Edge Cases in ERP Process Re-engineering

PostedOn: 2017-11-25 11:03:05

Re-engineering your business processes is a critical part of installing an ERP system. As part of the installation, every process in the business needs to be examined, rationalized and streamlined. 

This includes not just documenting the normal flow of business but the edge cases as well what happens when a business doesn’t proceed normally. As a rule, you want your process documentation to include all possible cases, no matter how unlikely. This is important because you don’t want anything loose left in your system. Every condition needs to be accounted for. 

Accounting for edge cases is one reason business process re-engineering takes so long. It is time-consuming to account for all possible outcomes, but it is important to make your new suite of business processes flows smoothly. 

Generally, this takes a second pass through the process flowchart. Ask yourself ‘what happens if things don’t go the way you expect?’ and plan that out. 

Failure to do so can leave you with all kinds of problems ranging from minor and annoying to major headaches. This is specifically true because the workflows in ERP systems are designed to stay fixed and not be changed. 

One chain of fabric stores found that out the hard way when they installed an ERP system. After a two-year installation process, they thought that they had everything under control. 

It only took a couple of months to find out differently. They had forgotten to account for shrinkage goods that disappeared from inventory and were not paid for. 

All retailers have shrinkage, but it is especially bad in a mass retailer with lots of SKUs and only a small staff at each store. Merchandise walks out the door, leaving behind phantom inventory. inventory that is on the books but no longer exists. At a moderately busy retail, this unaccounted for shrinkage can add up to thousands of dollars a quarter. 

Almost as bad, the ERP system was set up to automatically restock inventory when the system showed levels had dropped to a trigger point. Since the phantom inventory remained in the system, the stock levels never dropped to replacement levels and the items had to be reordered manually. That was time-consuming and distorted the inventory levels at the stores. 

It took months for the chain to sort things out not to mention the hassle, frustration, and ill-will it generated between headquarters and the store management. 

The consequences can be worse if a relationship with a major supplier or the government is involved. It is vitally important to have business processes properly mapped out and all contingencies allowed for. 

Edge cases are edge cases because they are rare. That makes them easy to overlook. But it is important that all your processes account for the edge cases.