I often hear from companies that they have not been able to realize the intended objectives and cherished expectations from the ERP solution they implemented.
This is especially evident in the number of activities still executed manually and the many labor intensive procedures designed to support the unique characteristics / processes of the company.
Apparently the solution implemented did not match the company sufficiently.
Seems in the preliminary phase too little attention was paid to identifying the real business requirements of the company and solving the existing organizational problems. We all - business experts - know you better not start an ERP implementation when there are too many organizational challenges lying around. Unfortunately there are still managers that believe they can use an ERP implementation as a lever to remove obstacles in the organization.
But also in many cases the organization is / was insufficiently prepared, the right resources were not made available permanently, and deep insight in business processes and data flows was missing. The managers just left the implementation over to the implementation partner
"Who is here to blame!"
"Think it through before you start" is my motto. Often what I see is that the managerial involvement is limited to the kick-off of the implementation.
Without leadership and involvement, every adventure ends in a personal drama. Vision, passion, conviction and trust are what companies need to be successful - and yes, a little luck helps too.
Another important point of attention is that we should see automation as a continuous process of change. Go-live is the starting point for continuous small and medium improvements / changes.
However, most companies usually do not reach this point because they made too many concessions during the implementation and the organization has been knocked down.
electronic data exchange with customers, suppliers and between branches
One of those continuous improvements is the establishment of electronic data exchange with customers, suppliers and between branches. I know from experience that this can bring huge savings. Sometimes up to a few FTEs yearly, although those FTEs do not really disappear, but can finally focus on providing added value for the customer, supplier or internal organization.
Notwithstanding this positive outlook, I notice a lot of reluctance during conversations with companies. From a business point of view, they particularly are concerned about the consequences that increasing transparency can entail for their partners. And some companies are not at all interested in investing heavily in forming close partnerships.
The biggest obstacles, however, are the technological complexity and the fear of compromising flexibility.
Flexibility, a good excuse for companies that do not have their internal processes and data management properly in place. These companies lack structure and clear agreements. And rightly a good excuse because the success of these processes is largely determined by how well the internal data management is structured. Is there a good methodology for coding articles, materials and raw materials? For identifying partners and the different partner roles.
The lack of digital integration facilities in ERP solutions is the most valid argument. Many suppliers of ERP solutions still struggle with whether or not to offer standard integration options. We can't get around it, for years, integration has been the cash cow of these suppliers and it's hard to say goodbye to it. By the way, this argument does not apply to all suppliers. A few - I'll name just a few - SAP, JDE, Oracle, MFG/Pro have been supporting O2C, P2P and product data data exchange processes for decades.
True in the past years more and more solution providers started offering integration out of the box.
the costs of technology and changes discourage companies
Down the line the costs of technology and the changes to be made prevent companies from taking these steps.
electronic ordering and invoicing at the purchasing side
If we look at P2P / eProcurement, in particular electronic ordering and invoicing, companies do achieve significant cost savings and process improvements. For finance departments, the number of invoices processed without human intervention is a measure of efficiency of the invoice handling process - 'touchless accounting'. The aim is to process as many invoices as possible with fewer people.
BUT Straight Through Processing (STP) provides much more insight. It is an indicator for the efficiency and maturity of the total purchasing process. The more the purchasing process is automated and information systems work together in an integrated manner, the more lead times and operational costs can be reduced, the less errors will be made.
It will come as no surprise that this also applies to the processing of customer orders.
And these are - in addition to increasing revenue by strengthening relationships with customers or suppliers - the savings incremental continuous improvements deliver.
Why hesitate to put P2P and O2C on track ?
Sure it costs money, we can all agree, but it pays off - better structured processes, improved internal data management, higher degree of Straight-Through processing (STP), strengthened relationships with internal and external partners, and for some companies it is no longer an option but an obligation.
Since April 2019, Governments and Institutions are obliged to comply with the Regulation 2014/55/EU that states they must be able to receive electronic invoices. All companies that provide goods and services to them will have to send structured invoices electronically, now or in the near future.
SAP as a backbone
Assuming a company has SAP as a backbone, I dare to say that it is possible to connect a fairly high percentage of suppliers in a limited period of time by:
following a differentiated strategy where you provide multiple channels to present purchase orders and/or receive invoices including a supplier portal, direct integration (EDI) or integration through an intermediary
maintaining a clear strategy towards applying and using standards and agreements for the identification of products and locations, including GS1 GLN & GLN
using a limited set of data exchange standards and agreements, including PEPPOL, OASIS UBL, OAGI, ANSI X12
using standard SAP integration facility
follow a structured Supplier onboarding approach
What have we learned from the past years?
Companies automating P2P and O2C processes have had less positive experiences in the past years due to:
lack of clear goals and demarcation of the scope of the project
outsourcing the implementation to a third party that favors a much too technical approach and pays too little attention to the collaborative processes
pressure of implementation-specialists for the use of customization because standard interfaces supposingly are not available or do not perform
low level of maturity of B2B integration partners and their solutions
My experience as a Project Manager of ERP and eProcurement / eCommerce projects is that solutions such as SAP, MFG/Pro and JDE have enough standard facilities BUT it does require that implementation specialists really dig deep into the solution to understand how it works and what the maker intended.
From 2010 to mid 2015, I implemented P2P and O2C processes with technical wholesalers in the Netherlands / Europe (EDIFACT, UBL, PEPPOL, openTrans) for the Muelink & Grol Group and in the USA (ANSI X12) for Duravent.
Honoustly I can tell from this experience that without much customization, the standard SAP IDOC interface can be your best friend, but only if you go really dig deep.
SAP Cloud Platform Integration Suite
Today, with the SAP Cloud Platform Integration Suite, integration has become even much more easier. The SAP Cloud Platform Integration Suite, residing in the Cloud, is SAP’s strategic integration platform as a service to simplify and accelerate the integration of SAP as well as non-SAP applications in heterogenous landscapes.
I wrote an article in 2017 (SEE link below) about how the SAP eDocument Framework and PEPPOL simplifies eInvoicing and eProcurement with out-of-the-box functionality. Since then SAP only improved their offering by becoming a certified PEPPOL Access Point, which enables you to communicate directly out of SAP with your partners using PEPPOL.
For a recent overview of the eDocument Solution go to the article on SAPSPOT (April 2018).
But SAP is not the only one with an integrated integration solution
JDE: In 2016 I have been working for Kaemingk, seasons decorations defining and setting up EDI integrations with a large number of European and US Wholesalers.
QAD / Philips: My journey in eBusiness started here. We were ahead of time at Philips where we automated all communications between suppliers and customers using the Philips COPS standard and the back-to-back ordering functionality (QAD Enterprise Material Transfer). Read more about it in my articles "Ketenintegratie: hoe gegevens stromen doorheen een ecosysteem" en "Ketenintegratie, leuker en uitdagender kan werken niet zijn" (SEE links below).
AND NOW, ROLL UP your sleeves
Now the big question is when will you start with electronic data exchange with your customers, suppliers or between branches?
More articles:
July 2020: Ketenintegratie, leuker en uitdagender kan werken niet zijn!
September 2018: Ketenintegratie: hoe gegevens stromen doorheen een ecosysteem ?
September 2018: PEPPOL BIS Post-Award Scenario's
June 2017: SAP EDI simplifies eInvoicing, eProcurement and eReporting
October 2016: Running O2C / P2P in and with SAP or any other ERP
July 2016: What processes add value for the customer?
February 2016: How EPCIS and RFID are changing E2E Visibility and Traceability in the Supply Chain
December 2015: Take the most sustainable responsible road to electronic invoicing!
Tags: EDI, ERP, PEPPOL, SAP, e-Invoicing
