FAQ - when should you implement a manufacturing or enterprise resource planning system (ERP)?
To answer the question when computers are the right answer for planning and control of a manufacturing company, the size of the company is a significant influence. In small companies (say less than 50 people) it is not difficult for informal "word of mouth" communication to work well along with spreadsheets or planning boards (see http://www.woodcon.co.uk/ for a UK source of visual planning boards). As companies grow, word of mouth and other informal systems become less efficient and mistakes happen. Spreadsheets are generally "owned" by just one or two people. Much of the information they contain has to be entered from and re-entered by other department leading to errors and reducing the speed of reaction to change. An integrated MRPII or ERP system enables accounts, sales, production, planning and purchasing to use the same basic data to keep the business synchronised to minimise confusion and delays.
The other big driver for the increased used of computerisation is time scales. In the 70’s it was common to plan in monthly time periods so materials were brought in the month before they were needed and shipments were any time in the month. In the 80’s best practice was to plan in weekly time periods. These days, many companies have to ship to meet a time slot of minutes many times a day, very few companies are not expected to ship on a specific day so must plan in daily time periods. Manual planning and re-planning every day, to the day is impractical due to the number of calculations needed to be done every day. For a computer daily planning is as easy as monthly planning once set up.
The downside is that computer planning requires a lot of data and it has to be very accurate, a culture change for most companies.
Best practice and the most efficient way to plan manufacturing for any company over about 50 people is a fully integrated, properly implemented and understood MRPII or ERP planning system. The best education course to prepare you for this important decision is the Business Excellence Fundamentals course; there are 1 day and 4 day versions of this course.
There are consulting groups who could help with ERP education and training but an alternative 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. Click here for more information and a link to purchase this toolkit for just GBP34.90 (about US$63 or 50Euro). Of course this toolkit will not solve your problems for you but it is an inexpensive way to help get you started.