Is Your ERP System a Barrier to Operational Excellence

Is Your ERP System a Barrier to Operational Excellence - Is...

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Is Your ERP System a Barrier to Operational Excellence? by Mark Edmondson Dell, Toyota, and Wal-Mart -- did you know that none of these productivity leaders run large-scale ERP systems? Yet their operational excellence is indisputable and has given them a distinct competitive advantage. What makes these companies market leaders, and how can you take advantage of the same approach? In two words -- lean logistics. These companies and a growing number of other market leaders recognize the importance of creating a high-velocity, yet accurate materials logistics process. The materials requirements planning (MRP) evolution took us down the road of computer automation, and was one of the first applications of technology to production scheduling. It promised to be the panacea for solving all manufacturing problems. Little did we know when we arrived at the current generation -- ERP -- that we would still be facing daily parts shortages, shop-floor disasters and end-of-month chaos. What happened to all those promises? Why has MRP/ERP failed to deliver materials to the factory floor as promised? How are leading manufacturers managing their materials logistics? "P" stands for planning, not pushing The concept of creating well-documented business processes and a standard work model is integral to both lean and MRP. But instead of becoming a transaction backbone that lets companies respond faster, MRP implementations often only create more bureaucracy, cycle time, and waste. As initially conceived in the 1960s, MRP was used for planning time-phased "dependent demands" for components and assemblies. Assuming the data are reasonably accurate, MRP can be a good forecasting and capacity planning tool -- that is, it can provide an estimate of dependent demands in monthly, and if managed precisely, weekly intervals. Where companies run into trouble is when they rely on MRP technology to manage the
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This note was uploaded on 04/18/2011 for the course OPERATIONS 456 taught by Professor Hale during the Spring '11 term at American InterContinental University.

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Is Your ERP System a Barrier to Operational Excellence - Is...

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