me6703 - computer integrated manufacturing …computer aided process planning to overcome the...
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ME6703 - COMPUTER INTEGRATED MANUFACTURING SYSTEMS
UNIT II PRODUCTION PLANNING AND CONTROL AND COMPUTERISED PROCESS
PLANNING
Process planning – Computer Aided Process Planning (CAPP) – Logical steps in Computer Aided
Process Planning – Aggregate Production Planning and the Master Production Schedule – Material
Requirement planning – Capacity Planning- Control Systems-Shop Floor Control-Inventory Control – Brief on Manufacturing Resource Planning-II (MRP-II) & Enterprise Resource Planning (ERP) – Simple Problems.
PROCESS PLANNING
Role of process planning in CAM/CAM integration
PROCESS PLANNING ACTIVITIES
APPROACHES TO PROCESS PLANNING
1. Manual process planning
2. Computer aided process planning
a) Retrieval CAPP system
b) Generative CAPP system
1.MANUAL PROCESS PLANNING
In traditional process planning systems the process plan is prepared manually. It involves examining and
interpreting engineering drawings, making decisions on machining processes selection, equipment selection,
operations sequence and shop practices. The manual process plan is very much dependent on the skill,
judgement and experience of the process planner. If different planners were asked to develop a process plan
for the same part, they would probably come up with different plans.
Advantages of Manual Process Planning
• Manual process planning is very much suitable for small scale companies with few process plans to
generate.
• Highly flexible.
• Requires low investment costs.
Disadvantages of Manual Process Planning
• Very complex and time consuming job requiring a large amount of data.
• Requires the skilled process planner.
• More possibilities for human error because this method depends on the planner’s skill, judgement and experience.
• Increases paper work.
• Inconsistent process plans result in reduced productivity.
COMPUTER AIDED PROCESS PLANNING
To overcome the drawbacks of manual process planning, the computer- aided process planning
(CAPP) is used. With the use of computers in the process planning, one can reduce the routine clerical work
of manufacturing engineers. It provides the opportunity to generate, rational consistent and optimal plans. In
addition CAPP provides the interface between CAD and CAM.
Benefits of CAPP
1. Process rationalization and standardization: CAPP leads to more logical and consistent process plans
than manual process planning.
2. Productivity improvement: As a result of standard process plan, the productivity is improved.
3. Product cost reduction: Standard plans tend to result in lower manufacturing costs and higher product
quality.
4. Elimination of human error.
5. Reduction in time: As a result of computerised work, a job that used to take several days, is now done in
a few minutes.
6. Reduced clerical effort and paper work
7. Improved legibility: Computer-prepared route sheets are neater and easier to read than manually
prepared route sheets.
8. Faster response to engineering changes: Since the logic is stored in the memory of the computer, CAPP
becomes more responsive to any changes in the production parameters than the manual method of process
planning.
9. Incorporation of other application programs: The CAPP program can be interfaced with other
application programs, such as cost estimating and work standards.
RETRIEVAL CAPP SYSTEM
Advantages of Retrieval CAPP System
• Once a standard plan has been written, a variety of parts can be planned.
• Comparatively simple programming and installation (compared with generative CAPP systems) is
required to implement a planning system.
• Efficient processing and evaluation of complicated activities and decisions, thus reducing the time
and labour requirements.
• Standardized procedures by structuring manufacturing knowledge of the process planners to
company’s needs. • Lower development and hardware costs.
• Shorter development times.
• The system is understandable and the planner has control of the final plan.
• It is easy to learn and easy to use.
Drawbacks of Retrieval CAPP System
• The components to be planned are limited to similar components previously planned.
• Maintaining consistency in editing is difficult.
• Experienced process planners are still required to modify the standard plan for the specific
component.
Examples of commercial variant CAPP system
CUTPLAN, CAPP, COMCAPP V, DCLASS, INTELLICAPP, MAYCAPP
2. GENARATIVE CAPP
The various components of a generative system are:
A part description, which identifies a series of component characteristics, including
geometric features, dimensions, tolerances and surface condition.
A subsystem to define the machining parameters, for example using look-up tables and
analytical results for cutting parameters.
A subsystem to select and sequence individual operations. Decision logic is used to
associate appropriate operations with features of a component and heuristics and algorithms
are used to calculate operation steps, times and sequences.
A database of available machines and tooling.
A report generator which prepares the process plan report.
Advantages of Generative CAPP System
• It can generate consistent process plans rapidly.
• New components can be planned as easily as existing components.
• It has potential for integrating with an automated manufacturing facility to provide detailed control
information.
Drawbacks of Generative CAPP System
• The generative approach is complex and very difficult to develop.
Examples of commercial variant CAPP system
AUTAP, CMPP, GENPLAN, LOCAM, OPTA-PLAN
PRODUCTION PLANNING & CONTROL
Typical activities in a production planning and control system
AGGREGATE PRODUCTION PLANNING
MASTER PRODUCTION SCHEDULE
MATERIALS REQUIREMENTS PLANNING
Basic Characteristics of MRP
Two basic characteristics of MRP are:
1. Drives demand for components, sub assemblies, materials, etc. from demand for and production schedules
of parent items.
2. Offsets replenishment orders (purchase orders or production schedules) relative to the date when
replenishment is needed.
Information Needed for MRP
The following information are needed for MRP:
• Demand for all products.
• Lead times for all finished goods, components, parts and raw materials.
• Lot sizing policies for all parts.
• Opening inventory levels.
• Safety stock requirements.
• Any orders previously placed but which haven’t arrived yet.
Inputs to MRP
The three important inputs to MRP are:
1.Master production schedule,
2.Bill of materials file and
3.Inventory record file.
Figure depicts the structure of a MRP system, showing the flow of data into the MRP processor and its
conversion into useful output reports.
Figure: Structure of a material requirements planning (MRP) system
1.Master Production Schedule (MPS)
It is a detailed plan that states how many end items (i.e. the final product to be sold to the customer) will be
available for sale or distribution during specific periods.
Purpose of the master production schedule:
The MPS is used:
(i ) To set due dates for the availability of end items.
(ii) To provide information regarding resources and materials required to support the aggregate plan.
(iii) Input to MRP will set specific production schedules for parts and components used in end items.
Inputs to MPS:
The MPS inputs are:
1.Market requirements.
2.Production plan from aggregate planning and
3.Resources available.
MRP Output:
It is the list of end items available every period that is feasible with respect to demand and capacity.
Bill of Materials File
Designates what items and how many of each are used to make up a specified final product.Used to compute
the raw material and component requirements for end products listed in the master schedule.
It Provides information on the product structure by listing the component parts and subassemblies that make
up each product.
Product structure:
Structure of an assembled product, in the form of a pyramid, can be depicted as shown in Fig.
It can be seen from Figure. that the product P1 is the parent of sub assemblies SA1, SA2, and SA3. similarly
SA1 is the parent of components C1, C2 and C3, and so on.
Figure: Product structure for product P1
Inventory Record File
All the data related to the inventory are recorded in the inventory record file.
The inventory record file contains the following three segment.
ITEM MASTER
DATA SEGMENT Part No. Descriptions Lead time Std. cost Safety stock
Order quantity Setup Cycle
Last year's usage
Class
Scrap allowance Cutting data Pointers Etc.
INVENTORY
STATUS
SEGMENT
Allocated Control balance Period Total
1 2 3 4 5 6 7 8
Gross requirements
Scheduled receipts
On hand
Planned order
releases
SUBSIDIARY
DATA SEGMENT Order details
Pending action
Counters
Keeping track
Figure: Record of an inventory item
Working of MRP
MPS provides a period-by-period list of final products required. BOM defines what materials and
components are needed for each product.
Inventory record file contains information on the current and future inventory status of each component.
using these three inputs, the MRP processor computes the number of each component and raw material
required for the given final product.
Example for working MRP
Example : For the product structures of products p1 and p2 shown in Figure below determine the time-
phased requirements for component C4. The raw material used in component C4 is M4. One unit of C4 is
obtained from every unit of M4. Figure: Product structure for product P1
Use the master schedule of Figure.
Figure: Product structure for product P2
Figure: MPS for products P1 and P2, showing week delivery quantities
The ordering and manufacturing lead times for the MRP computations are as follows:
P1: Assembly lead time = 1 week
P2: Assembly lead time = 1 week
SA2: Assembly lead time = 1 week
SA3: Assembly lead time = 1 week
C4: Manufacturing lead time = 2 weeks
M4: Ordering lead time = 2 weeks
Assume that the current inventory status for all the items above are: units on hand = units on order = 0.
Solution:
The MRP solution for the component C4 is presented
Period 1 2 3 4 5 6 7 8 9 10
Item: Product P1
50
100
Gross Requirements
Scheduled Receipts
On Hand 0
Net Requirements
50
100
Planned Order Releases
50
100
Item: Product P2
70 80 25
Gross Requirements
Scheduled Receipts
On Hand 0
Net Requirements
70 80 25
Planned Order Releases
70 80 25
Item: Subassembly S2
100
200
Gross Requirements
Scheduled Receipts
On Hand 0
Net Requirements
100
200
Planned Order Releases
100
200
Item: Subassembly S3
70 80 25
Gross Requirements
Scheduled Receipts
On Hand 0
Net Requirements
70 80 25
Planned Order Releases
70 80 25
Item: Component C4
70 280 25 400
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
70 280 25 400
Planned Order Releases
70 280 25 400
Item: Raw Material M4
70 280 25 400
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
70 280 25 400
Planned Order Release 70 280 25 400
Figure: MRP solution
Procedure Steps:
1. In Figure. for products P1 and P2, the gross requirements can be written by using the given MPS .
2. Since there is no on-hand inventory, gross and net requirements are same for products P1 and P2
correspondingly.
3. Delivery requirements for products P1 and P2 must be offset by the 1-week assembly lead time. This can
be seen in Figure. for both products P1 and P2, in the planned order release row.
4. Let us move to sub assemblies. for component C4, only sub assemblies SA2 and SA3 are to be exploded.
using the product structures, the gross requirements for SA2 and SA3 can be calculated. (Ex: For SA2: 50 ×
2 = 100; for SA3: 70 × 1 and so on). Now the rows of net requirements and planned order release for SA2
and SA3 can be filled as discussed earlier.
5. As discussed in the step 4, the component C4 can be exploded. for C4, the manufacturing lead time is 2
weeks, so offset the net requirements value by two weeks, to obtain the planned order release.
6. In the similar way, the raw material M4 can be exploded. Thus with an ordering lead time of 2 weeks, the
order release for the 70 units must be planned for week 1.
MRP Output Reports
Table: Presents various MRS outputs that are generated by the MRP program.
Types of reports Purpose
II. Secondary Output Reports
1. Performance reports of various types To indicate costs, item usage, etc
2. Exception reports To show deviations from schedule, orders that are
overdue, scrap and so on
3. Inventory forecasts To indicate the projected level in future periods
4. Cancellation notices To indicate the cancellation of open orders because of
changes in the master schedule
5. Reports on inventory status To indicate the current status of the inventory
Table: Various MRP output reports
Benefits of MRP
The various benefits of implementing MRP system are:
• Reduced inventory levels.
• Better production scheduling.
• Reduced production lead time.
• Reduced setup cost.
• Reduced product changeover cost.
• Better machine utilization.
• Improved product quality.
• Quicker response to changes in demand.
CAPACITY PLANNING
Control Systems
1. Shop Floor Control
This control manages the detailed flow of materials inside the production facility. It Encompasses the
principles, approaches and techniques needed to schedule, control, measure and evaluate the effectiveness of
production operations. Is an activity of production control.one of the activity of process planning and control
(PPC).
To understand the significance of the shop floor control, it is essential to have the basic knowledge of
various activities of PPC and their relations to shop floor control. It is defined as a system for utilizing data
from the shop floor as well as data processing files to maintain and communicate status information on shop
orders and work centre.
Shop floor control (SFC) is concerned with:
(i) The release of production orders to the factory.
(ii) Monitoring and controlling the progress of the orders through the various work centres.
(iii) Acquiring information on the status of the orders.
Shop floor control deals with managing the work-in-process. This can be shown in the form of a factory
information system, as shown in figure.
Functions of Shop Floor Control
1. Assigning priority of each shop order (Scheduling).
2. Maintaining work-in-process quantity information (Dispatching).
3. Conveying shop-order status information to the office (Follow up).
4. Providing actual output data for capacity control purposes.
5. Providing quantity by location by shop order for work-in-process inventory and accounting purposes.
6. Providing measurement of efficiency, utilisation and productivity of manpower and machines.
In other words, the functions of SFC are:
1.Scheduling
2.Dispatching and
3.Follow-up or Expediting.
Phases of SFC
The three important phases of SFC are:
1.Order release
2.Order scheduling and
3.Order progress.
Figure depicts the three phases (enclosed part in dotted lines) and their relationship to other functions in the
production management system. In a computer integrated manufacturing system these phases are managed
by computer software.
1) Order Release
This phase provides the documentation needed to process a production order through the factory. Collection
of documents is sometimes referred as the shop packet.
The shop packet for an order consists of:
(i) Route sheet - used to list the sequence of operations and tools required.
(ii) Material requisitions - used to get necessary raw materials from inventory.
(iii) Job cards - used to report the labour for each operation on the route sheet.
(iv) Move tickets - used to move the parts between the work centres.
(v) Part lists - required for assembly jobs.
In a typical factory which works on manual processing of data, the above documents move with the
production order and are used to track the progress through the shop. In a CIM factory, more automated
methods are used to track the progress of the production orders.
(i) The first input is the authorization to produce (that derives from master schedule). This authorisation
proceeds through MRP which generates work orders with scheduling information.
(ii) The second input is the engineering and manufacturing database. This database contains engineering
data (such as the product design, component material specifications, bills of materials, process plans, etc.)
required to make the components and assemble the products. Database input provides the product structure
and process planning information needed to prepare the various documents that accompany the order
through the shop.
2) Order Scheduling
Second phase of shop floor control is the order scheduling module, which follows directly from the
order release module. This module assigns the production orders to the various work centres in that plant.
Executes the dispatching function in production planning and control. This module prepares a dispatch list
that indicates which production order should be accomplished at the various work centres. Provides
information about relative priorities of the different jobs by showing the due dates for each job. By
following the dispatch list in making work assignments and allocating resources in different jobs, the master
schedule can be best achieved.
The two inputs required to the order scheduling are:
(i) The order release and
(ii) The priority control information
It Priority control is used in production planning and control to denote the function that maintains the
appropriate levels for the various production orders in the shop.
The order scheduling module is used to solve the following two problems in production controls:
i)Machine loading: Allocating orders to work centres is known as machine loading. The term shop loading is
used when loading of all machines in the plant are done.
ii)Job sequencing: Determining the priority in which the jobs should be processed is termed as job
sequencing. Each work centre will have a queue of orders waiting to be processed. Queue problem can be
solved by job sequencing.To determine the sequence, priorities are given to the jobs in the queue and the
jobs are processed in the order of their relative priorities.Priority sequencing rules, also known as
dispatching rules, have been developed to establish priorities for production orders in the plant.
Some of the commonly used priorities sequencing rules are presented below.
1. SOT (shortest operating time): Run the job with the shortest completion time first, next shortest second
and so on.
2. Earliest due date: Run the job with the earliest due date first.
3. STR (slack time remaining): This is calculated as the difference between the time remaining before the
due date minus the processing time remaining. Orders with the STR are run first.
4. STR/OP (slack time per operation): Orders with shortest STR/OP are run first. STR/OP is calculated as
follows:
5. CR (critical ratio): This is calculated as the difference between the due date and the current date divided
by the number of work days remaining. Orders with the smallest CR are run first.
6. QR (queue ratio): This is calculated as the slack time remaining in the schedule divided by the planned
remaining queue time. Orders with the smallest QR are run first.
7. FCFS (first-come, first-served): Orders are run in the order they arrive in the department.
8. LCFS (last-come, first-served): As orders arrive, they are placed on the top of the stock and are run first.
When an order is completed at one work centre, then it enters at the next work centre in its process
routing. Again priority control is used to determine the sequence of processing among the jobs at the work
centre. Relative priorities of the different orders may change time to time, because of many reasons such as
Fluctuations in market demand, Equipment breakdown, Cancellation of the order by customer, Defective
raw material or delay in the receipt of materials. Priority control function reviews the relative priorities of
the orders and adjusts the dispatch lot accordingly.
Order Progress
The third and final phase of SFC is order progress phase. The order progress phase monitors the status of the
various orders in the plant, work-in-progress (WIP). Order progress collects data from shop floor and
generates reports to assist production management. Function of order progress module is to provide
information that is useful in managing the factory based on data collected from the factory.
Table presents the three forms of order progress reports that are presented to production management.
1
Work order status reports:These reports indicate the current status of each shop through the shop.
It provides information on the current work centre where each order is located, processing hours
remaining before completion of each order, whether the job is on-time or behind scheduleand priority
level.
2
Progress reports: These reports indicate the performance of the shop during a certain time period
(say, week or month in the master schedule). Typical information listed in these reports include how
many orders were completed during the period, how many orders that should have been completed
during the period were not completed.
3. Exception reports: These reports indicate the deviations from the production schedule (e.g. overdue
jobs), and similar exception information.
Reports are useful to production management in making the decisions about Allocation of resources,
Authorization of the overtime hours and Other capacity issues. It is useful in identifying areas of problems in
the plant that adversely affect the implementation of the master production schedule.
Inventory Control
It is defined as the scientific method of determining what to order, when to order and how much to
order and how much to stock so that costs associated with buying and storing are optimal without
interrupting production and sales.
Inventory decisions: There are two basic decisions to be made for every item in the inventory. They are:
(i) How much of an item to order when the inventory of that item is to be replenished? (i.e. order
quantity) and
(ii)When to replenish the inventory of that item?
The use of inventory models answer the above two questions.
Objective of Inventory Control
The main objectives of inventory control are:
• To ensure continuous supply of materials so that production should not suffer at any time.
• To maintain the overall investment in inventory at the lowest level, consistent with operating
requirements.
• To minimize holding, replacement and shortage cost of inventories and maximize the efficiency in
production and distribution.
• To keep inactive, waste, surplus, scrap and obsolete items at the minimum level.
• To supply the product, raw material, WIP, etc., to its users as per their requirements at right time and
at right price.
• To ensure timely action for replenishment.
• To maintain timely record of inventories of all the items and to maintain the stock within the desired
limits.
• To avoid both over-stocking and under-stocking of inventory.
Costs Associated with Inventory (What are Inventory Costs?)
The major costs associated with procuring and holding inventories are:
1. Ordering costs
2. Carrying (or holding) costs
3. Shortage (or stock out) costsand
4. Purchase costs.
1.Ordering costs
There are costs associated with the placement of an order for the acquisition of inventories. It is Refer to the
managerial and clerical costs to prepare the purchase or production order.
It is also known by the names procurement costs, replenishment costs and acquisition costs.
These costs include:
(i) Costs of staff of purchase department,
(ii) Costs of stationery consumed for ordering, postage, telephone bills, etc.
(iii) Depreciation costs and expenses for maintaining equipment required for ordering,
receiving and inspecting incoming items.
(iv) Inspection costs of incoming materials.
If a firm is producing its own inventory rather than taking it from an outside supplier, then the cost of
set-up for making one batch of product is termed as set-up cost. Set up cost is used when inventory is made
within the firm; and in case of buy situation the ordering cost is used.
2. Holding (or inventory carrying) costs
Inventory carrying costs are the costs associated with holding a given level of inventory on hand. It
varies in direct proportion to the amount of holding and period of holding the stock in stores.This cost will
not occur if inventory is not carried out.
The holding costs include:
(i ) Costs for storage facilities.
(ii) Handling costs.
(iii) Depreciation, taxes and insurance.
(iv) Costs on record keeping.
(v) Losses due to pilferage, spoilage, deterioration and obsolescence.
(vi)Opportunity cost of capital.
3. Shortage (or stock-out) costs
When the stock of an item is depleted and there is a demand for it, then the shortage cost will occur.
Shortage cost is the cost associated with stock-out.
The shortage costs include:
(i) Back order costs.
(ii) Loss of future sales.
(iii) Loss of customer goodwill.
(iv) Loss of profit contribution by lost sales revenue.
(iv) Extra cost associated with urgent, small quantity ordering costs.
4. Purchase (or production) costs
These are the costs incurred to purchase/or produce the item.This sssssCosts include the price paid or
the labour, material and overhead charges necessary to produce the item.
ECONOMIC ORDER QUANTITY
Where, D- annual demand, S- setup cost, H- holding cost
Brief on Manufacturing Resource Planning-II (MRP-II)
Manufacturing Resource Planning (MRP-II)
It Represents the natural evolution of closed-loop MRP (materials requirements planning). It is an integrated
information system that synchronize all aspects of the business. It is Coordinates sales, purchasing,
manufacturing, finance and engineering by adopting a focal production plan and by using one unified
database to plan and update the activities in all the systems. It is defined as a computer-based system for
planning, scheduling and controlling the materials, resources and supporting activities needed to meet the
master production schedule (MPS). MRP II consists of virtually all the functions in the PPC system
(presented in Figure) plus additional business functions that are related to production.
Important MRP II system functions include:
1. Management planning—business strategy, aggregate production planning, master production
scheduling, rough-cut capacity planning and budget planning.
2. Customer services—sales forecasting, order entry, sales analysis and finished goods inventory.
3. Operations planning—purchase order and work order release.
4. Operations execution—purchasing, product scheduling and control, work-in- process inventory control,
shop floor control and labour hour tracking.
5. Financial functions—cost accounting, accounts receivable, accounts payable, general ledger and payroll.
MRP II system integrates and coordinates all of the major functions of the business to produce the
right products at the right times. Now-a-days many commercial software are available incorporating MRP II
functions with more features.
Some of them include:
• Enterprise Resource Planning (ERP)
• Customer-Oriented Manufacturing Management Systems (COMMS)
• Manufacturing Execution Systems (MES)
• Customer-Oriented Management Systems (COMS).
Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP) is business management software that allows an organization to
use a system of integrated applications to manage the business.
Being Specific ERP systems are large computer systems that integrate application programs in
accounting (i.e., accounts receivable), sales (i.e., order booking), manufacturing (i.e., product shipping) and
the other functions in the firm. This integration is accomplished through a database shared by all the
application programs.
A typical ERP system will use multiple components of computer hardware and software to achieve
the integration. A key ingredient of most ERP systems is the use of a unified database to store data for
various system modules. ERP Broken down into business processes:
– HRM, Distribution, Financials, Manufacturing
• 1960’s - Systems Just for Inventory Control
• 1970’s - MRP – Material Requirement Planning (Inventory with material planning &
procurement)
• 1980’s - MRP II – Manufacturing Resources Planning (Extended MRP to shop floor &
distribution Management.)
• Mid 1990’s - ERP – Enterprise Resource Planning (Covering all the activities of an Enterprise)
• 2000 onwards – ERP II – Collaborative Commerce (Extending ERP to external business entities)
Limitations of ERP
• High cost.
• Forced change of processes.
• Very complex software.
• Lack of trained people.
• Flexibility of software system upgrades.
• Implementation timelines.
• Availability of internal technical knowledge and resources.
• Education and training.
• Implementation strategy and execution.
• Resistance to change.
Reasons for adopting ERP
• Integrate financial information.
• Integrate customer order information.
• Standardize and speed up operations processes.
• Reduce inventory.
• Standardize Human Resources information .
• Common definitions.
• Common database.
• Update one module, automatically updates others.
The Applicability of ERP
ERP and its predecessor, MRP II, have been successfully implemented 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
ERP problems fall into these four types:
1. The system itself is bad.
2. The system is good, but it's set up incorrectly.
3. The system is good, but it's not being used.
4. The system is good, but it's being used ineffectively.
1. If we've got a bad system... We need to ask
Can the system be fixed?
Can we work around it ?
Can we use some other piece of software instead of the part of the system that is bad Or Should we replace
the system?
But too many executives ask that last question before asking any of the others.
Just because a system is bad doesn't mean it needs to be replaced.
Depends on how bad it is and whether the bad parts are fundamental or superficial.
For example, a system might have an unfriendly order entry screen.
Perhaps the order entry screen could be modified to remove unneeded data elements, or it could be
reconfigured to be more natural to the way One's company takes orders.
If the rest of the system is good, it would be foolish to replace the entire system just because of an isolated
user interface problem.
2. If the system is set up incorrectly... It is easy to find out why the system was set up in the way it is.
This will lead us to the possible root cause.
Was it just ignorance of the original implementation team? That would point to a need for training on the
system.
Was it because the company was trying to make the new system look like the old? That would point to a
need for business process redesign, or at least to address assumptions about how the business should operate.
For example consider a company that has hard time keeping up with inventory transaction volumes.
We found that the problem was that the system had been set up to serialize each unit of finished production.
Company thought that this was necessary to provide full traceability of products for FDA regulatory
compliance.
It also exploded the number of transactions that would need to be entered every time a finished product was
transacted.
When we investigated, we found that the system was fully capable of providing traceability by means of lot
or batch numbering, which would greatly improve productivity while maintaining compliance.
We then asked why the system had been configured for serial unit control and we found that it was because
that was how the previous system had done it.
When management understood the weak basis for the original decision, it was a simple matter for everyone
to agree to change it.
3. If the system is not being used...
Again we have to ask why. Is it because parts of the old system are still in use, in parallel with the new
system?
A client once brought wants to determine whether their new system was in fact the right system for them.
Users had many perceptions about the inadequacy of the new system, most of which were incorrect.
The reason was:
The old system was still running for many functions that the new system could have performed.
As long as management was not committed to abandon the use of the old system, which users had grown
accustomed to, there was no hope that they would learn to use and appreciate the new system.
There can be any number of reasons that a perfectly good system is not being used.
It could be a lack of training or a lack of resources to do the implementation or resistance to change.
There are cases where certain users prefer their little Access systems, Excel worksheets or cumbersome
manual systems. Why? Because those little informal systems represent job security.
As long as the company depends on those users for their personal knowledge of "how things get done
around here," those users are unlikely to embrace an ERP system that promises to formalize and make
transparent the business process.
4. If the system is being used ineffectively
We need to do more analysis.
In this category, problems can be grouped into four sub-categories.
Data problems. For example, inventory inaccuracy can make MRP systems all but useless. There are
dozens of other examples of how data problems can undermine ERP systems and force users to work around
the system. Many companies have problems with duplicate part numbers, duplicate vendor numbers and
inaccurate costing data. All of these make ERP ineffective.
Integration problems. Enterprise systems by definition are integrated systems. But the organizations that
implement them may not be integrated.
There may be a strong functional orientation that creates isolated "silos" with walls between departments.
ERP systems work best when they automate cross-functional processes.
If sales does not talk to production, and production does not talk to engineering, it is unlikely that the ERP
system will be used effectively.
Measurement problems. Too often companies ask managers to do one thing but measure them on
something else.
If we ask a factory to ship product according to customer delivery dates, but we measure the plant on "tons
produced" each month, it is likely that the plant will maximize tonnage by shipping the largest orders first,
instead of the ones with the earliest due dates. Yet, it is easier for management to blame the system instead
of their own out-dated measurement systems. There are dozens of similar examples.