Industry Insight: Extending ERP principles outside of the Enterprise
Some organisations in the UK’s waste and recycling sector have taken heed of the benefits enjoyed by many manufacturing and distribution companies by implementing Enterprise Resource Planning (ERP) systems. An ERP system is a single software application that covers both financial and operational functions. The aspects of ERP are numerous, but the two that generally make ERP a must have for the 21st century business are Single point of entry and Single data repository for reporting. By having a single point of data entry a company removes duplication of effort and, often, increases the quality of data thus removing costly errors from core processes. This reduction in cost can be significant. Companies that do not have an ERP tool often rely on manual data shuffling and excessive use of Microsoft Excel. In a recent survey it was found that 87% of excel spreadsheets have errors in them – what cost does that have on a business? On the second point, one can only manage the performance of a business if you can report on it (accurately!). Having islands of data in various databases and spreadsheets can make reporting timely, difficult and prone to error. The quality of a manager can only be no better than the quality and accessibility of the information they have available to them.
So, that covers the principles of ERP in its simplest form. Few ERP solutions are available for waste and recycling companies, but Prodware adjust Waste & Recycling, which has been developed in Microsoft Dynamics NAV, is by far the most successful solution available. Hundreds of implementations across Europe have brought the benefits of ERP to recycling companies large and small. But once ERP is implemented, what can we gain further improvements in efficiency? Well, let’s consider a simple scenario: We operate a mid-sized recycling company and service our customers in many ways. We collect some waste streams ourselves, but sub-contract others to 3rd parties. Our ERP solution contains all the details of our customers contract, so that when they require a container emptying they telephone us, we enter the job onto the system and the software either allocates the job to our transport or creates a purchase order on one of our 3rd party contractors. As we’ve invested in a technically advanced solution, it sends that instruction automatically by email. Our contractor receives the email, manually enters the job into their system and completes the work. Or, we assume they complete the work. We don’t know this for a fact until the following month when we receive an invoice from them, hopefully advising us of the weight, grade etc. If they don’t complete the job, we find out when the customer complains. So, we get the weights, enter in to our system and raise an invoice, sometimes at the end of the following month. The issue this creates with cash-flow is one for another day.
Having discovered the benefits of ERP it appears that they are lost as soon as we start to use other organisations to perform our work, or perhaps we are the contractor. Either way, benefits are lost and duplication of effort, reporting and errors are issues for us once more.
XML (eXtendable mark-up language) has, if ask the techies, become a very common standard that can allow different system to talk to each other, passing documents or instructions freely. Now, if our customer sent us an electronic instruction using XML, and providing it met the criteria we have defined against their contract in our ERP solution, we would not need to manually enter the request. And if our 3rd party contractor had an XML enabled system (Which can include Microsoft Excel by the way) then they would not need to enter the job either. When they complete the job, the vehicle, driver or weighbridge operator would instruct their system of the work done and the confirmation, including weight, would be sent directly back into our ERP system without anyone lifting their mouse or hitting a key. So, we’ve taken ERP principles, reduced duplication of effort, improved response times and got our invoices out earlier and more accurately. This is how we can extend ERP beyond the our enterprise.
Sounds like rocket science? It isn’t. XML has been part of Microsoft Dynamics and Office products for half a decade or more. Taking advantage of them is just a matter of mindset.