Jack Welch, the CEO of General Electric, stated that businesses tend
to go wrong because they focus on predictability of operations,
rather than flexibility to respond to events in the marketplace. One
of biggest obstacles to flexibility is the predictability of
behavior that is strongly reinforced by current accounting systems.
For example, departments and departmental managers are measured to
performance against budget; unfortunately, budgets are created a
year at a time, with the budgeting process starting three to six
months before the year in question actually starts. Thus, at the end
of a budget year, the budget and standard costs are 15 to 18 months
old. These practices inherently discourage continuous improvement.
We propose instead a new measurement system that recognizes that
everything is temporary—products, customers, workers, and processes.
It should base its approach on the assumption that all products have
life cycles, and should have three key metrics: profitability, time,
and quality. It should also require continuous improvement.
Supply Chain Management Integration
Full supply chain management integration means partnering with
customers and suppliers with the intent to eliminate paperwork,
waste, cost, and lead times throughout the supply chain, while
maximizing responsiveness and flexibility. In its ultimate form, it
requires a company to source each group of raw materials with only
one supplier, and to be the sole source for a group of products for
its customers. This is the only way to hold the supplier completely
accountable and to eliminate all interim paperwork and
administration. To accomplish this, TEI/ ERP must be designed with
supply chain as its center.
The concept of customer relationship management assumes and
requires integrating all functions that affect the customer. Areas
of customer-focused information that are integrated with the rest
of a TEI system include the following.
Full Sales Support
Sales functions can be divided into the following categories:
selling—the interaction between salespeople and consumers, and can
- outside the company (using salespeople in the field)
- inside the company (using telesales or customer service
• unassisted selling—includes sales via Web sites and kiosks at
Most MRP II systems
were extremely weak in supporting salespeople in the field.
However, virtually all of the capabilities needed by field
salespeople are also required by inside salespeople. A
fully-integrated TEI/ERP system needs to provide full access to all
TEI/ERP functionality for a salesperson with a computer, no matter
where he or she happens to be. Sales force automation software
should primarily assist the salesperson in the field and in the
Forecasts drive capital decisions, material volume (and even
supplier choice) decisions, staffing decisions, and financial plans.
In spite of its importance, forecasting is still more of an art than
a science, because it needs to blend intelligence from the field
with past actual sales to create the most accurate forecast
available. Once a forecast has been accepted, companies frequently
have great difficulty in communicating the impact of forecast
adjustments on each affected area unless the forecasts are part of a
fully integrated ERP or TEI system.
Reducing forecast errors involves three approaches, the last two of
which rely heavily on TEI/ERP system support:
1. decreasing response lead times sufficiently that a company can
efficiently and effectively supply what the customer wants within
the customer's lead time. Repetitive techniques can be very
effective in this effort.
2. increasing visibility with the customer, which, as far as the
manufacturer is concerned, effectively increases customer lead
3. monitoring forecast errors and taking corrective action when an
error exceeds a predetermined threshold.
To Be Continued
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