ERP AS A FOUNDATION

Today, there are a wide variety of tools and techniques that have been
designed to help companies and their people produce their products
better and more efficiently. These include Lean Manufacturing, Six
Sigma Quality, Employee Involvement, Factory Automation, Design
for Manufacturability, and many more. These are excellent tools
with enormous potential.
But . . . none of them will ever yield their full potential unless
they’re coupled with effective forecasting, planning, and scheduling
processes. Here’s why:
It’s not good enough to be extremely efficient . . . if you’re making
the wrong stuff.
It’s not good enough to make items at a very high level of quality . . .
if they’re not the ones needed.
It’s not good enough to reduce setup times and cut lot sizes . . . if bad
schedules prevent knowing what’s really needed and when.
Back in the early 1980s, a new way of thinking about manufacturing
came out of Japan, and it was truly revolutionary. In this country
we’ve called it Just-In-Time (JIT), and more recently it has evolved
into Lean Manufacturing.1
As with most new tools and processes, its early adherents promoted
JIT with a missionary zeal—and rightly so. This is great stuff.
Some of them, however, took the approach that MRP/MRP II was
no longer necessary for companies doing JIT. The MRP establishment
pushed back and the result was a raging debate that generated
a lot of heat and not much light.
Today we can see the situation much more clearly, and we feel this
view has been best articulated by Chris Gray, president of Gray Research
in Wakefield, NH. Chris says that improvements to business
processes take one of three forms:
1. Improving process reliability. Six Sigma and other Total Quality
tools are predominant here.
14 ERP: M I H
1 Also called Agile Manufacturing or Synchronous Flow Manufacturing.
2. Reducing process complexity. Lean Manufacturing is heavily
used here.
3. Coordinating the individual elements of the overall set of
business processes. ERP lives here.
Enterprise Resource Planning, when operating at a high level of
effectiveness, will do several things for a company. First, it will enable
the company’s people to generate enormous benefits. Many companies
have experienced, as a direct result of ERP (or MRP II) dramatic
increases in responsiveness, productivity, on-time shipments
and sales, along with substantial decreases in lead times, purchase
costs, quality problems, and inventories.
Further, ERP can provide the foundation upon which additional
productivity and quality enhancements can be built—an environment
where these other tools and techniques can reach their full potential.
Effective forecasting, planning and scheduling—knowing routinely
what is needed and when via the formal system—is fundamental
to productivity. ERP is the vehicle for getting valid plans and
schedules, but not just of materials and production. It also means
valid schedules of shipments to customers, of personnel and equipment
requirements, of required product development resources, and
of cash flow and profit. Enterprise Resource Planning has proven itself
to be the foundation, the bedrock, for supply chain management.
It’s the glue that helps bind the company together with its customers,
distributors, and suppliers—all on a coordinated, cooperative basis.