Management Insights Justin D. Lee Management Insights Justin D. Lee

ERP Systems: Breaking Down Organizational Readiness and Sustainability Considerations for Implementation

Trish Nguyen from TPG

"If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term"

What is an ERP and why might an organization need one? How can it make someone’s life/job easier?

An ERP is enterprise resource planning. It’s essentially an integrated management system of a company’s main business processes, through software and technology. Typically, it’s a suite of applications that are integrated or modules that an organization uses to collect, manage, store and use the data for their business activities.

It makes somebody’s life or job easier because it’s designed to track business resources such as cash or materials or production capabilities. And then they balance that out with business commitments. The data from purchase orders, HR, payables and more, is shared across departments, making it a single source of the truth in real-time. This makes all department functions work seamlessly together.

 

Are there any key considerations that a company should think about before implementing an ERP system? Are there any cautions or pitfalls that are common?

  1. Buy-in from leadership

The leadership team must have a willingness to champion the integration, build that organizational support. If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term.

2. Understanding of the organization’s business process requirements

Before implementing an ERP, companies need to know what the current state of their existing processes is, including how mature they are and how much mature documentation exists around those processes. From a finance perspective, understanding the critical reporting elements and what the information system needs to provide.

3. Clean data

Having clean data, and having a good plan in place to be able to migrate the good data into an ERP is critical. The system is only as good as its data. Does the company have the right team and competencies to undertake an integration? What gaps exist? And what mitigation plan is being put in place?

4. Capacity

Does the organization have enough capacity to undertake the integration? Do your people have the bandwidth to undertake this (and the necessary training hours that come with it) on top of their existing jobs?

 

How has an integrated ERP system evolved and how will it continue to evolve in a virtual / post-COVID-19 world?

Any system through this pandemic must support increased collaboration. A lot of companies are still on traditional hardware-based ERPs, while some have moved to cloud-based platforms. For those with older systems, when work-from-home orders began in March of 2020, there was a scramble to get new technology integrated to enable remote working. In 2021 and beyond, it is likely that organizations will continue to place more importance on making sure their employee can access everything online.

 

What trends or innovations are emerging in the space right now. Are there any opportunities that companies should be taking advantage of?

  1. Increased use of cloud-based systems

As mentioned above,  one of the benefits of internet-based systems is the accessibility of real-time data and up-to-date software. Any time there is an update or upgrade, it is automatic across the company. This also makes it a lot easier to integrate with other applications. With this, companies will continue to look into what they can integrate together, to make their systems easier to use.

2. Demand for niche systems

There’s a growing demand for more niche solutions to optimize processes for both businesses and vendors. ERP systems started with the big guys (i.e. Oracle, SAP etc.). Now, companies are looking for ERPS that specifically serve their industry or niche business needs with features and functionalities that companies operating in this niche market would use. It’s no longer a generic software.

3.AI Integration

Companies are facing an increase in the number of complex and unstructured data that they’re collecting and that they’re having to analyze. Integrating an ERP with some sort of artificial intelligence platform makes it a lot easier to process that information.

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Management Insights Justin D. Lee Management Insights Justin D. Lee

Optimizing Accounts Payable (AP) Processes to Free up Cash

Jennifer Phan from The Poirier Group

"Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques which often causes bottlenecks."

Why is optimizing AP processes so important for a company’s ability to free up cash and strengthen its working capital?

Optimizing AP processes is often not on many organizations’ list of priorities. As it is a back-office function, the importance of improving AP processes is often overlooked. In theory, if a business simply delays invoice payments to the last possible date, this will allow the business to have more cash on hand to maximize free cash flow. However, with this approach, the business will put themselves at risk of service/delivery delays, late payment charges, and will build a poor relationship with suppliers which will indirectly impact the business down the road.

Businesses need to optimize AP processes as it will help free up cash and strengthen working capital. If optimized, this will allow businesses to fund growth and build shareholder value. With an optimized AP process, there are structured processes in place so that invoices are received and processed within a timely manner. However, as part of this process, management must emphasize the importance of optimizing work capital in its culture as it involves collaboration within the whole organization from submitting POs, receiving invoices, and reviewing/approving invoices to processing payment for the invoice.

 

What are the main activities to optimize to improve accounts payable processing and reduce bottlenecks? How can automation help?

With the advanced technology that we have today, we would always see efficiencies with automation.

Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques (just to name a few) which often causes bottlenecks. In essence, the more manual tasks that are involved in the AP process, the more bottlenecks and human errors occur.

A great way to reduce bottlenecks is to use AP automation software. Tasks such as scanning invoices, entering invoice data, matching invoices against PO, and routing invoices for approvals can all be automated. This will greatly reduce invoice processing time and human errors while freeing up time from repeatable tasks to reallocate to value-add tasks.

 

How can you select and negotiate with vendors to create favourable buying terms? (i.e customer service quality, payment terms, price etc.)

During the vendor negotiation process, always negotiate for longer payment terms or early payment discounts to save costs or free up cash flow. It helps to utilize a vendor evaluation and selection matrix (or a decision matrix) to compare different vendor pricing and offerings to help with the decision process. This matrix can be leveraged during the negotiation process to induce suppliers for better pricing/payment terms and services.

 

What are some best practices companies can adopt to create both quick wins and long-term results?

Go paperless!

There are many options for electronic payment nowadays. Companies should move away from issuing cheque payments and transition to the different forms of electronic payments available today. When companies issue cheque payments, it requires a lot of admin work. The cheque needs to be issued, signed off and then mailed out (which often time takes 3-5 days to arrive at the destination). If the cheque is stale dated it needs to be re-issued and if it gets lost in the mail a stop payment needs to be processed. All of this admin work can be eliminated if businesses move towards electronic payments. With electronic payments, payments are made quicker, it is more secured and it does not require as much admin work.

Create and manage an AP workflow

Proper management of AP workflows is very important. Oftentimes, particularly near month-end, quarter-end, or year-end closing, there are high volumes of invoices that need to be posted before the books are closed. Without a proper workflow in place, it is common to see a backlog of invoices in the queue pending approvals which can cause delays or often an oversight in approvals due to the high volume of invoices that needs to be reviewed.

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Learning to motivate subordinates correctly is an essential skill for a qualified boss

Burmington Management Consulting Group

Motivation, at any stage of life is a very effective way to promote a positive attitude.

Babbling babies receive encouragement from their mothers to speak bravely;

Children who are new to school will receive encouragement from teachers and play with unfamiliar classmates.

Sons with poor grades will receive incentives from their mothers to work hard to improve their grades.

In the workplace, motivation is a means for the boss to strengthen the motivation of employees to get better results.

However, incentive is also a kind of knowledge, is good is twice the result with half the effort, with bad is to be counter-productive.

So how is it right to motivate employees? Let's look at the following questions first:

There is a horse in the distance. How do you attract it?

A. With grass B. With whip C. With mare D. Walk over and bring

You will find that no matter which method, can achieve the goal. But on closer reflection, each answer has its own problems.

If the horse is not hungry, A may not be effective, and if it is hungry, C. B and D, also if you can get close to the horse, what if you go there and it runs off?

To put it bluntly, how to motivate, or depends on the needs of the motivated. What he wants, what you give, is the best incentive.

In the incentive process, the direct supervisor and the human resources department need to cooperate with each other.

What the immediate supervisor has to do is:

The first is to conduct an employee needs survey, the second is personality needs inspiration, the third is the implementation of spiritual inspiration, and the fourth is to stimulate policy implementation.

What HR does is:

The first is the organization of employee needs survey, the second is the common need to motivate, the third is the implementation of material incentives, the fourth is to stimulate policy.

The main four steps:

Step 1. Investigate employee needs.

Every year, HR department should organize all departments to carry out employee needs survey to understand what employees focus on. Line manager should cooperate with HR department to do employee needs survey, explain the importance of needs survey to employees, ensure the authenticity of employee needs.

Step 2. individual requirements and generic requirements management.

According to the survey results of employee needs, to the common needs, human resources department should establish the company level to meet the needs of countermeasures; On personality needs, and line managers to research specific personality solutions.

The third step, material incentive and spiritual incentive double management.

Human Resources Department is responsible for formulating the implementation plan of material incentives to meet the needs of employees. Line manager to develop specific spiritual incentive programs to meet the spiritual needs of employees.

The fourth step, incentive policy management.

Human Resources regularly complete the incentive policy, supervise all departments to implement in place, line manager is responsible for the implementation of incentives in place. Joint efforts by both sides are really effective incentives.

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One More Chip Company Went Bankrupted

Due to the bottleneck of electronic industry, "chip development tide" started across the country a few years ago. All kinds of funds poured in crazily, and chip industrial parks have also been built in various places.

However, so far, few.chip factories are heard to output chips, some of them have closed down.

Since the collapse of "Huaxintong Semiconductor" in 2019, the most famous one, Wuhan Hongxin, which claims to invest nearly 100 billion yuan, has turned into an unfinished building and invested tens of billion yuan in "Nanjing Dema", with tens of billion yuan spent out, has also declared bankruptcy.

There are also Chengdu Gexin: established in 2017 and stopped working in 2020; Changsha Chuangxin: established in 2013 and auctioned in 2020; Shaanxi Kuntong Semiconductor: established in 2018 and suspended in 2020.

We wonder What on earth happened to these chip companies that once boasted high hope for?

Still, there are some more stories.. A few days ago, there was another piece of news that Shandong chip enterprise, Jinan Quanxin, with 59.8 billion yuan invested in, has stopped paying wages since April this year, and the construction of the factory building has also stopped one after another.

This is a chip enterprise that once had strong support from Jinan, Shandong Province. This enterprise also weny to Taiwan to hire technicians.

According to the report, Quanxin currently has only more than 400 employees, 180 of whom are engineers recruited from Taiwan. The average monthly salary of these Taiwanese engineers is between 50,000 yuan and 100,000 yuan.

The construction of Quanxin's plant began in 2019, when it was planned to build a chip plant that could produce 12 nanometers chips, with an annual output of 480,000 wafers and 2,400 light masks.

The factory has so far ordered a large amount of equipments, and the deposit alone has paid about 1.7 billion yuan.

According to public information, Quanxin was established at the end of January 2019. The three major shareholders are Yixin Jiji Circuit (Zhuhai) Co., Ltd., Jinan High-tech Holding Group Co., Ltd. and Jinan Industrial Development and Investment Group Co., Ltd. The last two units are all affiliated to Jinan State-owned Assets Supervision and Administration Commission.

However, the business is now facing great difficulties.

An employee of Quanxin said in an interview with the reporter, "The company is in a very difficult situation now. Since April, it has stopped paying salaries, and the company is forcing employees to leave."

The contractor in charge of plant construction also said, "This enterprise has changed the general contractor many times during the construction of

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