Cushing interview looking at TOC and ERP
One of the many people I follow on Twitter, Richard Cushing, has been interviewed by "find accounting software" and the results posted as Where Does Your ERP Selection Fit with Your Continuous Improvement Efforts?
Richard's discussion follows very familiar territory for people who are interested in Theory of Constraints and other continuous improvement concepts: Focus on the few things that are truly limiting your performance. Use something like the calculations provided by Throughput Accounting to determine if a change is going to be beneficial or not. He even describes the Thinking Processes, and the written interview goes to some lengths to describe how these begin to work to help people understand their system.
Maybe it is the name of the website, but I kept a wary eye on the language. And I was not surprised by the last several questions, which all seem to be of the form, "But isn't ERP software great?" I think Richard did an excellent job of answering - better than I would have done. Essentially, the way most ERP software is setup does not help companies ask useful questions when they begin to think along the lines of TOC (or Lean!) with respect to their organization.
Is ERP or accounting software ever the weakest link in an organization? No.
How does one evaluate ERP software? The same way as any other question in a business. What is the real power behind the opportunity? (Is it different from what we have already?) What limitation does the new software remove? How are we going to change the business if that limitation were to be removed?
Can ERP help identify or manage the constraint? No. I love Richard's response here. "The very best computer to identify system constraints is human intuition applied in a systematic process of understanding the cause-and-effect relationships between activities within the enterprise."
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