Can an ERP Drive Innovation in Your Business?

Posted on: May 15, 2015

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Topics: Enterprise Resource Planning (ERP)

How Customizing Your ERP

Don’t you just want to kick yourself sometimes, when you see a commercial for a brand new product or service that seems like such an obvious solution to a common problem? Why didn’t you think of that?

Well, it may seem obvious in retrospect, but for most people, the problem with common problems is that they’re so…common! We get used to dealing with something a certain way, and never even think twice about how it could be changed – until someone somewhere has that sudden insight.

The same principle holds true for business practices, as well. We get into routines and don’t even notice areas that could be improved on, or better yet, areas ripe for innovation.

But believe it or not, that’s where implementing an ERP can help. ERPs can actually help drive innovation within your company, because they allow clear, detailed insight into the workings of your business, assisting decision makers in seeing where innovations are needed – and what type of innovations those should be.

There’s even a tried and true process for promoting innovation within a company, known as the Six Sigma Method. This approach to business has companies take five specific steps to work out what that innovation should be: Define, Measure, Analyze, Design, and Verify

. This methodology is used successfully by businesses the world over to improve their processes – but coupled with an ERP system, it’s a sure-fire way to encourage innovation. Let’s break down each step and take a look at how using an ERP aligns perfectly with each one.

Define


The first step is to define the goals of your business, specifically in the area you are analyzing for possible innovation. What is it you are aiming for? These goals should play a major role in your ERP set-up, so that you can track how efficiently and effectively they’re being worked towards and reached.

Measure


Now it’s time to quantify those goals. This is where your ERP is invaluable. With all the necessary data at your fingertips, you can easily crunch the numbers and see how you’re currently performing, where you’d like to be, and what it’ll take to get there.

Analyze


The third step is to analyze your current process. Take a close look at how things are done, and then brainstorm ways they could be done differently in order to improve the outcome. Weigh each option, looking carefully at the results it’s likely to bring. The information found in your ERP will be immensely helpful here, as it provides easy insight into every department and every process – not to mention an ERP’s forecasting ability, which lets you play with different scenarios.

Design


This step is where the innovation happens. Design an improvement to your existing process – or change it completely. Eliminate steps entirely, or replace them with something totally new. Let your creative juices flow here – but always grounded in the facts and numbers that your ERP provides you with.

Verify


Finally, run a trial of your new idea to make sure that it will actually perform as desired. Try a simulation, run it through your ERP to see what happens, or test it out in some other way to ensure that it will do the job.

By following these five steps, utilizing the data provided by your ERP in each one, you can drive focused and imminently practical innovation at your company. Necessity may be the mother of all invention, but if you don’t know what you need, no progress will be made. ERPs allow easy insight into exactly where improvements are needed in your business, so that you can latch on and run with it. Contact TGO Consulting today to find out how we can help your company start the innovation process today!

Sources:
http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/the-dmadv-methodology.html
http://blogs.ramco.com/erp-and-six-sigma
http://www.sixsigmaonline.org/six-sigma-training-certification-information/articles/the-significance-of-six-sigma-and-erp-implementation.html