No more computers, please.
Well, they can't, and we as an industry need to quit wasting time and money on our impossible quest for the perfect system. As one client of mine says--and I more or less agree--"there is no such thing as a good computer system; they're all bad, but some are better than others."
Know Your Options
As I see it, there are three basic types of foundry information systems. First among these is the accounting system. This is the software package that contains the general ledger and controls the way we handle receivables, payables, payroll and the like. The most visible reports generated by accounting systems are the financial statements we are all so familiar with--the income (or P&L) statement, the balance sheet and the statement of cash flows.
It's important to note that accounting systems and their statements have little value as management tools. Financial statements generated each month are designed primarily to ensure the integrity of the company's financial record keeping, but they were never intended to be used by managers to manage. So, the notion that accounting systems--and financial statements--can greatly assist managers as they work to improve business performance is decidedly incorrect.
The second variety of foundry information systems is what I call the production system. This is the bit of software that primarily deals with customer orders and, at its heart, helps schedule and track production. These systems are most effective when they are in the hands of conscientious people (no computer can adequately schedule foundry production), when they are linked to the accounting system (for invoicing purposes, mainly) and when they compile and report production statistics. It's in this compilation of production statistics where we first get a glimpse of valuable management information emanating from a computer system.
Reports that organize and summarize production statistics are among the most valuable operation management tools around. However, to be really useful, these statistics need to go well beyond how many components (or which alloys) were produced in a given time period. These systems also need to enable us to identify and track the actual cost of various activities both in terms of dollars and time, separate value adding activities from those that do not add value and separate good parts from scrap.
That brings me to the third variety of foundry information systems--what I call the management information system itself. The essential purpose of this system is to provide each manager in each functional area with exactly the right information needed for them to do their jobs most effectively. Sounds great, doesn't it? In fact, the whole notion of an "enterprise management system" (EMS), in my view, contradicts the true need here and the true nature of information involved.
In other words, the only MIS that can be truly effective at providing customized management information as it's needed is a decentralized one--where, in effect, each manager has his or her own "system."
A centralized EMS often is inflexible and almost always ends up restricting management's access to the information it truly needs to control and improve the business.
Make the Right Investment
For my money, a simple, integrated and relatively inexpensive accounting and production system is the place to start. Look for one that enables users to track time as well as dollars and quantities and is flexible and user-friendly enough so that your operation's managers can easily create their own customized reports without first obtaining a degree in computer science.
Next, CEOs should invest in a simple, decentralized array of customized systems to generate important management information for marketing and sales, quality, human resources, maintenance and so on. Although simple and consisting only of basic spread sheets and databases, creating such an MIS is anything but easy. But the rewards can be great because this is where the real management information will be generated and where the real managing can begin.
I know it's tempting to wish for one system that can do it all, but they can't and, moreover, we shouldn't want them to. CEOs need to insist that their managers think, and not allow them to become dependent on and handcuffed by computer systems that can quickly become the tail that wags the dog.
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|Title Annotation:||CEO Journal|
|Date:||Jun 1, 2004|
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