Today’s fast-paced marketplace requires companies to be streamlined and efficient to keep up with their competitors. One of the best ways to optimize operational efficiency is by implementing an ERP distribution management solution. However, it’s critical that this solution is a well-designed, robust system that’s properly implemented by qualified professionals. Otherwise, inferior technology could kill your distribution company.
ERP Implementation Failure
One of the most epic ERP implementation failures occurred with Target Canada. When Target — which has more than 1,800 locations in the U.S. — decided to branch out into Canada, it made a mistake that wound up costing $7 billion.
In the U.S., Target has an outstanding ERP solution that enables it to function seamlessly. The company can anticipate demand, fill its shelves on time and keep its customers happy. However, this solution couldn’t just be replicated in Canada. Canada uses Canadian dollars and the metric system, and the existing ERP system couldn’t accommodate other currencies or measurements. As a result, Target decided to use a completely new ERP solution designed by an outside supplier.
Two important things went wrong. First of all, employees were required to enter reams of data for approximately 75,000 products into the new system within a short period of time. Second, analysts turned off the automatic ordering option that was designed to replenish the supplies in time. In short, it didn’t take long for the entire endeavor to fail spectacularly, resulting in Target closing all of its 133 Canadian stores and laying off 17,000 employees.
Implementing a New ERP Solution Correctly
When you’re implementing a new ERP solution, you should always work with a service provider that can deliver an industry-specific solution containing features, tools and metrics relevant to your industry. In addition, the service provider should be able to customize the solution to your specific business needs.
For example, if you have a lot of international vendors, you need to be able to enter multiple currencies. If you plan to expand operations, the solution should be scalable. Moreover, the processes should be representative of those that are actually used within your organization — not standard, one-size-fits-all procedures that your employees won’t utilize.
It’s also crucial to roll the new ERP solution out slowly. Otherwise, you run the risk of something going wrong and your system going down for a while. If you take a step-by-step approach, you can incrementally implement the various components of the solution one at a time, train the end-users in their use and work out any gaps or glitches. To facilitate this process, you need to put good change management in place that can guide your people as they learn how to work with the solution.
In addition, you need to ensure good maintenance. Your ERP solution will need periodic upgrades to fully support your business processes, so you can either task your in-house IT team with maintaining it or use an outside service provider.
Clearly, inferior technology can be disastrous to a distribution company. That’s why it’s critical to work with an experienced service provider that knows how to correctly implement an ERP solution customized to your needs. For more information about how we can help your distribution business, contact us today.