI) – a composite index produced by J.P.Morgan and IHS Markit – fell to its lowest level for over six-and-a-half years and posted back-to-back sub-50.0 readings for the first time since the second half of 2012.
Of the 30 nations for which a June PMI reading was available, the majority (18) signaled contraction. China, Japan, Germany, the UK, Taiwan, South Korea, Italy and Russia were among those countries experiencing downturns. The US, India, Brazil and Australia were some of the larger industrial nations to register an expansion.
Sub-sector data indicated that operating conditions deteriorated again in the intermediate and investment goods industries. The consumer goods category fared better in comparison, despite seeing growth ease to a three-year low.
The trend in international trade flows continued to weaken at the end of the second quarter. June saw new export business decline for the tenth straight month and at the joint-fastest pace for six years. Among the largest industrial economies covered, declines were registered in the euro area, China and Japan. Increases were seen in the US and India.
June data signaled a mild decrease in global manufacturing employment for the second month running. Reduced workloads and ample available capacity (emphasized by a further solid drop in backlogs of work) were the prime factors underlying the latest round of job cuts.
Inflationary pressures remained contained in June. Rates of increase in input costs and output charges both ticked lower and remained below their respective long-run averages. Average vendor lead times (a bellwether of supply-chain price pressures) also improved for the first time in six years as purchasing activity among manufacturers fell for the fifth straight month. 2
“Global Manufacturing PMI fell to its lowest level since October 2012; June saw new export business decline for the tenth straight month; June data signaled a mild decrease in global manufacturing employment for the second month running”
Cloudy Outlook in North America
The U.S. economy is in an odd place. Jobs are plentiful and the stock market is at record levels, but business leaders are worried enough about the future to pull back on spending. President Trump calls this the “greatest economy” ever, yet he’s also demanding the U.S. central bank inject more stimulus into the economy ASAP, something that typically happens only when a lot of yellow and red flags appear.
The overwhelming consensus among experts is that the U.S. economy is slowing after a pretty hot 2018. But there is heated debate over how fast it is cooling. Some argue that by the end of 2019, the U.S. economy is likely to look and feel a lot as it did in 2016: decent but not great. Others say the nation is likely to slip into a moderate downturn akin to those in 1990 or 2001.
The Washington Post asked top economic forecasters what metrics they are watching closely right now. Many pointed to seven key indicators that have done a decent job signaling recessions in the past: manufacturing purchases (PMI), trucking volumes, heavy truck sales, business capital spending, temporary hires, bank lending conditions (i.e., how easy it is to get a loan) and new claims for unemployment benefits.
The data reveal a cloudy outlook but only a few signs of a nasty storm. Manufacturing is the biggest red flag, a sector that makes up about 12 percent of the economy. Trucking shipments and business spending are flashing some yellow lights, a reflection that have executives on edge. But hiring and banking lending still look solid – or even strong.
“The message you hear from Fed Chair Jerome H. Powell and about everyone else is, ‘we are waiting for the trend to become clear,’” said Peter Atwater, president of Financial Insyghts. “The danger is everyone plays catch up at once” if the trend starts to point down.
The big risk is if corporate anxiety over the trade war, weak growth abroad and the slowing manufacturing sector causes businesses to halt hiring in the United States in coming months, a shift that would probably spook Main Street and cause the almighty American consumer to pull back on spending. But a lot remains unclear. Here is a rundown of the key metrics.
Manufacturing (red flag) — There has been a sharp deceleration in manufacturing in 2019. Hiring has flatlined after having one of its best years in 2018 since the late 1990s. Output is slowing, and, especially alarming, manufacturing sentiment has tumbled to levels that almost signal a recession.
Many economists closely watch the Purchasing Managers’ Index (See Figure 1), a survey of industry leaders by IHS Markit. When PMI is above 50 the economy is usually expanding. When it falls below 50, the economy is typically contracting. In June, the index fell to 50.1, the worst reading since 2009. The question is whether this weakness will spill over into other sectors or set up a situation similar to that in 2015, when manufacturing contracted but the services sector (technology, finance, hospitality, health care, etc.) remained solid.
Trucking (yellow to red flag) — Nearly every good sold in the United States touches a truck at some point, which is why trucking shipment data can be revealing. After a stellar 2018, shipments have plunged during the past six months, according to the Cass Freight Index.
“Bottom line, more and more data is indicating that this is the beginning of an economic contraction. If a contraction occurs, then the Cass Shipments Index will have been one of the first early indicators once again,” said Donald Broughton, founder of Broughton Capital and the lead analyst for the Cass Freight Index.
But many truckers note that it would be tough to continue last year’s levels, so it’s hard to know how much to read into the annual decline. In 2018, companies were enjoying big tax cuts that spurred some extra purchases and trying to move goods before President Trump’s tariffs took effect.
Heavy truck sales (green light) — While trucking shipments look gloomy, another way to gauge the health of the trucking industry (and overall economy) is to look at sales of the big 18-wheeler trucks. That data looks a lot better, a seeming indication that the industry is still in a good enough place for companies to want to invest for the future.
“So far, the data I am looking at does not suggest the economy is slowing,” said Brian Wesbury, chief economist at First Trust Portfolios, who likes to watch large truck sales and initial jobless claims.
But Boris Strbac, owner of Star Trucking in Milwaukee, says a lot of trucking company owners wanted to buy trucks at the end of last year and couldn’t get them until this year because of heavy demand. He expects sales to drop off.
Jobless claims (green light) — Hiring has been one of the strongest parts of the economy since 2014. Economists closely watch how many Americans file for unemployment insurance, because that data comes out weekly and is often the first indication of trouble.
New jobless claims remain low, but there has been a slight uptick recently at the end of June 2019, reaching a seven-week high. Still, most economists say unemployment claims need to reach at least 250,000 a week before there’s concern (the latest data out June 27, 2019 showed 227,000 new claims for the previous week).
Temporary hires (green light) — Another way to gauge how eager companies are to hire people is to look at how many temporary employees they bring on. These workers are usually the first to go if there is any sign of a slowdown, since they are easy to let go and have few ties to the company or management.
The Labor Department measures temporary hires monthly. So far in 2019, temporary hiring has slowed, compared with last year’s, but it has yet to turn negative. Temp hiring appears to be consistent with the idea that the economy is slowing gradually this year but not nose-diving.
Business spending (yellow flag) — Business leaders are nervous, according to most metrics of sentiment in the corporate sector. But the question is how is that translating into decision-making? This year evidence is growing that companies are pulling back on investment spending.
Business typically taper their capital spending when they are less certain about the future, making it a closely watched economic gauge. Like temporary hires, business spending has yet to turn negative but it is showing a clear slowing path.
Bank lending (green light) — While many watch the daily gyrations of the stock market, a better gauge of how Wall Street and the broader economy are interacting is what is happening with bank loans. Economists pay close attention to whether banks are tightening lending standards, a sign of growing concern, or easing them.
Lately, banks have been easing lending standards, an indication that most banks do not think a big downturn is imminent.
Matthew Luzzetti, chief U.S. economist at Deutsche Bank, says all of these mixed signs about the economy lead him to predict “a decline in domestic growth momentum in the second half of the year,” but he is careful not to say “recession.”5
North American Manufacturing
Moderate gains were widespread among the major market groups in May 2019. The production of consumer goods rose 0.5 percent. An increase of 2.0 percent for consumer durables resulted from gains for all of its components but primarily reflected higher output of automotive products. The output of consumer nondurables edged up; an increase for consumer energy products was mostly offset by a decrease for non-energy nondurables.
The indexes for business equipment and for defense and space equipment both increased modestly. The improvement for business equipment came despite a drop for transit equipment that resulted from a decrease in the output of commercial aircraft. The indexes for construction supplies, business supplies, and materials all moved up. The gain of 0.3 percent for materials was driven by increases for nondurable and energy materials.
Manufacturing output increased 0.2 percent in May 2019 after having decreased about 0.4 percent per month, on average, in the first four months of the year. In May, the production of durable goods rose 0.3 percent, while the output of nondurable goods edged up 0.1 percent. Among durables, gains of more than 1 percent were posted by wood products, machinery, electrical equipment, appliances, and components, and motor vehicles and parts. These increases were partially offset by decreases in primary metals and in aerospace and miscellaneous transportation equipment.
Among nondurables, the only gain greater than 1 percent was recorded by plastics and rubber products, and the only decline greater than 1 percent was recorded by apparel and leather products. The index for other manufacturing (publishing and logging) decreased 0.9 percent last month; it has fallen 6.5 percent during the past 12 months.
The output of utilities increased 2.1 percent in May, with identically sized gains in the indexes for both natural gas and electric utilities. Mining output inched up 0.1 percent in May and was 10.0 percent above its level of a year earlier. The increase in the mining index for May reflected gains in oil and natural gas extraction that were mostly offset by a large decline for oil and gas well drilling.
Capacity utilization for manufacturing moved up 0.1 percentage point in May to 75.7 percent, a rate that is 2.6 percentage points below its long-run average. The utilization rates for durable and nondurable manufacturing were little changed, while the rate for other manufacturing (publishing and logging) slipped 0.4 percentage point. Capacity utilization for mining dipped to 91.3 percent but remained well above its long-run average of 87.1 percent. The operating rate for utilities jumped to 77.5 percent; even so, it was still about 8 percentage points below its long-run average. 7
“Output of utilities increased 2.1% in May”
U.S. – EU Trade Talks
The U.S. widened its threat to impose tariffs against the European Union, pending the outcome of a World Trade Organization (WTO) case over the EU’s subsidies of the airplane manufacturer Airbus SE.
The Office of the U.S. Trade Representative (USTR) said that as part of a long-running dispute over aircraft subsidies, it would consider tariffs on an additional 89 items with an annual trade value of $4 billion, including cheese, pasta, and Scottish and Irish whiskies as well as chemicals and metals. In April 2019, the U.S. began the process of imposing tariffs against the EU pending the resolution of a WTO case that found the aircraft manufacturer has received unfair governmental support. The EU has proposed tariffs against the U.S. over a companion case regarding U.S. subsidies of Boeing Co.
The announcement expands the USTR’s earlier threat, and now leaves items with a trade value of about $21 billion a year under consideration for tariffs, according to the statement. The Trump administration has largely sought to portray these tariffs as separate from their other trade efforts, saying that these tariffs are part of a distinct dispute over aviation subsidies, and not part of the overall effort to apply pressure to the EU to negotiate a broad trade deal.
Airbus responded, “this only adds to the trade tensions but in reality does not change anything.” The level of retaliation is set by the WTO, the European plane maker said, adding the U.S. move made negotiating a solution harder and could result in a “lose-lose situation” for industries on both sides.
The European Commission’s president, Jean-Claude Juncker, and President Trump agreed to negotiate a trade pact last summer, but the two sides have made little progress in their negotiations. Even if the Airbus-Boeing spat is largely separate from other trade issues, the threat of tariffs hasn’t been conducive to progress in those talks.
The issue between the aircraft companies, however, predates President Trump by over a decade. The EU and U.S. have been tangling before the WTO for about 15 years over dueling claims that manufacturers are unfairly subsidized. The WTO has found that both sides unfairly subsidize their aircraft and may make a decision later this year that would allow the U.S. and EU to impose tariffs as countermeasures to these unfair subsidies. The WTO will also rule on the extent of harm caused by the subsidies, which would determine the size of tariffs that would be permissible in response.
These tariffs differ from most others pursued by the Trump administration because they would be imposed in response to an official WTO ruling, rather than unilaterally initiated by Washington. The tariffs in place against China, for example, stemmed from a U.S.-initiated investigation into China’s intellectual-property practices, which provided legal justification for the administration to impose tariffs, so far, against roughly $250 billion in imports. The U.S. tariffs against global steel and aluminum imports were initiated by Washington with the official justification that steel and aluminum imports threatened U.S. national security.
While some of the administration’s tariffs have had few supporters, the WTO case against Airbus has been supported by Boeing. When the tariffs were first announced in April, the aircraft manufacturer said it supported the USTR’s efforts to “level the playing field.” Experts on the WTO’s litigation process do not expect the final scale of tariffs to be as large as that proposed by the U.S. and EU.
“The EU remains open for discussions with the U.S.,” according to a European Commission spokesman. The EU’s executive arm declined to comment on procedural steps by the USTR, highlighting that the final award is still to be decided. Brussels also reiterated that barring a settlement, it is ready to “promptly” retaliate against the U.S., once the WTO finalizes penalties in the bloc’s case against Boeing. The EU award is expected early 2020.
The USTR said its final list of tariffs “will take into account the report of the WTO Arbitrator on the appropriate level of countermeasures to be authorized by the WTO.” Before imposing the tariffs, the USTR will hold a public hearing on Aug. 5, 2019, when companies can testify about the effects of the tariffs. 3
U.S. – China Trade Talks
President Trump and President Xi Jinping of China managed to get trade talks back on track this past weekend, but an even tougher job lies ahead – appeasing hard-line factions within their own governments demanding they give no quarter.
President Xi Jinping faces party leaders and executives of state-owned enterprises who believe Washington is out to demolish the government-led economic model that is responsible for China’s emergence as a global power and U.S. rival. President Trump, for his part, faces skepticism from some Republican and Democratic lawmakers who worry he will give up too much in any deal, as well as wariness among some of his own appointees. Heading into an election year, President Trump must also..
As an independent ERP consulting firm, we’re always on the lookout for changes in the ERP landscape, whether it is news of mergers, acquisitions or expansions.
We were intrigued to see the news that the ERP software vendor Deacom recently announced plans to open a European office in Frankfurt, Germany. It’s a strong signal that indicates growth in Deacom’s customer base in their internationalization efforts.
The ERP provider plans to staff the new office with experienced technology and manufacturing professionals from both Germany and other European locations.
A group of experienced Deacom employees will transfer temporarily to help open the office and train new employees.
It’s an interesting step as the company evolves their awareness and visibility into new geographic markets.
Shared here is a QA session with Jay Deakins, Founder and CEO of Deacom, Inc. who added insight into what the expansion means to the company and the community of organizations in the marketplace.
Vendor QA with Jay Deakins, Founder and CEO of Deacom, Inc.
What role do you expect this new office to play in Deacom’s future?
Jay Deakins, Founder, CEO of Deacom: “When it comes to Deacom’s international strategy, the Germany office is just the beginning. We plan to make this more than just an extension of our US headquarters and have it act more as a European headquarters. It will be staffed with sales, implementation, support, and administration teams so they can be effectively servicing the entire European market.
It’s important to note that the US and German Deacom operations will still work cohesively together. Many existing employees have already expressed great interest in wanting to move to Germany temporarily to help get the office up and running, and train new employees. I have also committed to spending 50% of my time in Germany over the next year to establish the business and understand the market. It is important that we bring over some of Deacom’s culture while still embracing all that Germany has to offer.
Our goal with this initiative is to both grow our customer base with strong, European manufacturing businesses and support our thriving customers who have facilities overseas. Once we establish a solid team, reputation, and clientele from this office, we will start the next phase of our expansion plans: opening an office in Asia.
While we have some ideas of what cities we would want to do this in, we are still a few years out from starting to plan that move. Right now, our priority is on Germany and making our mark in Europe.”
“I started Deacom in my basement in 1995 when the idea of building a global company was simply a dream. Expanding internationally has been on top of my mind.”
Jay Deakins, Founder, CEO of Deacom: “I started Deacom in my basement in 1995 when the idea of building a global company was simply a dream. But expanding internationally has been on top of my mind for about ten years now as we continue to establish ourselves in the marketplace. When it comes to delivering an ERP solution that answers the specific needs of batch and process manufacturers, I firmly believe that we are one of the best in the world. So now we need to deliver it to the world.
It’s an incredible feeling to be where we are today with a strong team of professionals, flexible and robust software platform, and impressive customer reputation throughout North America. With these resources in place, we are ready to expand into new territories and confidently turn that dream into a reality.”
What does this expansion mean for manufacturers?
Jay Deakins, Founder, CEO of Deacom: We are opening up incredible opportunities for manufacturers to expand their operations beyond the boarders that they are currently in – whether they are current or future Deacom customers. There are so many considerations to take into account when growing a business.
By providing ERP sales, implementation, and support throughout Europe and North America, these companies can remain confident in the software that is running their business and focus on other aspects of the growth. Rolling out DEACOM ERP to all locations will reduce the complications around juggling various software systems by country and help to centralize operations for these international manufacturers.
The response from current customers about this news has been overwhelming. Over the years, Deacom has grown and so have our customers. Many are either starting to establish or already have a presence in Europe and now we will be well positioned to help them establish strong operations around the world.
Are there any impacts on the product offering?
Not at all. The great thing about DEACOM ERP is its agility. Even though we are currently focused on manufacturers with North American headquarters, many of them already have facilities in other countries and successfully deployed DEACOM at those locations. This includes Germany, the Netherlands, and Mexico, to name a few.
Using data-driven captions, the software system has multilingual capabilities that can be rolled out system-wide and leveraged for document generation. It also already has the functionality to manage various taxes, regulatory requirements, and foreign currencies. Therefore, the foundation of the software has already been optimized for other countries and languages.
With the incredible popularity of Cloud-based solutions in Europe, I know many manufacturers are curious to see if our Managed Cloud Services will change at all. Since this solution is hosted on the Microsoft Azure platform, we will be able to deliver this same service to those with overseas operations.
The new Deacom office is tentatively scheduled to open January 2020.
It’s a challenge for project teams to manage risk during an ERP project. We know as an independent ERP consulting firm with extensive experience in ERP selection and implementation projects that no enterprise software implementation project comes without some risk. To gain the desired success, it is essential to identify and manage risk during an ERP project.
Most manufacturers and distributors don’t have the expertise to pinpoint what causes risk and how to create an ERP risk management plan. The manufacturing and distribution teams we work with have relayed that managing risk is one of the strongest reasons to work with an independent consultant team.
ERP Implementation Risk
In our context, risk in an enterprise software implementation is defined as a chance of exposure to adverse consequences of future events. Risk might come masked as changes in leadership and project team priorities, lack of proper budgeting and unanticipated financial forecast changes, scope creep as the project requirements change, a lack of details that alters the project timeline and budget, lack of skills in managing organizational and culture change, and more.
In our 25 years of hundreds of engagements, the business improvement consultants at Ultra have identified four general areas of risk that can sabotage an enterprise project:
Lack of proper team resources and executive leadership/buy-in. ERP project teams are successful when they can properly devote their time to the project and have executive support.
Lack of team resources with extensive experience in various disciplines who will document the current and desired future state of operations. The role of an ERP consultant can fill this gap, bringing industry experience to propose suggested business process re-engineering directives.
Settling for out-of-the-box solutions rather than focusing on the appropriate fit between ERP features and the desired future state of business processes.
Assuming an ERP project is “just” an IT project. In fact, implementing a new enterprise technology solution is the perfect time to review and revise business processes to maximize the technology investment.
Resources to Help Manage Risk During an ERP Project
Ultra’s experts have written numerous posts about how to minimize and manage risk during an ERP project.
Developing a formal plan for an implementation project is a smart strategic step for the ERP project team. In an insightful post, Forming an ERP Risk Management Plan for Your Implementation Project, we identify varying types of risk, marking the distinction between project risks and business risks. ERP project risks fall into three categories: cost/money, timeline, and scope/quality.
To manage risk during an ERP project it pays to get educated. As a part of our toolkit of ERP education resources, we have developed methodologies for dealing with risk, including prevention, reduction, transference, contingency, and risk acceptance. Our structured approach to risk analysis and risk action begins in the planning phase and continues throughout the project.
At Ultra, our experience gained from more than 300 successful ERP engagements has given us specific knowledge of the Types of ERP Risks You Simply Can’t Afford to Ignore. We guide teams to address serious project and business issues. The risks we encounter most frequently fall in the areas of:
Business priorities and leadership
Financial budget and value realization
Project scope and timeline
Resource staffing and competencies
Change and cultural adoption
Process capability and future state expectations
As part of ERP process improvement services, Ultra focuses on proactively identifying ERP risks and instituting risk management best practices. We apply methods throughout the implementation process to proactively identify, plan for, and mitigate risks.
Ultra’s recent article in Plant Engineering looks at Three Questions to Consider During ERP Software Selection. We understand that an ERP project will deliver success only when it is built on business process improvement rather than driven merely by ERP system features. Consider these questions when selecting ERP software:
Why is business process improvement the place to start, even before selecting ERP software?
What are the key categories of decision drivers?
How is setting strategic decision drivers different from the traditional RFP process?
Learn More to Manage Risk During an ERP Project
It is imperative to have the right resources to carefully plan for and manage risk during an ERP project.
EQT Partners, a leading investment firm with $45B of assets under management, has announced the signing of a definitive agreement to acquire cloud-native enterprise software provider Acumatica through an investment vehicle owned by the same holding company that holds IFS AB (Industrial and Financial Systems).
The news is viewed as paving the way to a top 5 ERP entity,
Following the closing of the transaction, Jonas Persson will serve as chairman for both companies.
IFS, the global enterprise applications company, and Acumatica, the world’s fastest-growing Cloud ERP provider, will serve growth industries such as manufacturing, distribution, construction, service, energy and A&D, while competing directly with SAP, Oracle, Microsoft, Infor, and Sage among others.
As noted in the official announcement, IFS CEO Darren Roos will assume a position on Acumatica’s board of directors. Notes Roos, “This collaboration is great news for both organizations, our customers, partners, and employees.”
“EQT has brought together two businesses that will enjoy the key benefits of a partnership in the growing cloud enterprise applications market. IFS and Acumatica can benefit from one another’s resources, capabilities, and strategies, but still enjoy full autonomy and rapid growth trajectories while avoiding disruptions to business operations or brand equity. Acumatica’s cloud-native architecture and operations are absolutely cutting edge, as is its commitment to partners and customers. I ultimately see this as two allies to cover the market from end to end, with combined strength to take market share.”
“IFS is an admirable company in the ERP market who shares our belief in customer satisfaction,” said Jon Roskill, CEO, Acumatica. “We could not have asked for a better match of technologies, strategies, and cultures. IFS and Acumatica both stand for customer satisfaction and choice, providing public, private, and hybrid cloud options as well as modern licensing and rich independent software vendor (ISV) ecosystems.
Acumatica’s customer-friendly licensing and industry-leading partner programs will not change, and our award-winning support will only get better. Combined with the proficiencies of IFS, Acumatica is positioned to expand into new markets and offer true global support for our rapidly expanding international customers.”
A Global ERP Community
To scale and compete, organizations need a network of resources that will support business operations wherever they, their business partners, and customers may be. To address these needs the two companies will tap into one another’s ISV, reseller and systems integrator communities, cross-pollinate technical resources and roadmaps, and implement best practices across services and support to enable efficiencies of scale and rapid growth that are mutually beneficial.
Both companies are currently adopting artificial intelligence and machine learning features into their respective products and expect to achieve early success in that area.
Acumatica Cloud ERP provides business management solution for transforming companies to thrive in the new digital economy. Built on a future-proof platform with open architecture for rapid integrations, scalability, and ease of use, Acumatica is used by more than 5,000 small and midmarket organizations through a team of 275 worldwide employees and 300 channel partners.
IFS™ develops and delivers enterprise software for customers around the world who manufacture and distribute goods, and maintain assets. The IFS team of 3,500 employees supports more than 10,000 customers worldwide from a network of local offices and through a growing ecosystem of partners. For more information, visit: IFSworld.com
When project teams from manufacturing and distribution companies head into business process improvement, ERP evaluation, selection or implementation, our role as an independent ERP consultant team comes into play.
The value these companies obtain from partnering with vendor-agnostic ERP consultants means Ultra’s allegiance is to your success and your effective use of enterprise technology.
There are many phases to a typical ERP selection project – from ERP requirements definitions to setting selection criteria and contract negotiations. Selection projects require significant staff resources, time, and cost your organization money.
What often separates successful projects from those that don’t deliver on results is access to timely insight and enterprise systems education provided by an independent, vendor-agnostic resource.
ERP News Round Up
As part of Ultra’s focus to provide timely insight, guidance and enterprise systems education, industry publications seek Ultra’s perspectives on enterprise software evaluation and implementation.
Noted here are a few of our consultant’s insights, recently published in several media outlets including Manufacturing Automation, Food Engineering and Solutions Review.
Manufacturing Automation Magazine: Four Types of ERP Risk
In the article titled Four types of ERP Implementation Risks. Ultra’s Director of the Center of Excellence, Andrew Bolivar, outlines the realities project teams face when undertaking an ERP project. Andrew presents four common risks that manufacturers should be wary of including the issues that come into play when neglecting to assign a full-time project manager. Also included are the challenges that stem from not having a project sponsor, and inadequate testing process. Finally, Andrew shares the problems that stem from management viewing an ERP implementation as an IT project
The article argues for the benefits of implementing new ERP solutions by noting the improvements that companies can expect to realize when the implementation is properly executed. The article also presents compelling data provided by the Mint Jutras survey “The Real Facts about ERP Implementation: Busting the Myth of Failure, But Are You Overrating Your Success?”
Food Engineering Magazine: A Lean and Green Approach to Reduce Waste
Waste in the food industry is a significant problem. Waste costs money wreaks havoc with the bottom line and doesn’t do much for corporate sustainability image. The article entitled A Lean and Green Approach to Reduce Waste provides a high level look at the lean manufacturing concepts and philosophies proven to cut waste in manufacturing industries. The editor shares how those concepts can be put in motion in food processing. Ultra Consultants was called upon to provide analysis and insight into the discussion.
Solutions Review Magazine: Better Together – SCM and ERP
Ultra Consultants authored an article entitled Better Together – SCM and ERP for Solutions Review magazine. The article outlines the advantages of integrating Supply Chain Management (SCM) systems and ERP. A company that retains inefficient legacy solutions is operating in a reduced capacity that none can afford and remain competitive. A carefully researched, intelligent approach to integrating ERP and SCM solutions will result in a company that is able to deliver its products to the customer faster, more efficiently and with a higher degree of quality.
The article outlines five critical metrics manufacturers and distributors should monitor to have a thorough picture of the overall efficiency of the supply chain operation.
From ERP comparison to go live, we well know that an ERP project is one of the most critical, strategic and resource-intensive initiatives a company will face. That’s why our team of independent ERP consultants is passionate about providing independent enterprise systems education, to help guide project teams to a successful outcome.
Buying an ERP system? Many manufacturing and distribution organization project teams are now considering an active ERP project.
The reasons vary, but in all, it’s likely that legacy technologies and processes are not robust enough to manage costs, streamline operations and accommodate growth.
The Reasons for Buying an ERP System
When project teams consider the capabilities of today’s modern ERP software, they are wise to take a close look at whether their organizations are experiencing diminishing benefits from their legacy systems.
The ERP software may be a victim of end-of-life “sunsetting” where support is discontinued. Another possible scenario involves the vendor putting the product in “maintenance mode” with limited updates.
These legacy ERP software packages may no longer address the critical needs of today’s organization in areas of reporting, planning or overall efficiency.
Scale is also an issue. Many teams realize they can’t scale their operations due to a legacy ERP system developed more than a decade ago. Leadership might be planning for aggressive expansion to meet the region’s expansion into new markets and distribution channels, but often finds that an outdated system and standalone spreadsheets currently used to run the company can’t scale.
Organizations depending on legacy products are also limited due to a lack of mobile functionality, analytics, CRM, and other applications that are needed in today’s competitive environment
As independent ERP consultants, we’ve seen many of these scenarios in play. Based on this experience, offered here are high-level pointers to keep in mind as you start the ERP journey.
3 Pointers When Buying an ERP System
Pointer #1: Focus on People and Processes, not Just Technology
Successful ERP projects require that the most important work is done before the selection begins. It’s so much more than just dropping in a new piece of software.
For an effective approach, remember preparation starts at the top, as we describe in a blog post, 8 Steps to Get Ready for ERP. C-Level support and buy-in are essential and the lack of it is indeed a deal-breaker. Other steps include developing a phased strategy and defining the project team. This is also the time to identify holes, inefficiencies, and roadblocks in current business processes.
We have the data to confirm that a focus on people and processes is the way to go.
Mint Jutras conducted a survey of mid-market manufacturers and distributors for Ultra Consultants, focusing on the success of their ERP implementations in terms of schedule, cost and return on investment (ROI).
The survey reviewed goals and expectations, whether or not they were achieved, and why.
The Mint Jutras/Ultra Consultants survey found that the primary reasons for success had to do with people and process, and not just software. Key success factors include top management support and change management.
Reasons for lack of implementation success include inadequate business process re-engineering and inadequate project planning.
While many ERP implementations meet expectations in terms of schedule, budget and ROI, the Mint Jutras/Ultra Consultants study shows a significant number of manufacturing and distribution companies’ over-rate their success and leave additional attainable returns on the table.
So again, putting people and processes first is the best step when the team is on the road to buying a new ERP system.
Selecting and implementing a new ERP system is likely one of the most complex and resource-intensive initiatives a company will ever face.
Consider the areas of risk that are inherent in such an effort by assessing and managing the most pervasive risks related to cost overruns, project delays, and other issues. Typical in-house resources don’t have extensive experience in assessing these risks and therefore, find themselves reacting to risks and issues after they surface which leads to problems in achieving expectations.
Why devote careful analysis to the many categories of risk that come with enterprise software selection and implementation? Gaining an awareness of ERP risk categories will help teams take steps to address potential issues.
Pointer #3: Make Comprehensive Planning a Priority
Ultra has found successful ERP projects invest more energy in understanding their business well in the preparation phase than they spend in the selection process.
This phase includes a comprehensive analysis of current processes and a definition of future processes. Moreover, it identifies opportunities for change and outlines the necessary change management to achieve business value.
Rather than having a focus on converting the current state to a new ERP system, the project focus should be to use technology to drive business value improvement. We’ve found that failing to fully understand and document the current state and the desired future state is the single biggest reason ERP projects fail.
Preparation also includes an educational component to review current best practices and revise move to the desired future state. The detailed business process review necessary to craft the future state is often the hardest step in ERP projects.
Understanding this blind spot is the key to success when buying a new ERP system. Winning teams use a proven methodology with a team of highly experienced manufacturing and distribution experts to ensure that the project emphasize is on preparation over selection.
Final Thoughts for Teams Buying an ERP System
As your team considers buying an ERP system, consider how your enterprise can benefit from working with expert ERP selection consultants. Ultra’s team of consultants brings decades of experience in enterprise software systems and best business practices for the manufacturing and distribution industries.
We’ll leave you with this last reminder: be sure you take time to define the right processes, ensuring they are effectively used throughout the enterprise and avoiding common pitfalls throughout the preparation, ERP selection and implementation.
Contact Ultra for insight on what it takes when buying an ERP system.
We are often asked whether there is a distinction between ERP and “Best-of-Breed” enterprise technology solutions. We hear these terms as we meet with manufacturing ERP project teams, as well as solution vendors, to classify solutions in the marketplace.
In several recent ERP selection discussions, we’ve heard the implication that Best-of-Breed and ERP are two mutually exclusive approaches.
This perspective is not quite so straightforward.
A discussion of “ERP” and “Best-of-Breed” enterprise technology solutions is much more nuanced.
Sometimes, Best-of-Breed solutions are all that is needed to drive improvements in the organization. However, more often than not, the Best-of-Breed solution needs to be integrated as part of the total solution with the ERP system.
As I’ll review in this blog post, instead of seeing one approach as separate from the other, the discussion must include the specific requirements of the company, and how to achieve a desired future state. As part of that process, consider whether a standalone ERP solution, or a combination of an ERP system and a Best-of-Breed solution, is the best fit for the company.
To clear up some of the confusion when considering ERP and “Best-of-Breed,” let’s first understand the definition of both terms. A quick search on-line finds the following definitions:
ERP: the integrated management of main business processes, often in real-time and mediated by software and technology. ERP is usually referred to as a category of business management software — typically a suite of integrated applications
Best-of-Breed: the best system in its referenced niche or category. Although it performs specialized functions better than an integrated system, this type of system is limited by its specialty area.
Both terms describe technological solutions to support the business process needs of the organization and should be included in the overall solution we refer to as Enterprise Resource Planning. The point to stress is that they are not necessarily exclusive to a single piece of software by a single vendor with a single database.
These approaches are not separate from the other. Focus on the specific requirements of the company, and how to achieve a desired future state.
Characteristics of Effective ERP
In general, the key characteristics for effective use of enterprise technology include:
All systems throughout functional areas are integrated and implemented
A sustainable IT environment for the entire organization
All functions of the organization working from a single source of truth, even if multiple databases are used
All functions of the organization are integrated in a way that supports business best practices
Scalable for future growth
These characteristics describe the needs of the organization that the technological solution must meet.
Considering the “Best-of-Breed” Enterprise Technology Classification
It’s often the case that at a typical manufacturing or distribution organization, the single ERP system lacks sufficient functionality to support a critical aspect of the business. Thus, the ERP must be complemented with a specific solution that satisfies specific business requirements.
Some ERP systems come with “advanced modules” which try to alleviate the need for Best-of-Breed usage. Some come with pre-defined interfaces with Best-of-Breed solutions.
In the situation where the ERP logic is not sufficient, Best-of-Breed systems provide logic above and beyond the logic in the ERP system but they should be used as part of the total solution: i.e. in conjunction with the ERP system.
The concept goes as follows:
In lieu of using the standard module provided by ERP, extract the data from the ERP database and send it to Best-of-Breed
Best-of-Breed does its thing
Best-of-Breed solution sends data back to ERP which accepts the data and updates it into the ERP database
If done properly, ERP does not really know this detour took place. Yes, there may be a separate database being used by Best-of-Breed. Seamless integration will assure a single source of truth
Note: There is risk in this in that systems can get out of sync, but done properly, these risks will be minimal.
Common examples of Best-of-Breed systems that we’ve seen at Ultra include:
Customer Relationship Management (CRM) systems
Detail Shop Floor Scheduling systems
Warehouse Management Systems (WMS)
Computer Aided Design (CAD) systems
Product Lifecycle Management (PLM) systems
Global Supply Chain Management systems
Transportation Management Systems (TMS)
“Best of Breed systems” are not separate and independent, but are fully linked and integrated as part of the total solution.
Integration – Critical to Success
It’s part of the role of an ERP consultant to remind project teams that what is key is that any “Best of Breed systems” are not separate and independent, but are fully linked and integrated as part of the total solution.
We’ve guided ERP project teams to view the Best of Breed systems as providing logic above and beyond the logic in the ERP system but closely integrated with ERP.
We again stress that these systems are used as part of the total solution.
When looking at ERP and “Best-of-Breed” enterprise systems, it’s key to move beyond the classifications.
The most successful teams understand the detailed needs of the organization when it comes to business process improvement, and then develop a specific approach to technology selection that drives value.