Chapter 6: Understanding the Current System

Lyn sits down with Saf, Mel, Ren, Lia, Dex, and Max. Now that they have established their KPIs and goals, the next step is for Lyn to understand what the business needs. To do so, Lyn must first become familiar with the existing system being used at a micro-level. To accomplish this, Lyn presents the team with some questions that’ll help him gain some insight before they begin.

While straightforward, this question helps Lyn gain insight into the needs of the departments from the ERP modules.

For any implementation to be successful, it is crucial that the existing system—no matter how mismanaged it is—is understood to its core. Not just how something is done, but also why. Once both of these questions have been clarified and established, you become equipped with the tools to set up a smooth and functional ERP system for your business.

What’s the purpose of your department?

Max, who leads procurements and inventory, explains that their department is responsible for purchasing raw materials from suppliers based on the needs of the manufacturing department and managing the inventory of raw materials and finished goods both. Ren tells Lyn about the accounting department, which manages the finances of Spindl. They focus on bookkeeping, managing accounts payable and receivable, payroll, inventory cost management, maintaining the balance sheet, etc. Lia, who leads quality assurance, introduces Lyn to the guidelines for garment production set by the Bureau of Standards. The QA department internally checks every garment to ensure each one meets the standards. The final third-party QA takes place after packaging is complete. Once they’ve signed off on it, Lia’s department gives the stock approval to be stored in the warehouse.

Dex talks about the manufacturing department’s extensive role in the production of the garments in Spindl's catalog. From refining the raw materials to the final packaging, it all falls under manufacturing.

What is the exact process of your department, and how does it interact with other departments?

After all the other departments have spoken, Dex, who leads manufacturing, explains their department’s process to Lyn.

1. First, the procurements department handles the purchase of yarn, stitching thread, branding labels, and packaging from suppliers.
2. Once they receive their manufacturing order based on the sales expectations, the yarn is knitted into cloth, bleached and dyed.
3. Then, the compacting and steaming process takes place.
4. Following this chemical washing is conducted.
5. Then, the cloth is cut into shapes and the label is attached.
6. Then, the cloth pieces are stitched together, after which quality assurance takes place.
7. Once that’s complete, the clothes are ironed and then packed.
8. A final quality assurance assessment takes place, after which the clothes are stored in the warehouse by the inventory managers

After hearing Dex out, Lyn has a clear picture of what the process is. Then, he proceeds to ask Dex how communication between departments takes place, what software is used, and the nuances of the execution of the process.

Dex says that they usually have email correspondence for communication. The manufacturing process itself is tracked by Dex, through the use of spreadsheets that are shared with the other departments as well. There can be discrepancies from time to time since the system works without any sort of actionable data. Lyn gains insight into the pitfalls and issues of the current system and makes note of how these issues can be fixed later on during the implementation. More importantly, Lyn can now map these processes in the ERP system, which works toward Spindl's established goals.

Lyn goes through this process with every single department head.

Before beginning the next step of the implementation, it is paramount that the business goals, process, and improvement target objectives are all defined. Understanding the current state and the future state of the business is the only way we can build a bridge between the two using gap analysis.

Gap Analysis

Saf, Mel, and Lyn are huddled around a computer screen, where Lyn is showing them the barebones version of their ERP environment. There’s a sense of excitement that sparks in the air. As Lyn is walking them through the manufacturing module, Saf points out that there are a few processes that are missing. For example, after the cloth is stitched into a garment, manufacturing halts, and quality assurance takes place. Lyn, whilst making notes of their input, says, “We’re on the home stretch, but now’s the time to conduct an intensive gap analysis.”

When asked to elaborate, Lyn mentions they’ve already built the foundation for conducting this analysis by setting KPIs, and goals, and understanding the existing system (i.e. current state and future state). What remains is to describe and document the gap itself. What are the gaps between the current state and the (desired) future state? What constitutes the gap? What factors contribute to it? Are these gaps quantifiable, or qualitative? Once Mel, Saf, the department heads and Lyn vet the ERP system, they find that there are areas where they’d like to see changes and improvements that’ll help them meet their goals. When they find these gaps, they also consider bridging them by suggesting objective solutions that will come into play further into implementation.

Your ERP system is a business-critical tool, so it’s necessary to leave no stone unturned. There are many methods of conducting gap analysis. At the crux of each, however, the goal is the same. Through gap analysis, proper planning can take place. Find a method that works for your team, Project Champion, and implementers, and conduct a thorough gap analysis before beginning configuration. Not only will this give you a clear picture of what needs to be done, but it will also save you time and resources down the line.