Thursday, October 2, 2008

RFPs – Is that REALLY the right way to select an ERP solution for Formula Manufacturers?

vicinity software
It seems that once a month I get a very pleasant email from a well meaning consultant asking if I would like to respond to a Request for Proposal (RFP) or Request for Information (RFI). The first few years of being in practice I took a day or two to wade through pages upon pages of questions about features and forced to answer "yes", "no", "with customization" etc to questions that could have easily been asked of a doctor's office. Very few RPFs are written in such a way that the key business issues are highlighted. Instead they are VERY broad and limited in specificity.
So now I just say "no thank you" and move on with other projects.
You may ask why I do this and why would I walk away from an opportunity. In general companies that spend $20k with an outside consultant on an RFP for a $100-200k project have bigger issues to address than software.
My experience shows that for companies with sales volume of $5 million - $200 million there are 4-5 primary providers of software for the formula manufacturing sector. A subset of that group is typically in every opportunity that I see.
Here is a secret: each of these 4-5 applications do a fine job for their clients and have a full range of functionality from financials through distribution and manufacturing. So the key should be place on finding those industry specific applications and spending time differentiating the implementation firms and less time on RFPs.
Here is another secret. As a young consultant with Arthur Andersen and Deloitte & Touche I was engaged to generate many of these RFPs. A number of companies paid my firm big money for a list of 100-200 features to include on a check list. That did not make for a good RFP.
So how should a formula manufacturing company go about finding some of these qualified applications?
  • Ask your suppliers and customers – those happy with their system are willing to tell you what they use
  • Attend trade shows or have your attendees look for applications while they are touring the expo
  • Take a look at the industry publications and web sites
  • Search the internet for key words to your industry (chemical, food manufacturing, batch processing software, MSDS, COA)
  • Look for formula manufacturing add-ons to the more popular ERP solutions (Microsoft Dynamics, Sage, SAP etc)
  • Contact a consultant with industry background. If they cannot name 4 software applications without hesitation then move on to someone who does
Once you have a list of names then run them through an acid test and shorten your list
  • Look at their web site – does their product focus specifically on formula manufacturing or do they treat all manufacturers as the same? – see the Vicinity Manufacturing web site at for a good example of this
  • Have a 15 minute phone call with a representative – if they don't use industry terms then move on
  • Obtain a high level web demo of the best solutions using demonstration data – no more than 1 hour
When this is complete you should have a good idea of what applications have the best chance of meeting your objectives. The next phase is to communicate your primary business issues and your vision on how to address the issues. Once the vendors understand your needs they will be in a position to provide a comprehensive presentation.
During your process it is fair to assume that all the applications perform accounting functions well. They all cut checks and print invoices. Instead focus your attention on business issues such as reducing inventory levels, identifying and addressing batch yields and generating compliance documents such as MSDS and COAs. This will focus both you and the vendor on topics that will result in positive results for your company.
So in the end the process of selecting software is not as difficult as it might seem – if you are working with someone that knows your business. In today's software environment there are plenty of good industry solutions available – the trick is finding them. Once you find them the difference will be obvious.
Resist the temptation to pay a consultant for them to learn what you need only to communicate to other companies in the form of a features checklist. Take it from a software supplier – they really are not helpful, cost you a lot of money and in many cases turns off potentially viable applications from consideration.
Good luck on your search and remember that there are a number of good companies out there waiting to help you address your business challenges.
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