Six sigma initiatives and ERP systems have both been around for a long time. Companies like Motorola and GE made six sigma part of the business mainstream in the ’80s, while Baan made ERP software equally important at the corporate level in the ’90s. A lot has changed since then, but one thing remains the same: it is extremely rare to see companies effectively implement both or even just one of these initiatives.
According to Panorama’s research, 72-percent of ERP implementations fail. Although we don’t have statistics related to ERP and six sigma together, I imagine the percentage of companies that fail to deliver both initiatives together is staggering. If companies have that much trouble implementing ERP as a single initiative, they are not likely to take on another change initiative and expose it to the same failure rates as well.
The irony is that six sigma provides a framework and toolset that makes ERP implementations more likely to succeed. Although the thought of tackling both at the same time may seem a bit overwhelming, six sigma provides a structured and methodical toolset that actually improves the success of ERP initiatives.
Five Ways That Six Sigma Methods Can Make Your ERP Implementation More Successful and Deliver More Business Benefits
- Measurement and reporting. Six sigma is all about measurement and analysis of data. All the dashboard and reporting capabilities in the world won’t matter if you aren’t able to provide data to end-users and decision makers in a way that is easy to analyze and understand. In addition, the data should be embedded into key business processes and benefits realization plans. Rather than throw a hodgepodge of reports and data at your end-users, your project should focus on providing performance measures that are critical to your business.
- Focus on integrated business processes rather than functions. Another component of six sigma is that it encourages a focus on integrated, end-to-end business processes. Most ERP systems have flexible and well-defined functional transactions embedded in the software, but these transactions will be ineffective if not defined in the context of the comprehensive business workflows that are specific to your business. Business processes should be mapped in a way that defines suppliers, inputs, processes, customers, and outputs (SIPCO) across the business. This process focus becomes the foundation for measurement capabilities, analysis of benefit opportunities, and system testing throughout the ERP implementation.
- Focus on the customer. At the end of the day, ERP best practices and efficient business processes don’t really matter if they don’t support your organization’s ability to more effectively serve its customers. As business processes, performance measures, and corresponding software functionality are defined, they should be done so in the context of how they positively impact your internal and external customers.
- Reduce waste and non-value add activity. If you are implementing enterprise software to improve your business, then decisions during the system design and implementation phases should focus on reducing process inefficiencies and non-value-add activities. Business processes, performance measures, and system design should focus on eliminating waste, which becomes sort of a guiding principle for the entire implementation of ERP software.
- Cause and effect diagrams and Pareto charts. These two six sigma tools can be particularly helpful during an ERP implementation. Pareto charts can be useful during the design and implementation phase of the project by helping define and differentiate between business processes and scenarios that are core to your business and those that are exceptions. Many companies get into trouble by configuring or customizing software to handle infrequent business events rather than focusing on those that make up 80% or more of your business volume, but Pareto charts can help measure and focus on those important activities. Similarly, cause and effect analysis or fishbone diagrams can be used to define root causes for failure to realize expected business benefits, especially once the implementation is complete and the software is in place.
These are just a few examples of ways that six sigma tools can help not only make your ERP implementation more successful, but also embed six sigma best practices into your business software initiatives. There are a multitude of others that can help, but this provides a good starting point.
Learn more about how Panorama can help incorporate lean manufacturing and six sigma into your ERP system initiatives by engaging our on-site Lean Manufacturing, Six Sigma, and Supply Chain Management ERP Workshop. In addition, we can help embed six sigma best practices as part of a successful SAP, Oracle, Microsoft Dynamics, or Tier II ERP implementation. Contact us to learn more about how we can help manage your implementation to success.