What Your ERP Never Shows You …
I’ve been thinking about something Warren Buffet said during an interview a few years back when he was asked about the worst investment decisions he had made. He shares "..the biggest mistakes are the ones that actually don’t show up…they are the mistakes of omission rather than commission." He said it was the things he knew enough to do but didn’t do, namely the investment opportunities he felt like he should have taken advantage but didn't, that bothered him.
You too are investing or considering investing in a major software project. ERP systems are not an IT project; they are an opportunity to transform your business. Let’s talk about three major errors of omission as related to an ERP implementation: failing to review business process, ignoring inventory, and measuring project success by the wrong metrics.
Paving the Renegade Trails
Have you ever hiked a trail and noticed little ‘short cut’ trails that hikers have worn in over time? Businesses do the same thing operationally; they develop workarounds and manual processes outside the system. When the ERP implementer steps in and says, ‘tell me how you run your business,’ what they are really telling you is ‘give me enough information on your workflows so I can configure the system to run in a similar way.’ If this is you… STOP.
Reengineering all your processes is overwhelming and impractical. You don’t have the bandwidth; I get it. Consider only reviewing the major processes that drive your business; don’t just focus on resolving the bottlenecks. Look closely at how demand comes into your company and how that translates into order releases and manufacturing plans. Review your S&OP process so you can take advantage of the ERP software features that help you look forward and identify shortages in materials, labor, and equipment. Dive deeply into how information goes to and from the manufacturing floor and how that information translates into actions.
Ask your implementation team for best practices or how they have seen other organizations deal with the same business challenges. Have outside resources like Trail Guide work alongside your team during the implementation to make the most of those opportunities. If you don’t, the implementers will just pave over your short cuts and you’ll be asking yourself after go-live why you dragged your organization through a year of turmoil only to have your processes look exactly like they did before.
Cleaning Up the Garage
If you are like me, you struggle to keep your garage organized. This summer, through the less than gentle prodding of my beloved, I spent a lot of time cleaning and organizing. We bought new shelving and containers from Costco, took a load to the dump, installed an overhead shelving system, and I organized my rolling toolbox (it was painful). I knew these things needed to be done, but was just unwilling to put the time in. Don’t make the same mistake with your company.
Your company likely has hundreds of thousands if not millions of dollars of working capital tied up in inventory. Inventory is like the water level in the river: when the water is high you don’t feel the rocks hitting the bottom of the raft. What I mean by that is that you don’t see and aren’t forced to solve real business problems when you overbuild inventory. That 10-minute fixture changeover that is currently taking 2 hours, not a problem. That fulfillment commitment your company has on SKUs with McMaster Carr, not a problem. Running out of space and stacking things on the floor, not a problem.
For your ERP system to work properly, the inventory MUST be accurate. Cleaning, counting, and reorganizing inventory is a big effort, but one that shouldn’t be missed during your ERP implementation. In fact, loading the wrong starting inventory quantities and locations in an implementation is catastrophic. I can say that from experience.
Here is the truth, manufacturers make the most money, have the highest throughput, and the quickest delivery times (CSAT) when they can pivot quickly from one item to another. That is lean, but it only happens when inventory levels are lower and turn rates are higher. Little’s law tells us as WIP increases, throughput decreases. Lowering your WIP will transform your business performance financially and operationally. Use the implementation as an opportunity to get your inventory cleaned up. As an Operational Controller I took my facility from $26M in WIP down to $14M in two years and used the ERP implementation as a change vehicle to help drive it. If I can do it, so can you.
** Controller tip: use that inventory reserve as an opportunity to clean and write off your inventory without a major P&L hit. If your reserve isn’t large enough and you have a project like an implementation coming up, increase it a little each month so you have enough cushion when the time comes to clean up your shop floor and your balance sheet.
Stopping too Early
Your ERP project is a success. It finished on time and on budget. Go-live wasn’t a disaster and you are now using your new system. Dashboards are displaying your charts, product is shipping and money is coming in. Everyone is praising the accomplishment and grateful for the return to normalcy.
I used to manage a portfolio of implementation projects just like yours and used these same metrics. I had happy clients, but what did they leave on the table?
The cost of your implementation was an estimate. The Gantt chart reflecting your project timeline, you guessed it, an estimate. If you only measure yourself against your estimates, you are only measuring your ability to estimate. The true measurement of a successful ERP implementation is comparing the outcome with the goals defined in the original project charter, high level things like:
- Increased visibility to data and ease of reporting
- Establish a unified platform that connects your manufacturing, retail, and e-commerce channels
- Deploy an AI enabled platform that can automate workflows and identify anomalies
- Replace siloed software with a modern, future proof, minimally customized cloud-based system
And measurable outcomes like:
- Reductions in inventory
- Stockout rate improvements
- On-time delivery increases
- Labor productivity increases
It turns out this is an industry-wide blind spot. Panorama’s 2026 ERP Report found that companies focus heavily on making processes run faster (efficiency) over other benefits that are harder to quantify. Their data shows most companies would rather keep the old scorecard than do the harder work of actually changing.
If you don’t have these initial goals in front of you throughout the implementation, you will stop too early and settle for all the corners your team cuts to keep the project milestones on track. After all, you can’t see the opportunities that are being omitted because they don’t show up.
Clients need an advocate to push, challenge, and ensure that both the implementers and their internal project teams collaborate until their business is transformed as envisioned. Trail Guide can help. Give us a call.
