Tue. Sep 21st, 2021
Impact-on-ERP

While lots of ERP vendors want you to implement a newer version of their product because it has a ‘modern platform’, the business problem(s) to solve may be more time and people focused. Businesses have to be ready to move away from monthly, aggregated data to more precise data, costs and insights. A simple package upgrade barely scratches the surface of the needed changes.

Impact on ERP- The concept of time is changing and it may catch some ERP vendors and their customers by surprise.  Let’s recap several truisms in technology:

  1. Technology gets faster and faster but many applications are stuck in the 1980s
  2. Cost of sensors, readers, switches, etc. keeps getting cheaper and more powerful
  3. Telecom speeds and feeds keep increasing
  4. Storage costs continue to plummet
  5. Processing speeds are growing, too

These trends (and others) mean that we have an opportunity, in business, to kick the clock to the curb.

In Payroll applications, the concept of the pay period is fading fast. People can now get paid every day if their employer uses one of the new payroll solutions from firms like Ceridian Dayforce and their Dayforce Wallet.

Concepts like pay periods, accounting periods, etc. are all arbitrary, man-made inventions that exist because someone decided that we should count or accumulate things at specific, regular times. These determinations were often a compromise where firms balanced out one need (eg: employees would like to get paid in a timely fashion) against another (eg: payroll processing is time consuming and should be done as infrequently as possible). Those decisions, made decades or centuries ago, may have been correct in their day but that day is past.

Behind these timing decisions were manual or automated systems to help with this processing effort. These systems, once placed into production, were often constrained, costly and rigid. So, people and businesses just got used to things being done this way (and frequency) as “it’s the way we’ve always done it”.

Good news – we don’t have to keep doing things this way!

The Factory of the Future conundrum

While manufacturers everywhere want to modernize and/or digitally transform their operations, they’ll hit some roadblocks along the way – all of which involve time. Here are just some examples of the time-based challenges facing these Industry 4.0 efforts.

Time and costing – Many cost accounting systems look at data accumulated over an accounting period – typically, a month. Firms use monthly fuel, gas, electricity, water, and other costs and allocate these over the numerous batches, products, etc. manufactured that month. Raw materials may also get the monthly allocation treatment, too. This is really problematic as different batches could have materially different actual costs based on the timing of when the batch was run. For example, one metals company gets significant price reductions from its hydroelectricity provider if it runs its melting during the night. If the accountants only look at electricity consumption at month-end, they have no idea which batches ran at night and which one are more/less profitable.

These re-thought factories need readers/sensors/switches that capture the beginning and ending consumption of key production components throughout the month and for every unique product made. Why? If a company doesn’t have accurate cost data, how can it know if it is making money on specific orders, contracts or customers? How will Sales know exactly how to price a potential deal so that it meets minimum (or optimal) margin requirements?

These new time slices could be down to the batch, day, minute, or even millisecond level, if appropriate. Monthly is just not going to cut it. The more exact we can get time intervals, the more likely we can get useful P&Ls by customer, product, product line, batch, etc.

Read more at Diginomica

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