A plan to implement or improve your use of an ERP (Enterprise Resource Planning) Systems for manufacturing companies
Implementing a new manufacturing planning system is first and foremost a management task. Good software helps but is not a substitute for good management. After more than 20 years helping companies implement and get the most from manufacturing and enterprise resource planning systems (MRPII and ERP), we have produced the implementation checklist summarised below.
- Getting started - it is essential that all the key players understand, from the start, the scope of the project both in terms of the potential benefits but also the resources they will need to commit. If new software may be required (see software selection guide), these managers must have the confidence to ask the right questions so that they are sure that the selected software has the functionality needed for their business. Selecting a shortlist of software options, viewing demonstrations and, if possible, installing a trial version of the software should happen at the same time as the development of Company II (steps 1 to 5 of this plan). The quickest, simplest and most cost effective way to get the key managers up to the required level of knowledge of ERP, is an external education course.
- An alternative to external education, that has proved successful and much more cost effective, is to train an internal team of 3 or 4 experts. To assist you in this process I have produced an ERP class "A" toolkit which includes my book "Business Excellence" and all the other information you need for a class "A" implementation. You can find more information and a link to purchase this toolkit for just GBP34.90 (about US$63 or 50Euro) at http://www.bpic.co.uk/erp_toolkit+.htm. Of course this toolkit will not solve your problems for you but it is an inexpensive way to get you moving in the right direction. Until you know where you want to go you have no chance of getting there.
- You should also click the link for a simple cost and benefit example for a £40M company which can be scaled for your company to give a good starting point.. The annual benefit divided by 12 is the monthly cost of delay, a useful figure when it comes to resources allocation and setting priorities.
- Project leader - we do recommend you appoint a full time project leader, there is no question that this move really starts to make things happen, but whether your project leader is full time or part time the choice of project leader is a critical success factor. We believe you should always choose the best qualified person irrespective of any other considerations; company wide credibility, determination and a good knowledge of the business are the characteristics to look for. Once the person is chosen you then have to see how that person can be freed up for up to 12 months using, for instance, a temporary person to “back fill” their job. It is rare for a company's top managers to make good project leaders due to pressure on their time but the project leader will need a top manager “sponsor” to be able to turn to when necessary.
- Project team - our general recommendation is for a core team of 3 full time members for companies with up to 300 employees with another full time member for every 200 employees above this. Whilst experience is vital for the project leader, the other full time team members can be less experienced, e.g. trainees, students, people close to retirement etc.. In addition to the full time members, the key managers should also be on the project team. The main role of the project team is to pull together the overall objective or vision for the project (some ideas to stimulate creation of a vision) and the more detailed “new ways of working” which we call Company II. The team also has to understand all the relevant modules of the software and how they relate to your business. It is possible to run the project with an all part time team, this will slow down the project by a few months so the full time or part time decision depends on the cost of delay identified above.
- Task forces - part time task forces of 5 or 6 people, sharply focused on the key implementation areas and meeting 2 to 4 hours per week, are the key decision making mechanism. One project team member supports each task force as coordinator and facilitator. It is essential that all functional areas have a strong supporter who is intimately involved in the entire process, this is not an IT project. The task force should not spend too much time on the "as is", much of that will change, but devote their attention on planning, documenting and training in the new ways of working. Ideally, nobody other than full time project team members should be on more than one task force. The areas you may need task forces for are as follows :
- Sales and operations planning - the board plus designated master scheduler is our recommended task force with the MD as the task force leader. This task force is also the steering committee to oversee the whole project - click here for an overview of the process.
- Demand management & master scheduling - led by sales with the task of defining interfaces between the customer, the company and operations. The task force needs to understand and draw up forecasting, demand management and scheduling procedures. Our master production scheduling course is available on CD - click for more details
- Performance measures - led by finance with the task to implement new performance measures to support and monitor the new ways of working.
- Stock record accuracy - led by the senior team member most closely responsible for stock control. The target is 100% stock record accuracy with a milestone of 98% in 3 months. Our stock record accuracy course is available on CD - click for more details.
- Bill of material - led by engineering with the task to bring the quality of the bills of material up to the required standard, not less than 98% accuracy, and deciding how to manage design changes on the system. The task force also needs to decide the optimum structure for the bills on the planning system.
- Manufacturing - led by manufacturing with the role to ensure that everyone understands both the new scheduling processes, why the schedule must be strictly adhered to and the new tools they have available such as capacity requirements planning. The manufacturing task force will also co-ordinate task forces looking at work flow, kanbans, lead time reduction etc..
- Purchasing - led by purchasing with the role of reducing the supply base to as small a number of approved, reliable suppliers as possible, working in partnership, with high quality information and mutual trust. The task force will eventually look at implementing new purchasing methods such as vendor kanbans, vendor managed inventory and business-to-business e-commerce.
Business Excellence education - all the project team should have a good understanding of current best practice methods by attending the relevant education or reading my book "Business Excellence". The book is available both in paperback and e-book format with a company wide license for just £19.90 (about $33. or Euro29). The trick is for the members of the task force to read the relevant topic from one or more books then meet to discuss how the ideas apply to the company.
Software training - the project team should also become familiar with the software modules that you will need to build up a picture of the new way of working (Company II). You should allow a minimum of 3 full days training on each software module used for every user.
Conference room pilots - once you have a good idea of the new ways of working, you should set up the first conference room pilot, typically within the first 3 months of the project A conference room pilot is a room containing about 6 system terminals to simulate all the different company functions from forecasting and sales order processing through processing to shipment and financial reporting. Initially the pilot will be used by the project team to try out their ideas and should have just 7 part numbers in a simple structure. This simple model should be retained for future training. Training for users can start with this simple model and then build into more complex structures. As many members of staff as possible should be encouraged to get familiar with the system so that they are comfortable with and have documented how their will carry out all their tasks well before cut-over.
Data entry - it is essential that data is cleaned up prior to cut-over not only to simplify cut-over but also to give the new system the best possible start. Obsolete part numbers should be deleted. Part numbers with no recent activity and no stock should be transferred from the current system into an archive so that any that are subsequently required can be retrieved and entered into the new system. Overdue orders should be checked to ensure they are still valid. If data is being transferred from an existing system it can often be copied into a flat file such as Access, checked, tidied up and any new fields added before being copied to the new system. Fixed data such as part numbers, bills of material and customer and supplier details can be loaded over the week or two prior to cut-over. Live data can only be loaded over an extended weekend immediately prior to cut-over.
Time scale - you should expect the whole project to last between 6 and 18 months depending on whether you are improving an existing system or implementing a new one and the resources you are prepared to commit.
This implementation checklist is a brief summary of the implementation chapter in Business Excellence.
Phil Robinson - www.bpic.co.uk