Tuning ERP and the Supply Chain for Profitable Growth

Tuning ERP and the Supply
Chain for Profitable Growth

Three things every CFO should know about the
organization's SCM and ERP systems
White Paper sponsored by

Aligning Business and IT to Improve Performance
Ventana Research Headquarters 1900 South Norfolk Street, Suite 280 San Mateo, CA 94403 info@ventanaresearch.com (650) 931-0880
© Copyright Ventana Research 2007 Do Not Redistribute Without Permission Ventana Research - Tuning ERP and the Supply Chain
Table of Contents Visibility Needed ......................................................................................3
Supporting a Lean Supply Chain...............................................................4
Enhancing Supply Chain Visibility.............................................................4
Enabling Globalization..............................................................................5
Making It a Reality ...................................................................................6
About Ventana Research ..........................................................................7
© Ventana Research 2007 Page 2 Ventana Research - Tuning ERP and the Supply Chain
Visibility Needed In all companies a close link exists between information technology and an organization's ability to execute business efficiently and effectively. This is especially true for midsize organizations, which Ventana Research defines as those with 100 to 2,500 employees. Our research consistently shows that most chief financial officers and other senior finance executives in these companies fail to appreciate this link sufficiently, and therefore are not aware of - or, if they are, may resist - the need to make changes to their core financial systems. Finance executives are understandably reluctant to make major changes to these critical systems because the process can be time-consuming and expensive. For this reason, they tend to delay any changes for as long as possible. Ostensibly, such a conservative approach reflects a reluctance to put the business at risk if the transition is less than smooth. But a thorough cost/benefit/risk assessment should reveal whether changes in core financial systems are warranted and what those changes may entail. In both its client engagements and its research, Ventana Research has observed that well before financial systems become "broken" to the point where they threaten the orderly conduct of day-to-day business, they usually become increasingly costly and risky to the company. Usually, these growing problems are concealed by the hard work and clever adaptations of employees. Unfortunately, as a result of these well-meaning efforts, opportunities to maintain and perhaps even improve the company's profitability and competitiveness are lost. In most instances it is only when a crisis develops that company management is able to see the risks and true costs of an aging financial system. Indeed, even with the red light flashing and the alarm sounding, the link between the emergency and the inadequacy of the organization's core financial systems may not be evident to senior executives. The supply chain is, of course, the primary processing mechanism of every manufacturing company. But in today's competitive, cost-conscious global environment, it's more than that: The multifaceted, multi-company, multinational structure of the supply chain makes it the most complex management challenge found in any enterprise. Supply chain management (SCM), a critical part of any enterprise resource planning (ERP) system, no longer means just making sure that the right materials and resources move to the right place at the right time. Today, it also means ensuring that the sequences of events involved in producing goods and distributing them to customers are tuned optimally to satisfy customers, minimize costs and maximize profit. For these reasons, we believe CFOs must become actively involved in analyzing their ERP/SCM systems. They should investigate to determine if their core financial systems are adequate in three key areas to support their business. These areas are: . Supporting a lean supply chain . Enhancing supply chain visibility . Enabling globalization of a company's infrastructure. Failure to address opportunities and gaps in the organization's ... [download for more]