What should ERP change in your business?

Before your team starts using a new ERP system, agree on what should improve in the first three months. Microsoft's guidance for Dynamics 365 projects recommends goals tied to business outcomes and reviewed throughout the project. Below are seven goals for equipment distributors that also handle warranty and paid service. Each goal includes a measure to track. The final section helps you choose where to start and record your current results before making changes.

The seven goals at a glance

The goals cover three parts of the business:

• Before you accept an order (goals 1 and 2): Check the expected margin and the stock at the warehouse that will ship it.

• After you accept it (goals 3 and 4): Assign the next step to a team member and keep track of service after delivery.

• For the Owner (goals 5, 6 and 7): Plan cash payments, see overdue work and reduce the time spent preparing the monthly report.

Before you accept an order

1. Know the margin before you accept the order

Check the margin while you can still refuse a discount. The expected margin is the selling price minus the costs recorded for the order. Costs added later, such as freight or returns, can reduce it. Set a margin floor: the lowest margin you accept without the Owner's approval. In the next article in this series, Margin, stock and cash: three checks before a distributor approves an order, we use one example order to show how to check margin, stock and payment dates before approval.

Measure: Orders approved below your margin floor, with the reason for each exception.

An order already under way, with its margin: 42,000.00 PLN, or 61.76% of the 68,000.00 PLN order value. Sample data in the PowERP demo company.

2. Know what each warehouse can actually supply

A stock figure helps only when it matches the shelves. A salesperson promising a spare part needs to know which warehouse holds it and whether the quantity on the shelf matches the record. Count a small group of fast-moving items and compare the results with the recorded quantities.

Measure: Share of counted items that match the record.

After you accept it

3. Move an order between teams without losing the next step

Each step needs a responsible person and a due date. For example, sales confirms the terms on Monday and purchasing orders the part. By Friday, the order status still reads “confirmed”. The warehouse has nothing to prepare, and nobody has asked when the supplier will deliver.

For one month, note where each delay began. This helps you find the step that needs attention and agree who will act next.

Measure: Orders with an overdue next action, and time from confirmation to preparation.

The Orders / deals list: each card shows a status, the invoiced and paid amounts and the delivery date. Sample data in the PowERP demo company.

4. Continue the relationship after delivery

Keep the service history and the next action clear. When a Customer reports a fault, use four steps:

• Step 1: Check the history. Find the original order, the equipment and earlier service requests.

• Step 2: Assign the next action. Record who will respond, what they will do and when the Customer will hear back.

• Step 3: Track what is holding up the work. Note whether the request is waiting for a technician, a part or paperwork.

• Step 4: Measure the wait. Count the time to the first diagnosis or specific next step, then the time from completing paid work to issuing the invoice.

For a detailed example, read the third article in this series, Looking after Customers once the machine is delivered: ERP goals for service teams. It follows one service request from the first call to completion and, for paid work, the invoice.

Measure: Time to first useful reply, and time to invoice (from completed paid work to the invoice).

The same order gives each team a specific result to check.

For the Owner

5. Plan when money will arrive and leave

A profitable order may still leave you short of cash. You may have to pay the supplier before the Customer pays you. List expected Customer payments, supplier bills and other planned spending for a set period, such as the next three months. This shows when your balance is likely to be lowest.

Measure: Lowest projected balance in the planning period, then the gap between forecast and actual receipts and payments.

6. Spot a problem while someone can still act

When a delivery is delayed, someone needs to act quickly. If the delay becomes clear on Tuesday, the person responsible can check the options and update the Customer on Wednesday. The business Owner needs one list of overdue work across teams, with a responsible person beside each item.

Measure: The number of unresolved problems each week.

The demo widgets show how overdue work can be brought into view; the values are sample data.

7. Spend less time preparing the monthly report

A report should start with current records. If the manager still asks sales, service and the warehouse for separate files each month, note how many hours the team spends collecting the files and resolving differences between them. Also count corrections made after the first version reaches the Owner.

Once the team prepares the report from shared ERP records, measure the time and corrections again.

Measure: Hours spent assembling the report, and corrections after its first version.

How to choose, and what to write down

Start with two or three goals. For each one, recall the last time that problem occurred. Did your team spot it in its own records, or did a Customer, supplier or accountant tell you first? Give priority to problems that someone outside the team had to point out.

For each goal, record a baseline: the current result before you change the process. You can compare later results with this starting point. Write down five things:

• Measure: the one given under the goal, for example orders approved below the margin floor.

• Definition: what counts, for example orders confirmed below the floor in the order list, quotes excluded.

• Today's value: counted from last month's records or the last ten orders, even roughly.

• Who records it: one named person.

• When you check again: after a full working cycle, such as the next month end.

Bonus tip: a number without an Owner soon becomes another forgotten report.