How does your Management View ERP?
Enterprise Resource Planning Systems (ERP) in a manufacturing company have great tools to assist with integrating all of the functions of the business from quote to cash including all of the planning, procurement, inventory, production, despatch and financial functions.
The logic of how to use ERP in a manufacturing organisation is actually simple, if you understand what integration and integrated decision making means.
ERP is more than just a computer system; it is a decision support system to provide real-time information for decision making. Making gut-feel decisions on operational matters need not be guess work as the ERP system, used properly, can predict consequences of decisions before you make them by simulating the different decision making scenarios through the ERP system and predicting the likely consequences.
Unfortunately for most organisations mastering the tools in ERP, beyond the basic nuts and bolts, has proved too difficult and the potential of the technology is lost.
The high cost of ERP projects with delays and budget overruns has created a negative project image from top management and the users who have had to battle with the detail.
These systems, for most organisations tend to be underutilised, and used for little more than recoding systems. The interesting thing is when asked, management think the system works even though the system is not being used as intended.
Many organisations are unable to quantify any tangible benefits that implementing an ERP system has given them. This may be, in part, due to the lack of a realistic evaluation when justifying the project and the fact that they cannot identify what benefits, if any, they gained from the implementation of ERP.
We visit a number of manufacturing organisations where the management still view ERP as a technology project that is simply updating or replacing existing legacy systems. Adopting the philosophy for decision making using the technology is not an option as the system has not been sufficiently implemented to provide the information needed to simulate scenarios.
In one organisation, not an isolated incident, when we talked about Materials Requirement Planning or MRP, we were told that their MRP was based on a min/max system. On further questioning they didn’t understand what MRP was. The data that they would need to support an effective MRP in bill of materials and inventory accuracy was so bad no one believed the system information due to errors. They believed this was the fault of the computer. Spread sheets abound instead of fixing the data and the processes that generates the data and errors.
On presenting an overview to the management and key users on how MRP worked they thought they didn’t have that capability in their system. In a sense they didn’t. The MRP planning module was never configured as they felt they didn’t need it.
ERP was born out of the manufacturing industry back in the late 1960s (MRP & MRPII) and through a steady progression of technology innovations over the years is a very powerful tool for managing the flow of information and materials through a company.
These views from management must change if the real benefits of a technology with so much potential are to be used in the way they are intended.
Experience worth listening to!
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