IMPLEMENTERS AND RE-IMPLEMENTERS

IMPLEMENTERS AND RE-IMPLEMENTERS

This post deals with how to implement ERP at a Class A level. Further,  it  applies  to  both  first-time  implementers  and  to  re-implementers, companies  whose  first  implementation  resulted  in Class C or D results and who now want to get the full bang for their buck. For those of you who’ll be re-implementing, be of good cheer:

Many  companies  now  getting  Class  A  results  got  there  via  re-implementation. The steps involved in a re-implementation are vir-tually identical to a first-time implementation; the main difference is that  some  of  the  necessary  steps  may  have  already  been  accom-plished satisfactorily.

Many companies today need to re-implement. Some of these are companies who, as we saw earlier, thought they were implement-ing ERP, but actually were only installing enterprise software. Their motivations were largely software-driven: Y2K compliance, legacy systems becoming unworkable, multiple hardware platforms sup-porting too many operational systems, etc. The problem is that, in many  cases,  the  new  software  was  installed  but  not  much  else changed.

Many companies’ ERP implementations in the past started out with  the  best  intentions  in  the  world.  Company  S,  for  example, wanted to re-engineer and improve processes, to improve the way they managed the business, and to give far better customer service to an increasingly demanding customer base. During the implementa-tion, however, they were overwhelmed by the software. Enterprise software tends to be highly complex, and complexity can make it very difficult to install. As the implementation project took longer

and longer, and cost more and more, top management became more and more impatient. The result: a decision to forget about imple-menting better business processes and just get the software running. 

Thus, Company S has new software but is still running the busi-ness in much the same old way, and thus they need to re-implement. If you’re in this category, this book is intended for you every bit as much as for the company implementing for the first time.

THE APPLICABILITY OF ERP

THE APPLICABILITY OF ERP

ERP and its predecessor, MRP II, have been successfully imple-mented in companies with the following characteristics:

• Make-to-stock

• Make-to-order

• Design-to-order

• Complex product

• Simple product

• Multiple plants

• Single plant

• Contract manufacturers

• Manufacturers with distribution networks

• Sell direct to end users

• Sell through distributors

• Businesses heavily regulated by the government

• Conventional manufacturing (fabrication and assembly)

• Process manufacturing

• Repetitive manufacturing

• Job shop

• Flow shop

• Fabrication only (no assembly)

• Assembly only (no fabrication)

• High-speed manufacturing

• Low-speed manufacturing

Within the universe of companies that make things—manufac-turing enterprises—ERP has virtually universal application. This book deals with how to implement ERP in any of the above envi-ronments. Some people struggle with this applicability issue; they sometimes say: “We’re different, we’re unique, it won’t work for us.”

We’ve heard that a lot over the years. What we have never heard is:

“We’re  different,  we’re  unique,  Generally  Accepted  Accounting Principles (GAAP) won’t work for us.” Well, ERP is the logistics analogof GAAP. It’s a defined body of knowledge that contains the standard best practices for managing that part of the business. The main difference between the two is that ERP and its predecessors have been with us for about four decades; double-entry bookkeep-ing and its offshoots have been around for four centuries. 

MANUFACTURING RESOURCE PLANNING - MRP

MANUFACTURING RESOURCE PLANNING 

A method for the effective planning of all resources of a manufac-turing  company.  Ideally,  it  addresses  perational  planning  in units, financial planning in dollars, and has a simulation capabil-ity to answer “what-if” questions. It is made up of a variety of functions, each linked together: business planning, sales and op-erations planning, production planning, master scheduling, mate-rial requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. Manufacturing resource plan-ning is a direct outgrowth and extension of closed-loop MRP.

The next step in this evolution is called Manufacturing Resource Planning or MRP II (to distinguish it from Material Requirements Planning, MRP). A direct outgrowth and extension of closed-loop MRP, it involves three additional elements: 

1. Sales & Operations Planning—a powerful process to balance demand and supply at the volume level, thereby providing top management with far greater control over operational aspects of the business.

2. Financial  interface—the  ability  to  translate  the  operating plan (in pieces, pounds, gallons, or other units) into financial terms (dollars). 

3. Simulation—the ability to ask “what-if” questions and to ob-tain actionable answers—in both units and dollars. 

This was done only on an aggregate, “rough-cut” basis, but to-day’s advanced planning systems (APS) enable effective simu-lation at very detailed levels.

Now it’s time to define Manufacturing Resource Planning. This definition, and the one to follow, come from APICS—The Educa-tional Society for Resource Management. APICS is the leading pro-fessional society in this field, and its dictionary has set the standard for terminology over the years.