ERP for Manufacturers
The management of the information is the key in any company. The manufacturing industry experienced the first systems created with the objective to integrate the details and information, and to organize the different productive processes with MRP (Materials Requirement Planning), which have developed what is now known as ERP, or Enterprise Resource Planning. These resources are fundamental to understanding how information technology has contributed to the competitive advantages of the industrial sector.
ERP was created for the big industries, and the cost was usually not an obstacle to reaching the objective of productivity. Traditionally, ERP was expensive and out of reach of SMEs, but today it has been expanded in order to provide for small and medium sized companies. These Businesses now have the ability to implement ERP to satisfy their needs.
The decision to change from manufacturing to enterprise is related to the fact that an ERP system could be applied to a whole enterprise instead of only a manufacturing section. ERP could also be applied to services and other Businesses not related to manufacturing.
The manufacturing resource planning included all the sources in relation to the manufacturing such as material, human resource, equipment and finances. When the competitive strategy changed from low price and great variety to speed, ERP found the right place to give profit to this new strategy.
The difference with previous systems
ERP goes ahead of technological tools. The system connects to all the offices of a group of Business throughout the entire world. This program allows the companies to design products with the entrance of engineers all over the globe, installing factories in various areas to produce pieces and components for many countries, and the information of all the parties involved.
The traditional systems are limited to planning the assignment of the resources for one industrial plant or company, while ERP plans the resources for all the sectors of an enterprise. ERP can also apply to specific services related to the Business.
Is it known that a traditional enterprise bases its manufacturing processes with four pillars: the material, machines, manpower and money. The present needs count another resource as indispensable for manufacturing: the information to manage the rest of the resources. ERP takes into account this new resource and includes the main files of planning and transactions.
The master files contain details or routes, processes, accountancy, personnel, inventory, etc. The planning files include the production plan, the requirements of demand planning, master plans of production, request of material planning and capacity planning. Finally, the transaction files bring together the information regarding the operations like client orders, purchasing orders, working orders, among others.
Problems Related to Manufacturing Control
It is important to have a proper control of the manufacturing processes, but sometimes issues come up and limit the correct performance of this task. One of the most common problems is the fact that there are different demand sources for a product and its components. Some of the requirements of the product are determined by the needs of other products as well as products that are specified by the client.
The previous requirements also have their origin in clients, but not in a direct way. The requirements of the product can be classified as depending and independent demands. The independent demand for an article is not related with the demand of other products (i.e: finished products). However, the depending demand is directly related to the material exploitation for the final product. This type of demand is calculated, and it is not necessary for it to be predicted.
Another relevant problem for the right control are the short lead times and urgent handing, which is due to the shorter life cycles of the products and fluctuations on the client demand.
Some changes in the procedures of engineering lead to more trouble. If any problem occurs and affects the design or quality of the product, it is probable that a change in engineering will take place. Taking into account the client’s preferences, this change will increase, entailing other areas like marketing, production, storage, accounting and purchasing.
The last problem that the control could face is the possibility of a change in the production plan. Since it is not immutable, the only constant in production is the change itself. The clients change their dates of order, changes in the dates of expedition by providers, unexpected absences of employees, damages in machinery, etc. The challenge is not in getting rid of the changes, but confronting it.
Getting through the Limiting Factors of Implementation
It is important to remember that installing ERP requires you to do work under global coordination, which involves a solid concept of order and discipline all over the enterprise. In this case, ERP works as a guideline technology. The implementation should contribute to a benefit, but if it is not accompanied with an operational change, it will not make a significant change.
If the enterprise already has a technological means of calculation, sometimes it could interfere and complicate the situation. Regarding this matter, the implementation should be suitable to the needs, taking into consideration adequate training.
The key for success with the ERP model is in the combination of three important elements: team work, proper Business processes and a calculation tool. In order to make the technology work properly and give the expected results, it requires the support of these three phases: the management revision, training in situ, and implementation of the software.
Simulation and Benefits
The simulation is a technique through which the systems of the real world are represented by a computer program. This action is fundamental to obtaining a better knowledge of ERP, and to identify specific problems or problematic areas of the system. It is also helpful to develop plans and special politics on the system, evaluating concepts and systems before the implementation.
The simulation allows for the prediction of the behaviour of a new system, without the need to build it physically and predict the changes of an existing system. This reduces the need to affect the operation. However, the global benefit of this technique is to provide the management with the possibility of obtaining a global vision of the local changes made on the system.
The potential benefits include improving the performance of the system, saving money by reducing costs, and to guarantee a solution that is expected. It also allows for improvements in the comprehension of the system by different sectors of the organization.
The specific advantages for the manufacturing area is the creation of a global sight for the manufacturing environment. This allows for the evaluation in time of the local changes and to increase the throughput. Another benefit appreciated by the manufacturers is the reduction of inventory in process, the increase in the use of machinery and the number of orders sent in time to clients. In several opportunities, the simulation technique helped the manufacturing area to reduce the investment of capital or the costs of operation.
Besides, it gave security that a system design will operate as expected. It is important to take into account the fortuitous sources that the manufacturing system has, such as the time between the arrival of work or materials to system (also known as production programs); processing time, operation time between damages and flaws, reparation time and time to repair.
Some aspects of the manufacturing were successful on the needs of equipment and personnel, having bearing on the number and type of transport bands and other equipment for support. It has also had an effect of the location and type of security inventories, as well as the quantity and type of machines for specific objectives.
Furthermore, the influence reaches the evaluation of the change in volume, and a mix of products and the evaluation of the effect in a new piece of equipment. The simulation was successful for the assessment of the investment of capital, the requirements for manpower, and reports on performance.
Due to the previous mentioned benefits, ERP makes a difference. The flexibility in calculating infrastructure is turned into speed of Business, obtained through a better facility and lower cost to implement changes on the Business processes. This dynamism is one of the main strengths of the manufacturers, and improves the capacity to react quickly considering the changes in market.
Through the management of master files, groups of work, operation of machines, operations calendar, costs report, material positions and lists, budget calculator and the administration of the production order, ERP is shaping up as the better solution for integrating the manufacturing process and obtaining profit from improving the productivity, reducing the costs and keeping the clients satisfied.
