Realizing the Value of ERP Planning

Enterprise Resource Planning (ERP) systems have been in use for several decades. Over the last 30+ years, I’ve personally been a part of over 100 such projects. I have walked the production floor of at least as many food and beverage processors and industrial manufacturers. It’s no secret that successfully implementing ERP is difficult. At the end of an arduous implementation cycle – getting the ERP software up and running with the basic transactions is considered a victory. This includes basics like:

  • Taking a sales order
  • Running a perpetual inventory
  • Recording labor and material to a work order
  • Shipping a product
  • Basic accounting functions.

After a go live the consultants leave, the dust settles, and the manufacturer works to get back to normal. Now the question is: what do things typically look like two or three years later?

We’ve been taking the time to talk to folks that have implemented several different flavors including:

Our Findings

In almost every case we find that the value of the integrated planning functions isn’t being realized. As we looked closer, we concluded that this isn’t the result of software issues. The planning, scheduling, and integrated purchasing functions work well. For example, the Aptean JustFood Edition ERP has a flexible bill of materials and routings, a high-performing Material Requirements Planning (MRP) engine, and leverages Microsoft Dynamics Business Central scheduling capabilities. The issues are related to business processes, training, and workforce stability.

Labor Constraints

Our labor force is more competitive than ever, and food and beverage processors and industrial manufacturers have it especially tough. Often, I’ll spend several hours driving from the closest airport to reach a remote company that is close to the growers or supply. Or a river that long ago provided energy for production. These areas don’t have a large labor pool to draw upon. This results in the skilled positions turning over. This creates a real challenge for planning, scheduling, and purchasing. You can design the best processes but if your training walks out the door you must start over. Inevitably the manufacturer adopts spreadsheet-based “simplified” planning and/or just overbuys products to compensate. There is a better way and that is by breaking up the focus into the following areas:

  • Inventory Accuracy
  • Bill of Material / Routing Accuracy
  • Planning Configuration
  • Planning Execution

Our ERP and Staff Augmentation Expertise

Adroit’s ERP Value Realization and Staff Augmentation offerings address these four areas in sequence and establish a business environment that is more stable and enables a manufacturer to fully realize the value of their ERP investment.

Inventory Accuracy

Floor procedures need to incorporate the system into the material movements. This can be accomplished via the integration of scanners/handhelds on the floor such as those offered by Zebra with the ERP solution module – such as Aptean’s JustFood Floor or Insight Works WMS. The inventory location scheme must be granular enough that there isn’t a question of where a spot is. The floor processes need to be validated on a consistent and regular basis with an effective cycle counting program. Our ERP Value Realization Services provide the expertise to design and implement improved processes along with the correct hardware to ensure your perpetual inventory is accurate.

Bill of Material/Routing Accuracy

A bill of materials (BOM) is a comprehensive list of all the raw materials, sub-assemblies, and parts required to manufacture a product. It serves as a blueprint that defines the specific components and quantities needed to build a particular product.

A routing, also known as a process sheet or a recipe, is a step-by-step instruction guide that outlines the production process of a product. It includes details such as the sequence of operations, work centers, resources, and time required to produce the product.

Both the BOM and routing are crucial for maintaining accurate inventory levels, properly informing the MRP Engine what dependent materials are required to produce a particular item, and properly informing the scheduling engine about the resources and time required.

Our ERP Value Realization Services will work with you to conduct an audit/help to correct your Bill of Materials/Routings and more importantly define a repeatable process/floor audit to ensure that your BOMs and routings remain accurate.

Planning Configuration

The Material Requirements Planning and Master Production Scheduling functions of today’s ERP, such as Aptean’s JustFood Edition MRP and Insight Works Visual Scheduler, are powerful and provide a range of options. Manufacturers need to stratify their inventory into distinct groups with individualized planning configurations. For example, the configuration for long lead time items is different than short lead time items. Planning for the seasonal and supply-constrained grower output is different than drawing from a wholesale distributor down the street. Our team will work with you to segment your inventory, define your planning methodology, and define your planning procedures.

Planning Execution

Understanding and properly managing the planning requires training and solid industry experience. We continue to see challenges within our customer base to retain this experience in-house. If the above three prerequisites are in place the planning can be very effectively executed remotely. A Staff Augmentation/Outsourcing Provider, such as our Adroit Staff Augmentation Team, can provide remote support to produce the purchasing and scheduling recommendations. The recommendations take the form of ERP purchasing requisitions and the ERP master production schedule. Your buyers will review and convert the purchase requisitions to a purchase order and the production will utilize the Master Production Schedule while controlling the individual work orders. In this way, your team takes advantage of the planning horsepower while maintaining local control.

By taking on a systematic improvement process to address the prerequisites, create sustainable and repeatable processes, and leveraging external expertise to execute knowledge-intensive positions, your company can fully leverage the value of your ERP solution, reduce stock-outs, and improve your On Time In Full (OTIF) shipments.