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Enterprise Resource Planning for Manufacturing Articles

James Brolin
Marketing Manager at MIE Solutions
Mar 01 2021

Shop floor management with improved capabilities is an important component of the manufacturing industry. This makes it vital for manufacturers to have centralized systems and the best ERP software is the ideal choice in this regard.

The main purpose of shop floor management is to increase and sustain the production quality and efficiency. Today’s rising trend of digitization calls for identifying the improvement potentials of all manufacturing operations with focus on managing the shop floor. Fully optimized shop floor gives the managers more time to utilize in real management tasks.

Your choice of an ERP solution significantly affects the flow of information at every point. Hence, for better shop floor management, centralized information is a key feature that helps run your manufacturing operations smoothly and efficiently.

Let’s take a look how you can manage and monitor your shop floor in a better way using a manufacturing ERP.

Improved Turnaround Time:

Quick turnaround of finished products largely depends on outstanding shop floor management. With an integrated ERP, you can not only streamline the manufacturing process, but also connect production workflows happening on the shop floor with your inventory, finance and distribution process for greater efficiency and productivity enterprise-wide.

Any gap or mistake on the shop floor will backfire all business areas and more importantly the end customers – disturbing your sales order fulfilment and thereby, your brand reliability in the industry. For this reason, it is important to seamlessly communicate every single detail of each step, task and route, etc., in successful completion of the sales order.

Producing an item or batch also includes BoM (Bill of Materials) encompassing a specific sequence of events and detailed methods your shop floor employees must follow.

An ERP allows you to generate multi-level BoMs that can be configured in the production process, involving multiple routes – with specific sets of instructions in each route. That’s why, within a comprehensive system, you are going to have a well-optimized routing that will certainly make a big difference in improving shop floor efficiency – how fast you can produce finished goods.

Track Workers Progress:

In any industry, it’s important to leverage the skills of the workers on the shop floor and track their progress. Obviously, you cannot automate everything, but for shop floor productivity improvements you must be using an ERP. It will help you augment the work proficiency of your shop floor workers and allow them to make better decisions. Moreover, it will make the job easier especially for trainees.

The shop floor employees when having detailed BoMs cannot overlook the important information – expunging the guesswork and reducing the likelihoods of subjective decisions.

By splitting a BoM into step-by-step operations (routing), production teams on the shop floor know exactly what to do and can better focus on every step involved in manufacturing a finished part or assembly. An ERP software for manufacturing helps production teams and managers spot and solve shop floor and assembly line problems besides identifying the progress of the manufacturing process by end of the day.

When there is no grey area in production workflows, it will give your workers a greater capacity of understanding and improving shop floor efficiency. Moreover, when your shop floor workers have complete information about each and every step of the production or assembly process, they can easily execute it and make changes where needed to achieve finished goods at the lowest cost.

Error-free Operations:

In the manufacturing industry or any other business, everything should distill down to standardize operations with minimum-to-no errors. However, it is quite difficult to completely remove the human input and their related mistakes in any process. Despite using an ERP, there are some operations that need human resources and if they make a misstep, it could be devastating for your business growth and profitability.

As a discrete manufacturer, you may focus on all production essentials – planning both tangible and intangible resources, timely acquisition of raw materials and components required for assembly, and having the right equipment on the shop floor. However, one mistake by any of your shop floor workers will undo everything.

Here, you need to invest in improving the knowledge and skills of your production teams – especially working on the shop floor. 

Gene Hammons, MBA
Director at a consultancy with 1-10 employees
Nov 16 2020

Over the past few months, political coverage reminded me of a Winston Churchill quote – “A lie gets halfway around the world before the truth has a chance to get it’s pants on”. Living in a world of competing politicians and contentious media, there were seemingly plenty of lies for both sides to yelp about.

I thanked my lucky stars that in the business of ERP, we don’t deal in lies as the currency of the realm. Over the next few days, I began to rethink that. I won’t go so far as to say there’s widespread lying in the world of ERP, but there’s a lot of conventional wisdom, which neither follows proven convention, nor is particularly wise.

I realized that as an ERP Consultant, half of our work seems like swimming upstream with the truth on our backs – truths learned the hard way – truths proven time and time again – but implementing these truths and getting client buy-in is sometimes the hardest part of a software selection and implementation. If you find yourself dealing with an ERP implementation, here’s a few ‘truths’ you might find helpful

Conventional Wisdom says ‘buy ERP software and your business will be see huge improvements’.

  • Truth is it’s a lot more than simply buying software.
  • Truth is 80% of the attempts at ERP will fail.
  • Truth is you’re not buying a solution with ERP, you’re buying a toolkit.

The clients and prospects I talk to are really smart people. They run great businesses and the most common problems they really have revolve around dealing with rapid growth and phenomenal success.

Conventional Wisdom says, ‘how hard can ERP be – we can figure this out in house’

  • Truth is, ERP is far more complex and the ERP industry survives by making it look simple, when it rarely is.
  • Truth is every, and I mean every client in the last 20 years has underestimated how difficult an ERP project is measured by both effort and people needed to get the project to go live. Did I say every? – there was one who was exactly right a few months ago – but that’s one in 25 years, 1 in 400.

Conventional Wisdom says ERP can improve your business.

  • Truth is, 9 of 10 companies have no idea HOW MUCH ERP has the potential to impact the business and
  • Truth is, without setting those goals, most companies will never reach the goal. You know that about goal setting in your own life, you don’t set a goal, you don’t measure progress to the goal, you don’t reach the goal - the life of your business is no different.

The truth is, starting your ERP project with careful business analysis let’s you build a case that justifies the project, gets you the resources you need, and focuses the entire organization on a common goal. Replacing a poorly performing, older ERP platform can actually enable a company to drive an average of 3% bottom line improvement. Implementing ERP over manual business processes can often result in a 7% bump. Is that easy? NO – it’s hard work. And it all comes after the ERP implementation and as the users learning curve results in better workflow and processes.

Look, change in any business is hard. If you find yourself running an ERP project you will run up against resistance – that’s normal. Say you’re dealing with a Operations Manager – he’s been doing things the same for many years. He’s found out, in the beginning, by trial and error, through his hard knocks research that ‘his way’ is the best way to do it. He’s proven it over the years that come hell or high water, his process works. He’s experienced that his way is the best way. Research, Proven, Experienced. Is it any wonder he’s hesitant to change when some IT guy walks in telling him this is how the software does it best?

Truth is, you can’t just walk in and say ‘do it because I said so’. You need to show him the research – this is how others have done it in the past. Proven, that after go-live, costs dropped, efficiencies rose. Experienced – knowing that many others said the same thing and when you do it right, here’s what happens.

The truth is, ERP is an IT Project, a Software Project, and a Business Reengineering process. When you pull all those aspects together, well, truth is, it’s not easy - but the payoff can be worth it.

Exerpted from the ERPodcast, the weekly musings of Gene Hammons, Director of Profit From ERP, a selection and implementation consultancy. Subscribe on Apple Podcasts  or visit the Profit From ERP Website 

Gene Hammons, MBA
Director at a consultancy with 1-10 employees

The VP catches up to you and says, “The Strategic Planning Meeting was today and it was agreed we need new ERP Software – so you guys in IT get right on that – and can you have it done by Q2?”

Wow! That’s quite the project. Quite the responsibility. And can quickly become quite the nightmare. (We’ll address why you aren’t in the Strategic Planning Meetings in the first place in another column.)

As a Software Selection Consulting group, getting involved with an ERP selection project run solely by IT is a huge red flag for us. The only thing worse is the ERP project headed up solely by the accounting department - or a newly minted PMP certified Project Manager.

ERP – Enterprise Resource Planning really involves the entire enterprise. Trying to get user adoption when you’ve selected and installed ERP to meet requirements of the marketing team works fine until you get to the warehouse and realize their workload triples under the new system design.

In reality, industry averages show an 80% failure rate for ERP when measured by cost overrun, feature expectation or time to go-live. And many of those failures can directly trace back to differing goals, incentives and expectations of the various users.

So, how do you, the IT Manager, actually manage such a bear of a project?

Here’s a few Tips from ProfitFromERP, a group with experience in over 400 ERP projects ranging from small to regional companies, and even the occasional global and international projects.

ERP can have big payoffs but to be really successful it has to be a team effort.

There’s two teams of people you’ll be dealing with, volunteers and draftees. Your volunteers are excited about the project, those draftees need to be enlisted regardless if they’re wanting to play along – and more often than not, you’re trying to draft a CEO or CFO. The thought of ‘let the people who will be using the software pick the software’ is actually half right. Because ERP is two simultaneous projects, there’s a software project, there’s also a business consulting project.

Without the C-Suite providing executive input, that business consulting project is simply floating along, left to it’s own devices – and how many things in business ‘just work themselves out’? ERP isn’t one of them.

While the users in any department are the ‘experts’ at how things are currently done within their own department, there’s Williamson's First Law*, Everything looks simple if you don’t know the first thing about it – but he generally use a different f-word.

We were working with one Pharmaceutical manufacturer several years ago and had a morning meeting with the Supply Chain Manager, the Finance team was in the afternoon. We actually heard the Supply Chain Manager berate the Finance department for trying to save 8 cents a unit by foreign sourcing of a packaging vial without understanding customs costs or fees associated with importing. And in the afternoon, Finance criticized the Supply Chain manager for not knowing accounting terminology and ‘how she can run that department without knowing what FGI is, is beyond me’. In hundreds of accounting software projects, I’d never come across the term FGI either, so I suppose I’ll stay out of running Supply Chain departments just to be safe.

The point is, when you’re involving everyone in Enterprise software, you need to involve everyone from the beginning – and what one department thinks they know about another department can be very shortsighted.

But back to involving everyone. If they’re not on board from the beginning, find out what peaks their interest.

Yes, the higher ups are busy – but they’re also very focused on their areas of responsibility. The CFO may be too busy to look at journal entry screens, but she’s all ears when you tell her you’ve finalized the Requirements for the new AR workflow and she’ll make time to meet with you to cover those areas. The objective is to draft her involvement in future system design meetings and clarify/quantify project goals.

In a mid-sized company, you’ll end up with 75 – 150 Requirements – and working with your C-level leadership team, you should be able to make decisions like, Requirement 28 for centralized purchasing will cut costs by X while Requirement 63 auto batch reversal is nice to have a couple of times a year. Prioritizing your Requirements allows you to focus on evaluating which ERP solves your major issues best – and relegates those ‘nice to have’ issues to the right level of attention.

Fortunately for IT Departments – your daily work involves every department so use that access for full effect. CC higher ups with emails detailing proposed system architecture and when the final review meeting is to be held. You’ll be surprised who shows up.

Classically, you’ll want an Executive Steering Committee as your highest level of involvement – mostly in overall decisions. Your ERP Committee should have representatives from every department that will use a module in the new system – they may not all be in every meeting – but they’ll all be represented. Your User Group Committee should represent the staff doing the day to day entry into the new system.

And remember, you don’t own the actual project, you own the facilitator role. The new software doesn’t do anything – but your users can use the new software tool to accomplish much. Make sure they’re on the same page.

For more tips and methodologies used by the leading ERP implementation teams, www.ProfitFromERP.com offers podcasts, success stories, guidelines and white papers on how to select ERP and make it pay.

*This is generally referred to as Williamson’s First Law, from an article by Kevin D. Williamson on National Review – regardless of your political stand, you have to admit it makes a great deal of sense.