A practical guide to

selecting and

implementing a

new ERP system.

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Designed to Streamline™

By Dustin Alexander

Manufacturing in the U.S. is getting tougher all the time andthe pressure is unrelenting. To remain competitive, youmust continually cut costs, increase productivity andimprove quality, while at the same time offering betterservice, faster delivery and lower prices. Fortunately, thereis a tool to help you accomplish all this and more.

By now you’ve probably heard all about ERP, the enterpriseresource planning approach that cuts cost and boostsproductivity by integrating all your production processes intoone cohesive system. You’ve probably heard that it canimprove on-time deliveries and inventory control whilesimultaneously reducing administrative overhead. That it canstreamline all of your manufacturing processes by increasingvisibility throughout the organization. And that it can turninefficient companies with high cost structures into lean,mean operations that can compete with anyone in the world.

The fact is, ERP can do all this and more — we have seen ithappen time after time. But to some, the stories sound toogood to be true. So you wonder — can ERP really work in mybusiness? If so, how do you find the right system, what doesit take to install it and what kind of return on investment canyou expect? From an operational standpoint, how long doesit take to get ERP up and running in a company, and howmuch training is involved? What steps are required toimplement ERP software, and who needs to get involved inthe process? Most of all, can ERP software actually deliveron all that it promises to do?

If you’re considering ERP software for your business, theseare legitimate questions. ERP can literally transform amanufacturing business, but only if you do it right. At GlobalShop Solutions, we’ve been doing ERP right for nearly 30years. During that time, we have conducted more than athousand successful ERP implementations with companiesfrom five to 500 employees. In fact, we have the largestnumber of successful implementations in our market -nobody else is even close. In the process, we’ve learned agreat deal about what works and what doesn’t work, andour whole purpose with this booklet is to share some ofthose lessons with you.

Every company faces different challenges and has differentneeds in regards to ERP, so there is no cookie-cuttersolution for implementing the software. However, we havefound that certain basic principles apply in nearly everysituation, and that following these principles will greatlyincrease your chances of a successful implementation. So ifyou’re ready to take your business to the next level, here arenine things you need to know to successfully implement anERP system right the first time in your company. But first,let’s review exactly what an ERP system involves.

Get ERP right the first time.

The Enterprise Resource Planning Approach

2

“ERP can literally

transform a

manufacturing business,

but only if you do it right.”

First developed in the 1970’s, ERP (Enterprise ResourcePlanning) software started out as a few unrelated programsslapped together to improve various parts of themanufacturing process. The very best ERP systems evolvedinto highly comprehensive, fully integrated softwaresystems that enable companies to manage the entiremanufacturing process from one central location whilestreamlining operations and improving productivity in waysthat were previously not possible.

In essence, ERP software serves as a central communicationpoint, or hub, for all the activities in a manufacturingbusiness. It consists of different modules that handleeverything from estimating and quoting work orders, all theway to final delivery and billing. ERP also handles all thefinancial aspects of work generation, including purchasing,inventory management, administrative overhead and all theaccounting and financial activities. The end result is asoftware system that integrates all the essential activities ofthe business into one nice, neat electronic package.

Ideally suited for aerospace and defense firms, sheet metalfabricators, machine shops, screw machine shops, machinebuilders, electronics and repair facilities, wood shops,medical instrumentation and store fixture manufacturers,ERP allows companies to:

• Estimate, quote and bid

• Generate sales and purchase orders

• Generate work orders

• Purchase raw materials, outside resources and services

• Schedule people, resources and equipment

• Track work in progress

• Monitor and manage inventory

• Manage the shipping and delivery process

• Generate invoices and track accounts receivables

• Automatically funnel all data into the general ledger to produce P&L statements, financial statements and cash flow analysis

The benefits of using ERP software include faster cycletimes, better on-time delivery rates, reduced administrativeoverhead, lower labor and material costs, improvedproductivity and more.

ERP also enables companies to manage the numbers in realtime (instead of at the end of the month or quarter) so thatmanagement can make better decisions for the long term.When properly implemented, ERP acts like a company-wide,ongoing process improvement tool that empowers the entireorganization to become leaner, more efficient and,ultimately, more profitable.

What is ERP?

“ERP software serves as

a central communication

point, or hub, for

all the activities in a

manufacturing business.”

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Contrary to popular opinion, selecting, purchasing andimplementing an ERP system should not be left solely to theIT function. In fact, if you do, you’ll almost certainly fail.

Why? Because ERP software is an interrelated tool thattouches every aspect of your business. In addition tostreamlining all your mission-critical processes, thesoftware has strategic capabilities that go far beyond merelyhelping to manage inventory more effectively or schedulejobs more accurately. For many companies, ERP willliterally change the way you do business. ERP is really moreof an approach to better managing your business than it is asoftware program. As such, the decision to implement ERPsoftware is a strategic decision that requires the input andunequivocal support of the owner/CEO and the entiremanagement team, not just the IT function.

As part of the team, your IT person plays an important rolein the process, especially with regard to all network andhardware issues. To ensure success, however, all decisionsregarding the purchase and deployment of an ERP systemshould be made by a cross-functional team that representsoperations, purchasing, accounting, scheduling and all theessential activities of your business.

Once assembled, the ERP team has responsibility for:

• Researching, evaluating and selecting the appropriateERP software package

• Setting specific goals and objectives (such as improvedon-time delivery, better inventory management) for theERP initiative

• Working with the ERP vendor to create and execute animplementation plan

• Communicating the need for the ERP software and thebenefits to the company and employees

• Following through on the plan and holding peopleaccountable

When setting goals and objectives, be as specific as possible.For example, “improve on-time delivery by a minimum of 50 percent” will yield better results than the more generic“improve on-time delivery.” Specific goals lay a solidfoundation for the implementation process and providedirection for the key decisions that must take place. Moreimportant, they provide tangible performance metrics withwhich to measure the success of the implementation andyour return on investment. Be sure to recognize this groupfor a job well done after the ERP system is up and runningwell. This is a group of true leaders who have successfullyimplemented a significant change in your business.

Get ERP right the first time.

1. Assemble a Cross-Functional ERP Team

4

“ERP is really more of an

approach to better

managing your business.”

With so many different ERP systems to choose from,identifying the right software package can be a daunting andtime-consuming task. However, given the cost, integrationand long-term impact of ERP systems, you can’t invest toomuch time in the evaluation process.

The best approach involves using one of several online toolsto sift through all the different vendors and narrow the listdown to three to five finalists. Once you have a short list offinalists, conduct extensive interviews with each companyand “demo” their software to see which one best fits yourneeds. Be sure to ask each company to come to yourlocation for a test run. If they insist that you demo thesoftware at their site, it should raise a red flag about theirapproach to customer service.

When evaluating different packages, look for the “four C’s”of an ERP system:

• Complete. The software should integrate all aspects ofrunning a manufacturing business, everything frombidding on jobs to purchasing and materialsmanagement to invoicing accounts receivables andproducing financial statements. Anything short of thatand you’ll wind up with a cobbled together system withbolted on subsystems that may or may not work asintended.

• Comprehensive. Look for software that incorporatesthe latest technology and offers the most advancedfeatures and menu options but is also intuitive and easyto use. One of the easiest ways to assess a system’sease of use is to spend time moving through the

system’s screens. Are the screens visually uncluttered?Does the system’s flow make sense intuitively?

• Customizable. The software should allow users tocreate custom reports and use a variety of customoptions without requiring vendor modifications to thesoftware. Make sure the system has easy customizationfeatures built in from the start.

• Cohesive. Some ERP systems are actually a series ofdifferent software programs slapped together into onepackage. The best ERP applications are written from theground up by the same company, so that all the differentfunctions work together as an integrated system ratherthan a patchwork of loosely connected programs.

In addition, ERP software should be:

• Flexible. The software should adapt to the way you dobusiness. If it requires you to change your structure ormode of operations, look for another product.

• User friendly. Menu items should be self-explanatory,and the screen layout should make it easy for users tonavigate. Learning and using the software shouldn’trequire extensive reading of user manuals. However,the software should include a detailed online helpsystem that makes it easy to find the desiredinformation.

• Fully integrated. When you make a change at one pointin the system, the software should automatically makethe change throughout the entire system. Do not investin software that requires you to manually input thesame change on multiple screens.

Finally, select a software that is strong at your weakestpoint. For example, if scheduling represents your biggestbottleneck, make sure the software has a robust schedulingmodule. Although most ERP applications offer similarfeatures and functions, some are stronger in certain areasthan others. When conducting your research, look for anERP system that delivers maximum performance in yourareas of greatest need.

2. Choose the Right Software for Your Business

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“You can’t invest too

much time in the

evaluation process.”

With ERP, you’re buying more than just a software package.You’re engaging in a long-term relationship with a businesspartner that will impact the future success of your company.Investing the time up front to evaluate the vendor ascarefully as the product will pay substantial dividends in thelong run. When evaluating the company, pay close attentionto three key areas:

1. Company history. The best ERP companies have aproven track record of successful implementations,longevity within the industry, and stable ownership.When evaluating the company, ask:

• How long has the company been in business?

• Has it acquired or been acquired by other companies? Ifso, how many times?

• What is the structure of the current ownership? Howlong has it been in place?

• How many successful implementations has thecompany completed?

2. Consultant experience. The consultants who will installthe software, conduct the training and guide theimplementation are critical to your success. Extensivehands-on experience in manufacturing is paramount tosuccessful implementation. Carefully scrutinize theirbackgrounds and experience by asking:

• How long have the consultants been with the company?

• How many successful implementations have theycompleted?

• Have they worked in a manufacturing company or istheir experience limited to the software/technologyenvironment?

• Do they have hands-on experience in scheduling,materials management, inventory control and othercritical areas?

• Will they take the time to understand your businessgoals and objectives?

3. Culture. How the company does business and interactswith customers will have a direct impact on the successof your implementation. To evaluate the culture, ask:

• Are the people friendly and personable?

• Do they take the time to learn about your business andthe unique challenges you face?

• Do they respond to all questions in a timely and positivemanner?

• Is service and support an integral part of the companyor is it outsourced?

• Do they have a strong R&D function that is driven by themanufacturing expertise within the company?

• Are they committed to your success?

When evaluating an ERP vendor, check several references.Visit with current users to see how they are using thesoftware, what problems they have encountered, and howthe vendor has responded to those problems. Don’t leavewithout asking one critical question: “If you had to do it allover, would you work with this vendor again?”

Get ERP right the first time.

3. Choose the Right ERP Partner

6

“If you had to do it

all over, would you work

with this vendor again?”

Without question, the most critical aspect of any ERPimplementation is getting senior management on board and committed to the process. ERP requires a substantialchange effort for most companies, and if you and yourmanagement team are not fully committed to making ithappen, results will fall short of expectations.

What does management commitment look like?

This doesn’t mean that you have to attend every meeting orbecome an expert in the system. However, your activeparticipation will send a strong message to employeesabout the importance of the initiative and your support forthe software. Bottom line — if you support the new systemin an active and visible manner, people will follow yourexample. If you don’t support it, people won’t use it.

In larger companies, management support requires theongoing involvement of the entire management team,especially those who head critical functions such aspurchasing, materials management, inventory managementand accounting. Each department head must communicateto his or her team members, model using the system, andhold people accountable for learning and using their specificareas of the software.

It also helps to have an ERP champion, or “enforcer,”someone who lays down the law with respect to theimplementation process. In smaller companies, this is often

the owner or CEO. In larger companies, the CEO typicallydelegates the role to a trusted senior manager. Regardlessof who fills this critical role, it must go to someone in thecompany who knows how to make things happen and has atrack record of getting results. If you delegate this role toone of your direct reports, make sure you give them the fullauthority and resources they need to get the job done.

4. Provide Full Management Support

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“Have an ERP champion,

or enforcer, someone

who lays down the law

with respect to the

implementation process.”

Even when people know that change is necessary and/orgood for them, they will often resist to some degree.Therefore, every successful ERP implementation mustinclude a concerted effort to get employees to buy in to the new system.

Start by expecting some resistance to occur, then seek to understand the reasons. For example, some people —especially those who have been on the job a year or more— may resist simply because it feels more comfortabledoing things the old way. Others may feel the currentsystem is working fine, so why fix what isn’t broken? Afew may consider ERP an invasion of their turf and resistout of fear and/or company politics. The more you knowabout why people resist the change, the better you canaddress their issues and improve your chances of asuccessful implementation.

To make the change more attractive to employees andencourage their buy-in:

• Communicate the need for the change. Explain howERP will make their jobs easier and how the companywill benefit as a whole. At the same time, point out howdifficult it will be for your company to remaincompetitive without it.

• Demonstrate your commitment and support. Whenstaff members see that management is fully behindthe initiative, they are more inclined to support it.

• Get people involved. Insist that people take ownershipof the process. Tell employees, “We’re depending onyou to learn this because we’re going to come to youwith our questions.”

• Assign specific tasks and responsibilities. Often,resistance is due to a fear of the unknown. When peopleknow what is expected of them and what they areresponsible for, they will more readily embrace thechange and move forward.

Above all, hold people accountable for learning the systemand using it. If you pay lip service to the initiative but fail to

follow through, people will quickly surmise that you don’tmean business and will go back to using the old system.

Get ERP right the first time.

5. Get Employee Buy-In

8

The second most important factor in a successfulimplementation involves having a written plan. (Hint: here’sa key point to look for when evaluating vendors. A goodvendor will insist that you have a plan and will work withyou to create it.)

Why is a written plan so important? Because it removesmuch of the ambiguity from the process, establishesdeadlines for achieving key milestones, and provides a toolfor ensuring that all individuals and departments stay ontrack. In addition, a written plan serves as both a guidepostand a guiding force behind the implementation.

An effective ERP implementation plan can be done inspreadsheet format in one or two pages. It should:

• Identify all technical issues that need to be addressedby IT

• Include all goals and objectives

• Assign specific tasks and responsibilities to individualsand departments

• Set deadlines for important milestones such as dataconversion, training schedules and data testing

• Establish a firm “go live” date

Many companies also use an implementation audit to trackprogress against the plan. In fact, the best ERP vendors willprovide you with their own audit form and insist on receivingyour feedback. These audits typically ask questions relatedto the general areas of security, menu, help, training andconversion, as well as specific modules such as inventory,

estimating and operations. They provide an excellent tool formeasuring how well people are learning and understandingthe software during the training phase and for identifyingpotential bottlenecks in the implementation process.

A good implementation plan starts with realistic goals. Forexample, don’t expect to buy the software in the middle ofNovember and go live with it on January 1. Also, take intoaccount the various workloads of departments andemployees when setting up the implementation timeline.Overloading people who are already working at full capacitywill raise stress levels and resistance to the change. Asmuch as possible, schedule training and implementationaround work, rather than in place of it.

Finally, keep in mind that no plan — no matter how wellwritten — unfolds without some adjustments. With ERP, themost successful implementations are those that follow thesteps from start to finish, even if the timeline gets a bit offtrack. If minor bumps occur, stick to the components of theplan as much as possible, but be prepared to tweak thetimeline to accommodate circumstances that may arise.

6. Have a Written Implementation Plan

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“A good implementation

plan starts with

realistic goals.”

There are two basic ways to implement ERP software.

The phased-in approach implements the software one or twomodules at a time, generally starting with the areas that needthe most improvement. This gives users more time to train onthe software and get comfortable with it before going live. Italso puts less pressure on the organization as a whole, as noteveryone is required to learn the software and go live at thesame time. Lastly, it can also first address the areas of yourorganization that have the greatest inefficiencies and,therefore, produce fast gains and early successes.

The disadvantages with the phased-in approach are that itcan allow users to procrastinate learning the system, and itsometimes pits one group against another. For example,those required to learn the software may resent the extrawork, while those not using it may feel left out.

With the big bang approach, everyone trains on the newsystem at the same time and the data gets converted all at once. On the appointed date to go live, you literally unplugthe old system and plug in the new. The advantages?Everyone gets involved, plus you integrate all the systemsat once rather than over a period of time. This approachalso cuts down on procrastination. Perhaps most important,it creates a shared experience within the company aseveryone learns the system together and works to make the implementation a success.

Drawbacks to the big bang method include having less timeto test the data and experiment with the system beforegoing live. Plus, if key people fall behind or miss training, itcan force postponement of the go live date, which can stallmomentum and enthusiasm for the project.

Which implementation approach is right for you? Thatdepends on several factors, including the time frame for theimplementation and the amount of people and resourcesyou can commit to the project. A good consultant will makea recommendation based on his or her understanding ofyour company’s needs. However, the final decision shouldalways rest with your implementation team.

Regardless of which method you choose, the actualimplementation requires four basic steps: preparation,converting the data, training/testing and going live. Eachstep should have specific timelines for completion andsomeone accountable for ensuring those deadlines aremet. Keep in mind, however, that implementation is a fluidprocess that requires adapting to different circumstancesas they arrive. So plan thoroughly, implement carefully,and be prepared to adjust when necessary.

Get ERP right the first time.

7. Select the Right Implementation Approach

10

“The actual implementation

requires four basic steps:

preparation, converting

the data, training/testing

and going live.”

When it comes to training employees on the new ERPsystem, two critical questions immediately arise:

• How much training is required for a successfulimplementation?

• How much should you budget for the training?

As a rule of thumb, you can never have too much training,especially when embarking on a big bang implementationapproach. ERP is a sophisticated system, and people needplenty of time to learn the product, experiment with it andsee how it works before actually going live. Granted, thebest ERP applications are intuitive and easy to use, butproper training goes beyond the basic software so thatpeople can utilize all the features and maximize yourinvestment in the software.

The second question is not so easily answered. How muchyou budget depends on the size of your company, thenumber of employees who will use the product, and theirknowledge base regarding the software and computers ingeneral. Generally speaking, smaller companies will payless for the software, but more for training. As thecompanies get larger, the cost of training as a percentage oftotal cost goes down. Once you get to 15+ users, a trainingbudget equal to 25 percent of the software cost represents arealistic minimum.

Regardless of cost, the best ERP companies offer threedifferent types of training:

• Vendor-based. Your employees go to the vendor’s sitefor an intensive basic course in the software. Thistypically involves the first round of training andgenerally lasts three to five days.

• On-site. The vendor comes to your site to work with specificgroups and/or individuals. This training can last one ormore days and usually involves some of your own data.

• Online. This can include online tutorials as well assubscription classes with a live instructor. The classesgenerally run one to two hours and cover specific areasof the software.

In particular, the subscription classes can help employeesget up to speed quicker and use more of the system onceyou go live. They’re also good for second and thirdgeneration employees, so that outgoing workers do not haveto train their replacements. Finally, recognize that trainingshould not end with implementation. Bringing in onsiteinstructors once a year will enable new and existingemployees to use the system much more effectively, whichenhances your ongoing return on investment.

8. Train, Train and Train Some More

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Ultimately, the success of any ERP implementation dependson three critical factors: firm support from seniormanagement, a written plan with clearly defined goals,timelines and responsibilities, and a comprehensive trainingschedule that includes vendor-based, on site and onlinetraining. Follow through on these three areas and you’vewon 95 percent of the battle.

For the remaining five percent:

• Choose your priorities carefully. Most companies do 80 percent of their business with 20 percent of theircustomers, 20 percent of their vendors and 20 percentof their part numbers. If you plan to convert your data alittle at a time, start with the 20 percent that will yield80 percent of your results.

• Don’t waffle on the “go live” date. People needdeadlines to hold them accountable. If you extend thedate because people aren’t ready, they will continue toprocrastinate. When you set a firm “go live” date andstick to it, people will learn the system.

• Avoid the “super user” syndrome. Don’t depend onone highly motivated employee to become expert onthe software and then teach it to others. This approachensures a delayed implementation at best and outrightfailure at worst.

• Keep the momentum going. Avoid stops and starts inthe implementation process at all costs. Once peopleget excited about using the system, it’s better to keepthe momentum going, even if you only implement alittle at a time.

Finally, accept the fact that you will never find a perfecttime to implement ERP. If business is slow, you may notwant to spend the money for thorough training. If thebusiness is growing rapidly, employees may feel they don’t have the time to do their regular jobs and take onsomething new. The bottom line is that ERP involves a giantstep forward to position the company for sustained growthand profitability. Keeping this end goal in mind will make it

easier to endure the growing pains that inevitably arisewhen undertaking an organizational change.

If you decide to implement an ERP system, we hope youchoose Global Shop Solutions. Regardless of which systemyou choose, we hope it exceeds your expectations. If youhave any questions about Global Shop Solutions or aboutERP software in general, please give us a call at1.800.364.5958. We look forward to hearing from you.

Get ERP right the first time.

9. Putting it All Together

12

13

Use the following checklist as a quick reference guide when evaluating ERP software packages:

1. The company has a history of stable ownership witha proven track record of successful implementations.

2. The company will come to your location todemonstrate the software.

3. The consultants take the time to learn about yourbusiness and the challenges you are facing.

4. The consultants have hands-on experience in amanufacturing environment.

5. The consultants insist that you have a written planfor implementation.

6. The software is intuitive and easy to use.

7. The software enables customization withoutmodifications by the vendor.

8. The company offers three types of training: vendor-based, on site and online.

9. The service and support function are an integralpart of the company (not outsourced).

10. The company has an implementation audit form tohelp you monitor progress during implementation.

ERP Software Evaluation Checklist

Yes No

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ERP Solutions™

Get ERP right the first time.

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The Global Shop Solutions DifferenceGlobal Shop Solutions’ unique combination of manufacturingknowledge, software expertise and commitment tocustomer service has produced more than a thousandsuccessful ERP implementations. For manufacturingcompanies that want to provide better and faster service totheir customers, gain more control over their business andaccelerate growth and profitability, Global Shop Solutions isthe ERP software of choice.

CompanyGlobal Shop Solutions is the largest privately held ERPsoftware company in the United States. Headquartered inThe Woodlands, Texas, Global Shop Solutions has officesacross the country including Boston, Chicago, Los Angeles,Dallas, Denver and Detroit, and serves customers in a varietyof industries throughout the U.S., Canada and Australia.

MissionGlobal Shop Solutions’ mission is to help manufacturingcompanies streamline their operations for increased sales,lower costs and improved on-time delivery. Global ShopSolutions consistently delivers these results through One-System ERP Solutions™ that include unsurpassed levels ofcustomer training, service and support. With a provenimplementation process and Built-in Customization™,Global Shop Solutions provides a comprehensive enterprisemanagement system that can grow with the size and needsof its customers.

OwnershipFounded in 1976 by H. Richard Alexander, Global ShopSolutions’ ownership has not changed hands in 30 years —an unparalleled achievement in today’s environment wheresoftware companies get bought and sold every few years. Asa result, Global Shop Solutions’ customers enjoy a level ofstability unmatched in the software industry. Currently,Global Shop Solutions is headed by Alexander’s son, Dustin,who has guided the company since 1990.

CustomersGlobal Shop Solutions serves as the preferred managementsolution for a variety of industries, including aerospace anddefense, sheet metal fabricators and machine shops, screwmachine shops, machine builders, repair facilities andelectronics, wood shops, medical instrumentation and storefixture manufacturers. Global Shop Solutions’ customersinclude public and private companies, which range in sizefrom 10 to 500 employees.

StaffGlobal Shop Solutions has some of the most experiencedand knowledgeable employees in the industry. Many of theconsultants and trainers have been with the company formore than a decade. In addition to their software trainingand expertise, most have hands-on experience in amanufacturing environment. As a result, they understandthe unique challenges, issues and concerns facing today’smanufacturing companies. Friendly, caring andhardworking, Global Shop Solutions’ employees arededicated to making each and every implementation asuccessful one.

About Global Shop Solutions

Dustin Alexander is executive vice president for GlobalShop Solutions. Since joining the company in 1990, he has played a leading role in Global Shop Solutions’ newproduct development, with a special emphasis oncustomer-driven applications.

Dustin has also been instrumental in Global Shop Solutions’growth and development as a leader in the ERP softwareindustry. Under his leadership, Global Shop Solutions hasincreased sales by more than 15 percent per year for thepast 16 years, and has grown into the largest privately-heldmanufacturing ERP solutions company in the United States.During that time, Global Shop Solutions has earned areputation for outstanding customer service, superiortraining and highly successful product implementations.

The son of Global Shop Solutions’ founder, H. RichardAlexander, Dustin is a graduate of Baylor University’sHankamer School of Business.

Dustin Alexander

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975 Evergreen Circle • The Woodlands, Texas 77380 • (800) 364-5958 • www.globalshopsolutions.com