By Allen Pratt of FGMK LLC
Chicago, Illinois (October 14, 2016) – Turnaround Management Association Chicago/Midwest Chapter 2016 Certified Turnaround Professionals (CTP) hosted a presentation led by Gary Burns of GLB Global, an experienced subject matter expert in the field of ERP solutions followed by a discussion about how IT Enterprise Resources Planning (ERP) solutions can affect a corporate renewal turnaround.
What is an ERP System’s place in a Turnaround? What to do in a turnaround in the midst of an implementation? Put the project on hold! Take a hard look at any outside resources (consultants). Review license, services and maintenance agreements to understand what’s been committed to. Spend your efforts utilizing information from the transactional systems in place. Asses costs and benefits if and when the company returns to profitability. It is difficult to imagine a situation where the completion of an ERP project could actually help turn a company around.
An ERP Implementation project has no role in a turn-around. They are expensive. They are resource intensive. They distract from the day to day business. There is no “quick hit” with ERP, they are mostly planning systems. An ERP system is an investment in the business it is very difficult to correlate even medium term financial benefits (since paper). No reasonable size company can survive long term without “an ERP”.
What are useful aspects of an ERP system in a turnaround? Transactional components of ERP. Traditional Revenue and Disbursement Cycles. Order processing, Shipping, Invoicing and Cash Posting. 3 Way match (SO/BOL, Invoice and Payment/Remittance). Purchase Order Processing. 3-way match (PO/Receiver to vendor invoice to AP check). Inventory Control. Cycle counts (or physical inventory) Shipments/Issues, Receipts/Putaways, transfers and moves, can calculate net change period to period (beginning inventory minus shipments plus receipts plus or minus changes in WIP =COGS). Cost Accounting/Tracking. For labor and materials can use actuals from above but for direct, indirect and true produc.t costs can use work order reporting (even if only on a sample basis). General Ledger and Financial Reports (if you trust the sources).
What to look for in the legacy IT system. Transactional components of ERP, common causes of lost control – LEAKS. IT intervenes in transaction processing. This is a signal that something is not functioning correctly in ERP or users have not either been trained or empowered but either way this effects data integrity. Manual transactions are either not recorded or processing is delayed. Examples of this could be manual checks, inventory transactions, work order reporting, engineering changes, cost updates, or other transactions that are not getting recorded in ERP. Significant business processes are performed outside the system (spreadsheets). This undermines the ERP systems, this could be off-line inventory systems, accounting/cost allocations, or more detailed costing transactions.
Bill Paradise a healthcare, science, and business technology consultant described his assessment of the presentation this way, “Thank you very much for including me in yesterday’s lunch meeting. Gary was excellent. I found myself agreeing with him throughout most of his presentation. He’s got great depth of experience and well-earned knowledge. Please include me in any future, upcoming topics / presentations.”