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Comprehensive ERP Fast Start Kit for Industry and Government: Implementation Insights

This guide outlines the essentials of Enterprise Resource Planning (ERP) for manufacturing, distribution, and service industries. It provides an overview of ERP's integrated approach to resource planning, highlights lessons learned from past implementations, outlines risks, and offers recommendations for effective engagement with stakeholders. With insights from DCMC/DCAA studies and essential DCMA guidance, this resource emphasizes the critical role of management support, training, and early government involvement in successful ERP implementation, aiming to enhance operational efficiency and cost-effectiveness.

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Comprehensive ERP Fast Start Kit for Industry and Government: Implementation Insights

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  1. EnterpriseResource Planning Fast Start Kit

  2. ERP definition • DCMC/DCAA/Industry study group • DCMA guidance • Recommendations for Industry/Govt • Implementation/consequences • Lessons learned • What’s in it for Government • Risk management • Planned HQ involvement • Summary 2 Overview

  3. ERP is a method for the effective planning and control of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution, or service company.1 • It’s an integrated business management information system that automates and links enterprise operational components. • It’s an information conduit for the entire company. What it isn’t! • Easy and cheap to implement • A replacement for good management practices 3  Source: APICS Complex Industries Interest Group Definition

  4. August 1998 - Joint group recommended to examine ERP and identify common questions/concerns as a result of DCMC/DCAA/Industry Crosstalk meeting • November 1998 - Charter signed by DCMC and DCAA • April 1999 - Analysis and assessment completed 4 DCMC/DCAA/Industry

  5. Study Conclusions • Use Management Councils and Teaming Agreements with suppliers • Implementation approach and employee training are critical to success • Early indications show no statutory or regulatory impediments • Cultural challenge significant • Early Government involvement is essential 5

  6. Engage Customers and Stakeholders early in the process • Review proposed process changes • Ensure validity and accuracy of data • Review planned changes to supplier’s financial disclosure statement • Use teaming approach and participate in: • ERP planning and strategy sessions • Meetings with DCAA and suppliers 6 DCMA Guidance

  7. Use Management Council process in deployment phases to resolve ERP issues • Utilize Risk Management guidance when assessing supplier changes to processes • Send all CMO lessons learned to district ERP focal points 7 DCMA Role

  8. Recommendations For Industry • Share best practices • Examine possible civil/military integration of supplier, Government, and software supplier ERP systems • Encourage user groups workshops/conferences • Use the Management Council as a means to establish ground rules for teaming and involving customer 8

  9. Recommendations For Govt • Early involvement in implementation • Increase communication • Improve training • Emphasize current risk management and auditing approaches • Encourage system access 9

  10. Implementation/Consequences • Properly implemented ERP systems will help suppliers to more effectively manage key business drivers • Cost • Quality* • Lead-time / delivery • * Including lifetime product configuration • However, effective implementations may affect suppliers current processes • Accounting • Estimating • Purchasing • Production management • Configuration management • Quality • Property 10

  11. Lessons Learned • ERP costs a lot of money • Top management understanding and support needed • Must have clear understanding of business • processes prior to ERP implementation • May require a paradigm shift • Installations take time, no instant fix • Requires sufficient planning 11

  12. Implementation Problems • A large company delayed implementation of an ERP system after spending in excess of $200 million (based on high cost to start and sector reorganization) • A supplier gave up ERP implementation stating they were overwhelmed by the organizational changes involved • A supplier had to suspend billings on Government contracts after they found they could not reconcile the billings 12

  13. Implementation Problems • A supplier faced delays in shipping its product since switching to an ERP system. The United States was the sixth country in which a supplier installed ERP software, and in each country the supplier ran into similar problems following installation. • A manufacturer had initial problems producing earned value data which adversely affected customers 13

  14. What’s In It for Government • Improvement in meeting DOD goals for reducing cycle times and acquisition cost • Support Paper Reduction Act through data access • Information integration could reduce the number of Government reviews • Potential for development of shorter lead-times for contract closeout and overhead settlements • Enhance access to real-time delivery data 14

  15. Risk Management • ERP system implementation is high risk. This requires that suppliers and DCMA have an agreed to contingency plan for Risk Management. • Some areas to watch: • Earned Value Management • DD250 Process • Data Conversion • System Testing 15

  16. Planned HQ Involvement • Improve field guidance and education on ERP • Obtain feedback and publish lessons learned • Move to encourage strategic supplier agreements for ERP • Continue to work with industry • Leverage ERP enabled processes to implement other related DOD initiatives (i.e. Integrated Digital Environment) 16

  17. Summary • Early Government Involvement Is Essential • Communicate Using Management Councils • Establish Teaming Agreements With Suppliers • Keep Customers Informed 17

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