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Route to Market & Supply Chain Blog

FMCG ERP – how will you cope when yours fails?

Posted by Dave Jordan on Wed, Apr 07, 2021

The last few months have been remarkably busy on both the business and domestic fronts. COVID 19 and other challenges have ensured there was little time to rest over the Christmas season and 2021 has started off in the same vein. What does the rest of 2021 have in store for us?

fmcg-erp-in-postIn between UK lockdowns and during one of my quick dashes in and out of EU-free UK, I had a serious melt-down on communications for a variety of reasons. I had to send some important information (not data!) overseas urgently. No PC, no smart phone and certainly no scanner forced me to ask a question that made me feel old and backward in equal measure. In the Birmingham Post Office, I asked if I could use their fax machine!

The lady behind the Post Office counter looked at me as if I had requested her to do something horribly illegal before asking her colleague if they actually had a fax machine. This reminded me of the BBC2 Not The 9 o’clock News sketch where Mel Smith’s character enters a hi-tech electronics store and asks for a “gramophone”. Click here to see the late, great Mel Smith and the future Mr. Bean and Johnny English in action.

I digress. They had one! The Post Office fax machine was not even plugged into the wall and it was extremely dusty having clearly not been used for some time. Would it work, could we work it? Despite this, my handwritten notes were quickly despatched along the wire accompanied by the wheezing and whirring noise only people of a certain age will recognise. The noise that sounds like a cat being squeezed through a mangle while singing Bohemian Rhapsody – go and look mangle up on Wikipedia if you do not know. (No cats were harmed in the making of this blog.)

So, job done and quite cheaply too as I was charged the price from when the machine was last used. Four pages transmitted for the price of 3 groats and an egg; not bad eh?

Why am I telling you this tale of technological woe and embarrassment? Recently a major, multi-national FMCG company celebrated 10 years use of their globally harmonised ERP system. Despite the lack of relevant operational knowledge in the originally hired consultancy firm (why does this still happen?), the implementation had initially proven successful. Management by Excel spread sheet was apparently a thing of the past, all transactions were diligently recorded and performance KPIs automatically generated on a daily basis.

Excellent! Well, it was indeed excellent until the ERP suddenly ground to a halt and just before the quarter-end. No ERP exists without glitches and downtime for necessary patches and fixes but this was completely unplanned, unexpected and at a commercially sensitive time. The usual pressure to ship out the month-end sales peak was in full flow when the ERP stopped issuing sales invoices. No invoice = no shipment = no sale (= no sales bonuses!) = no cash collection.

The ERP was clearly not going to fully operate again until well into the following month so what to do? Not a problem, just type out the invoices using a PC or even revert to paper and pen and handwrite them. Ok, so this might take longer and there may be some errors but at the very least, invoices will be issued, goods despatched and critical cash sales value accrued.

Or not actually! Nobody knew how to issue invoices manually. All the old heads had shuffled off into retirement leaving the company without the basic but necessary historical experience. Slick and expensive ERPs are wonderful but if you do not have routinely tested fall-back options you will find yourself in big trouble one day. You almost certainly have dummy fire drills and dummy finished product recalls so why isn’t this case with your critical business system? Don’t be a dummy!

High quality ERPs remove the need and ultimately the capability of people to think about their roles and key tasks. ERP operators input data, produce reports and monitor processes rather than make considered decisions. In fact, they are not allowed to make decisions and that can expose your business when the IT fails, and it will.

CEOs should not simply accept the IT Manager’s reassuring statements; insist on checking that the required back-up system and knowledge are in place with your own eyes.

If necessary, ask an external expert resource to document the status quo. At the end of the day, it is your responsibility.

Tags: CEO, Supply Chain, IT, Recovery