1 / 32

A history of enterprise wide integration

A history of enterprise wide integration. From acronym to acronym EOQ / BOMP / MRP / MRP II / ERP / ERM / ERPII. Time frame and key milestones. 1950s. EOQ. Safety Stock. BOMP. Work Orders. 1965. MRP. Theoretical / conceptual Improvements in management techniques. MRPII. 1975. ERP.

philippa
Download Presentation

A history of enterprise wide integration

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. A history of enterprise wide integration From acronym to acronym EOQ / BOMP / MRP / MRP II / ERP / ERM / ERPII

  2. Time frame and key milestones 1950s EOQ Safety Stock BOMP Work Orders 1965 MRP Theoretical / conceptual Improvements in management techniques MRPII 1975 ERP 1990 ERM / ERPII 2000

  3. Time frame and key milestones 1950s EOQ Safety Stock BOMP Work Orders 1965 MRP Computing power enables completely integrated manufacturing solution MRPII 1975 ERP 1990 ERM / ERPII 2000

  4. Time frame and key milestones 1950s EOQ Safety Stock BOMP Work Orders 1965 MRP More functions become Integrated in the process MRPII 1975 ERP 1990 ERM / ERPII 2000

  5. Time frame and key milestones 1950s EOQ Safety Stock BOMP Work Orders 1965 MRP MRPII 1975 More functions become Integrated in the process + technology improvements ERP 1990 ERM / ERPII 2000

  6. Time frame and key milestones 1950s EOQ Safety Stock BOMP Work Orders 1965 MRP MRPII 1975 More functions become Integrated in the process to add up to complete business solution ERP 1990 ERM / ERPII 2000

  7. Material Requirement Planning • Emerged from BOMP in 60s • Conversion of production plan for parent items (finished products) into a production plan of production or purchasing for component items • Explosion of the requirements for a top level item through the BOM to generate component demand • Executed at each level of Assembly / sub-assembly

  8. Principles of MRP • System to plan and control production and material flows • core principle: demand for material, parts and components depends upon the demand for finished product • Chain of causality from finished goods back to inventories: • possible to reduce inventory to the minimum • plan for procurement based on actual needs • able to cater for “lumpy” (i.e. dependent) demand

  9. BOM = Recipe or formula • How to produce our products • List of components including possible substitutes • How much of each • Special conditions of operation • Expected yields and labour productivity (i.e. standards) • Extrapolate a cost per unit • Stored in a Bill of Material (BOM)

  10. Example: Bill of Material for desk 1 – List out the components 2 – describe the steps required for assembly 3 – arrange them in a possible manufacturing sequence

  11. Solution Desk Top (1) Adjustable legs (4) Screw Kit (1) Frame (1) 3 way junctions (4) Painted tubing (4) Painted metal legs (4) Leg Tubes (4) Paint (0.6 dl) Long Tubes (2) Short Tubes (2) Paint (1 dl)

  12. How MRP works • Master production schedule: drives the system based on customer orders • Bill of material (dependent demand) • Inventory status file • MRP package - contains the logic See diagram next page

  13. Master Production Schedule Open Purchase Orders Open Shop Orders MRP logic Module Inventory master part file BOM Reports: + planned order releases + Purchasing plan + work orders Is this a good plan???

  14. Master Production Schedule Open Purchase Orders Open Shop Orders MRP logic Module Inventory master part file BOM Reports: + planned order releases + Purchasing plan + work orders Is this a good plan???

  15. Benefits of MRP • Understanding the implications of changes in production schedule (by de-expediting parts) • Keeping inventory low (25% decreases reported) while removing risk of stock-outs • Better planning leading to: • reduction in lead times • better use of capacity • lowered risk of obsolete production (e.g. engineering firms) • Early warning system: earliest delivery dates are known before promises are made

  16. Without MRP Safety Stock Demand variations

  17. With MRP Safety Stock Demand variations

  18. Integration of design and manufacturing • integration of operations with upstream design activities and downstream sales activity • downstream: e.g. by integrating CAD with Bill of Material • new designs go on-line immediately • no production of obsolete products / assemblies • shorter time to market for new pdts

  19. The Rise of MRP • Snowball effect as companies moving to MRP imposed business changes to their partners • MRP logic was always around, but switching costs in manufacturing made it worthwhile: • data processing costs decreasing • inventory costs rising • Sophisticated CIM systems easier to justify • Other external pressures mean that tighter control is required

  20. Master Production Schedule Planned production Sales orders Open Purchase Orders Open Shop Orders Bill of resources MRP II logic Module Inventory master part file BOM Product routings CRP / RCCP Reports: + planned order releases + Purchasing plan + work orders + dispatch plan Move to MRP II OK Y/N?

  21. Extension to ERP functionalities • Natural extension of MRPII • Mix of two competences: • Engineering • Finance • Mix of targets • Efficiency • Control / consolidation • End to end business processes

  22. ERP Capabilities • Accounting / finance: • Fixed Assets • cash management • product cost accounting • A/R & A/P & G/L… • Production planning and materials planning • Purchasing / purchase order management • p/o receiving • inventory management • Bill of materials • Engineering changes • Product routings • MRP, production planning, CRP • Work orders • Warehouse management • maintenance

  23. ERP capabilities (2) • HR management • travel expenses • Payroll • personnel planning • sales and distribution • sales planning • Sales order management • quality control • Forecasting • Configuration management / sales quotes • Address book function: • Customer file, supplier file, employee file etc… • e.g. Microsoft spent 10 months and $25 ms replacing 33 different systems in 26 sites with SAP

  24. ERP stories • Whirlpool: hundreds of distributors receive no deliveries after the update of the SAP software. • Hershey: Despite $112 million spent on SAP R/3 all shops empty on Halloween week. • Allied Waste Industries: ERP project stopped after $130 million investment • Waste Management Inc.: same after $45 million investment • Unisource Worldwide and Dell also cancelled their projects • Foxmeyer: after three years of unsuccessful implementation, company sues SAP and AA before going bankrupt……………

  25. Buying software • Untypical IS projects • Balancing analysis of requirement with search for right supplier • Trading off conflicting requirements • Preparing for the project • Project management • Handling business disruption • Measuring progress and success

  26. Business Blueprint Realisation FinalPreparation Go-Live Support ProjectPreparation • Provide initial planning, scoping, and preparation for SAP transformation projects. • Conceptualise and document the final SAP and non-SAP operational environment based on new information and business process designed requirements. • Implement the information, business process and technical requirements based on the Business Blueprint developed during the previous phase. • Complete testing, end-user training, system management and cutover activities. • Take client from a pre-productionenvironment to a live production operation and to design and implement a long-term end users support organisation. AcceleratedSAP - The Tool for Successful Implementations

  27. Decision making process Intelligence Design Choice Review (Herbert Simon) ERP Software Implementation ERP Software Selection Vendor Independent Process Vendor guided Process Organisational Analysis Business Process Selection Implementation Review Preparation of needs Design of Software of benefits

  28. Change Management Top Issues Organisations Face During Enterprise Resource Planning Internal Staff Adequacy Training 15% 8% Project Team 7% Prioritisation/Resource Allocation 6% Consultants 5% Ownership (of benefits to others) PEOPLE 57% 5% Top Management Support Program Management 5% 4% Process Reengineering Benefit Realisation Issues/Obstacles Until Now PROCESS 20% 10% Stage/Transition 5% Software Functionality 2% Application Portfolio Management TECHNOLOGY 7% 3% Enhancements/Upgrades 3% Data 3% KNOWLEDGE ASSETS 3% Reporting 1% 1% 1% Percentage of Total Mentions(Multiple answers per respondent) 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

  29. Intelligence phase / requirements analysis • Understand • Identify stakeholders • Develop common vision • Make up a business case • Design • Draw up business maps • Design the ITT • Identify vendors • Solicit tender documents • Choice • Analyse / find best fit • Negotiate • chose

  30. Analysing Fit • Functionality grid • Break down per functional area • Down to process stage level • Ask vendors to rate fit • Not supported • Supported with mod / workaround • Supported with minor alteration • Fully supported • Score and recommend (see diagram)

  31. PackageEnabled Approach ReviewAs-Is Process Best Practice? No Yes ERP Enabled Reengineering Does ERPFit? DoesERP Fit? Yes Yes Implement ERPBase Package No BusinessImpact? No No Yes DevelopWorkaround

  32. Team creation • Multi-disciplinary • Full time • Decision making power • Budget • Representative – team leads • Balance between allegiance to team and to area of competence • Team spirit • Team awareness • Must have support from organisation

More Related