Why ERP Reduces Accountability and Measurement in Your Supply Chain, and How You Can Fix It

Enterprise and departmental silos are reinforced by today’s ERP systems given the fragmented environment present across most supply networks. By Joe Bellini

November 03, 2014

Assuming excellence in customer responsiveness is a given, in order to achieve excellence in operating performance all employees should have a solid education and understanding as to how their roles and responsibilities contribute to their supply network outcomes in addition to their budget or financial performance.

And more importantly, accountability must become a key component to any organizational and measurement alignment.

The importance of offering process visibility, measurement, control and the related education and training to employees whose roles are critical and accountable to successfully executing ‘great’ demand or supply processes can’t be underestimated.

Coupled with an overall financial and process leadership curriculum offering education on financial forecasts, cost management, and operating measurements, as well as comprehensive measures such as ‘cash conversion cycle’ improvements, it will empower and enable the organization to become ‘great.’

As mentioned above, technology isn’t the total answer, but is critical to providing the infrastructure to enable these process improvements. Enterprise and departmental silos are reinforced by today’s ERP systems given the fragmented environment present across most supply networks. Migrating this environment into one which will support change rather than resist change is much more cost effective than in the past given the highly secure cloud based system options available today.

The importance of offering process visibility, measurement, control and the related education and training to employees whose roles are critical and accountable to successfully executing ‘great’ demand or supply processes can’t be underestimated.

And while education and awareness will generate empowerment, it is the accountability and measurement of individuals across the organization and across their network of trading partners that will drive the collaboration necessary to achieve higher levels of performance. Annual goals for departmental managers must be tied to the supply network’s financial performance so that leaders are held accountable. Daily performance visibility and collaboration to discuss performance related to supply network outcomes and enterprise operating metrics must become part of the fabric and rhythm of running a successful operation.

Most enterprises will find that rather than creating a burden on their ‘silo’ based metrics, improvement in cross functional integration across trading partners will contribute to improvements in customer satisfaction scores, operating indicators, and overall employee satisfaction. Strong culture flows from thoughtful organizational design and measurement.

Performance and operating measurement visibility enabled by a platform which allows employees to take action to resolve related issues provides the foundation for continual employee participation and feedback. This capability will empower leadership, employees, and their trading partners to work toward achieving enterprise goals. Initial resistance to running a fully integrated environment is typical given the enormous time constraints in everyone’s schedules and their inability to resolve the issues they encounter on a daily basis today.

However to a person as they begin to engage and realize the value produced by operating in a completely actionable environment, supported by automated problem resolution, and capable of collaborative problem resolution when required, they will not only accept but begin to promote this type of measurement and accountability environment. Their ability to visualize the associated metric performance with planning or operating decisions made on a daily basis, while being equipped with the tools to affect future performance around those metrics will give them the confidence to succeed.

The pain of operating in the traditional ERP environment with all the associated limitations that made their jobs so frustrating will fade into distant memory.

For more about how the supply chain is changing, download the new whitepaper, “Supply Chain’s New World Order”, which discusses the cloud, S&OP, and why a holistic approach is needed for supply chain management.