Wednesday, July 22, 2009

Today 'discrete landscape of ERP of S: Tendencies, challenges, and solutions

Is not any more the face of today 'of the industry of S what it was there is of five or 10 years. The request of the consumers led the change of industry as to the technology used by producing goods. The planning systems of entrepreneurial resource (ERP) matched these tendencies, and consequently, conformity, manufacturing methods thin, and of the concepts of chain of provisioning were incorporated in the environment of manufacture.

The discrete ERP manages all the aspects of production, the supply, inventory, and so on in an environment of manufacture. This includes products of manufacture via the reiterated processes. Theoretically, of the products, once assembled, can be dismounted in the parts (discrete) separated, unlike the derivative products of the manufacture of process. The discrete applications of ERP, like all the software of ERP, aim at the total integration of management, the personnel, and the material.

The three principal tendencies assigning the discrete manufacturers are 1 today) technology, the 2) changing economic models, and 3) conformity.

Tendencies of technology

The software of ERP has changed clearly for its days earlier of the planning of the needs into matters (MRP) and of the MRP II. Between other changes, it integrated with the complex networks of the software of the management of chain of provisioning (SCM). Since the environment of manufacture became so complex, and because many new types of software were developed to meet the needs increasing for the manufacturers, the technology of Internet was incorporated in these autonomous solutions of software in order to try to integrate all together.

Which is orientated architecture towards the services?

Orientated architecture towards services (SOA) is a manner of integrating without seam of the multiple applications of software of company together on a platform of integration, amalgamation different IT from the infrastructures with the applications of company. It makes it possible all the systems without seam to act one on the other and to integrate the ones with the others in a way in which allows the user to have a singular point of view of what occurs in the organization. SOA makes it possible users to extract from the data starting from the multiple systems of company, which can often be a process very provocant and complex.

The aspect of service of SOA reflects the fact that the suppliers of ERP can now speak with the needs for the place about a manufacturer. It is what is known like analytics of manufacture. The analytics of manufacture represents a layer of solution of business intelligence (BI) on traditional manufacturing technologies, making it possible users to extract from the data.

The suppliers of ERP developed sectors of expertise in particular on discrete manufacture. With this expertise, they developed systems of ERP with the advanced BI functionality. The BI component to such systems of ERP can fulfill several functions:

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allow the user the data of mine in terms of approvisonnement, assembling, and providing goods or components
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increase to detect the visibility for goods via nomenclatures (BOM), of the automation of the purchase, of approvisonnement, and the recording of the orders
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synchronize the quotation treating and paying
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reduce the assembly line time of breakdown, the countable costs of inventory, the production costs, and the errors of record keeping
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optimize the resources used for the production.

The analytics of manufacture can also help of the users with

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distinguish the suppliers who provide components per hour and those which do not make, from this fact which helps with the choice of a supplier
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decide manufacturing processes so can be carried out before the components arrive for not wasting time

The exploitation of data by a system of ERP can help to lower the total manufacturing costs, as well as allow directors human resources (hour) to extract from important information on employees in the organization. For example, if a particular competence is necessary for a particular task of manufacture, the director of hour can quickly draw to the top this information and make a decision with the current on which the qualifications of the employees would be adapted for this particular task.

Collaboration among manufacturers, distributors, and suppliers

Posed on the platform of SOA which the suppliers of ERP east offer the discrete manufacturers the BI based on the WEB, which integrates now with systems of ERP and the technology of gate Internet to allow collaboration among manufacturers, distributors, and suppliers.

Gates Internet help to integrate the multiple parts unit. If a manufacturer deals with the international suppliers, collaboration can be realized by such gates, facilitating the communication between the international parts. Moreover, composing it based on the BI WEB helps of the manufacturers to identify the suppliers who could affect completion periods by not providing components per hour. Moreover, if a problem arises in the environment of manufacture, the BI component will inform the responsible directors, and an appropriate measure can be taken.

Commercial environment of manufacture

Since manufacture became total, SCM made it possible to the discrete manufacturers to the parts of source with inexpensive and to incorporate thin manufacturing methods in their environments of production. (For more information on SCM, to see please the chain of provisioning 101: The foundations which you must know).

In the past, the manufacturers were responsible to control their inventory and of the goods of forwarding to their final destination. Today however, the parts, manufacturing processes, and the distribution of the components or the final goods can cross the multiple bonds in the chain of provisioning. This means that many companies are implied by producing the goods in opposition to a simple manufacturer and with a supplier.

In such an environment, the manufacturers integrate their systems of ERP with the software of SCM. A discrete application of ERP aims at the total integration of management, the personnel, and the material. It also offers the broad functional insurance; vertical prolongations of industry; a robust technical architecture; formation, documentation, execution, and tools of design of process; and so on.

A typical discrete system of ERP now appropriate to the manufacturers of the products which can be dismounted in the constitutive components, such as tractors, computers, tables, and so on.

Conformity

Because of the increase in total competition in discrete manufacturing industry, an important concern for manufacturers (particularly for manufacturers treating the multiple countries) and the consumers are just as standards of quality can be compromised if the appropriate measures aren 't set up. Conformity-financial, technological of standardization, and health and safety-are of paramount importance.

The discrete manufacturers are responsible for three principal types of conformity:

1.

International standards, as those establish by the ISO international of standardization (OIN), or standards local, as those establish by the Canadian association of standards (SCUMS). Such audit processes of quality of control of organizations of standardization and prepare reference marks to make sure that the manufacturers adhere to these standards.
2.

Conformity-standards of industry which are specific to industry. For example, in aerospace industry, the components must be specific dimensions, and the materials must belong to the particular tolerance levels. Such characteristics are standards of safety, which allow to the component makers to have to place order to be standardized, of this fact ensuring adherence the standards suitable for industry.
3.

Conformity-standards of company or interns who dictate the course of operation, the systematic production, etc, which lead to the increases with the result.

How a discrete system of ERP can help

Since the software moves towards a platform of SOA, an architecture of well defined software will determine how these standards and policies are integrated in the total structure of ERP. This will make it possible to the manufacturer to resist the graduation a greater number of users, and determines if it will be able to incorporate emergence technology-all to adapt to the user growing and in the conditions of standardization.

Instantaneous of supplier of the discrete landscape of ERP

In all the discrete landscape of ERP, the activities of fusion and acquisition intensified in two last years. Five suppliers sit down now with the top of the market: Oracle, SAP, Infor, QAD, and sage.

Each one of broad functionality of these offers of suppliers, but each one made significant acquisitions as well, as each of the five with the vertical expertise in much of sectors as well. Since the software of ERP historically concentrated on manufacture, these five suppliers have the modules developed extremely well manufacture.

Other suppliers known for their strong presence on the market of ERP include the software of CDC, the Statistics financial international, Lawson, and Microsoft. Some older suppliers of software (those which were in industry during 10 to 20 years) chose to concentrate on specific verticals; they make well, but they cannot compete with such giant like Oracle or SAP.

Choice of a discrete solution of ERP

Using centers of evaluation of technology 'patented methodology (TECHNICAL), five points to be considered here by choosing a discrete solution of ERP:

1. Functionality of product
It is the first phase by choosing the discrete software of ERP. It evaluates the devices and functions the offers of solution as is, without modification or personalization-its possibilities available out of the box.

2. Technology of product
This defines as well as the product the 'architecture technical of S the technological environment in which the product can function successfully. The definition of the obligatory criteria in this unit makes it possible to the manufacturer to shorten the list of potential suppliers and the solutions applicable which pass the gathering relatively most fundamental to obligatory selection criteria.

3. Service and support of corporation
This set of criteria defines a supplier 'possibilities of S to provide the practical operations and the continuous support. The service and support include the consultation, systems integration, the qualifications of management of the projects, the geographical insurance, the service PLEASE of supplier 'insurance of language and time of S, and media of the delivery.

4. Viability of corporation
The viability of corporation (viability of supplier) is a critical category which examines a supplier a 's financial and a force of management. The report-and-metric analysis of Wall Street combined with qualitative management and the evaluations of corporation will give him executives a precise evaluation of the risks and advantages of the investment in a specific option of product and supplier.

5. Strategy of corporation
This evaluates chart of corporation and strategy of supplier of software one 'of road of S concerning of the specific chronologies in the way in which the product will be developed, sold, and supported in the market of the discrete software of ERP. The strategic whole and of long run of criteria of evaluation, it evaluates how indeed the supplier the 's three--five with the product of year, with the support, and the sales strategy traces with the total direction of the market.

The final word

SOA becomes an integral part of the discrete landscape of ERP. The manufacturers considering a software package of ERP have now more options because the discrete suppliers of software of ERP now take up the challenges of the environment in the course of evolution of manufacture. The discrete manufacturers also increase the Internet as manner of gathering the various solutions of software which function well for them. Couple these tendencies with an environment of software which can handle the challenges of the increasing globalisation and adherence to the standards of conformity, manufacturers can now concentrate more on their result and their businesses, in opposition to worrying about the technology which is placed in place to run their operation.

Justification of the investments of ERP Part four: Substitute or Giving in application a system of ERP �

Substitute or Giving in application a ERP System*



A financial analysis of investment concentrating on advantages of the planning of entrepreneurial resource (ERP) frequently applies to these companies justifying at the beginning an execution of ERP. It can also be employed to justify has re-execution when the initial efforts did not produce desired results. The box describing classifications of success of ERP identifies situations where the execution of ERP is lacking to produce the desired advantages.

the *This is the part four of an article with four parts reprinted to maximize your system of ERP by Dr. Scott Hamilton. The transition from the theory and realities of the current systems of ERP, maximizing your system of ERP provides practical advices for the manufacture of management in various environments. Drawing on case studies from Dr. Scott Hamilton 'from a first hand experiment from S from the consultation with more than thousand companies, it covers common problems and solutions of operation so that the way indeed applies and employs systems of ERP. The book can be ordered on amazon.com. It on extract justification of the investments of ERP is presented in four shares:

* Quantifiable advantages of a system of ERP

* Intangible effects of the ERP

* Costs to apply a system of ERP

* Substitute or giving in application a system of ERP

Reprinted with the permission of the McGraw-Hill.

Classifications of success of ERP

Several measurements were used as means of measuring the successful execution of a system of ERP. The impacts on results of execution and basic line of businesses provide the best measurement of success. Another measurement of success is the degree to which the formal system of ERP is employed to run the businesses. Four classifications - named class has with class D--were often employed to characterize success.

Diagram 3.5 recapitulates these classifications of success of ERP.

Classify a user. The formal system of ERP is actually employed to direct the whole company. The database of manufacture defines the manner that products are really built, and of the efforts were undertaken to simplify provisions of factory and processes of businesses. The system of ERP defines the realistic agreed strategies of S&OP (of the sales and planning of operations) which cover all the requests, of the sale orders have realistic promises of delivery, and the programs are really employed to coordinate activities of chain of provisioning. The efforts of coordination reflect action messages, with a handy number of exceptions. The system of ERP updates accountancy correctly and provides useful informations of management. The system of ERP typically reflects the last releases of the supplier of software.

User of the class B. the formal system of ERP is partially effective while being employed to direct the whole company. He defines strategies of S&OP, but they typically miss agreement and perfection of company. Activities of chain of provisioning are frequently launched which does not reflect programs of the system of ERP, and the volume of action messages makes them frequently difficult to employ. The not very realistic promises of delivery on much of sale orders contribute to the problem, and also create a large-that-necessary volume of conditions of exception requiring acceleration. Some systems without ceremony and parallels are used to control acceleration apart from the formal system. While the database of manufacture provides a reasonably complete and precise model in the way in which products are really built, there is of Juste enough of exceptions to make with question of some the formal system. The applications of accountancy are with intermediate coupling with the operational report, but the sufficient exceptions exist to make the financial suspect of impacts.

User of the class C. the formal system of ERP is only employed partly company, typically in information on the recordings about, forwarding, receipt of buying order and the application sale orders of accountancy. The database of manufacture provides an unfinished or vague model in the way in which products are really built. The strategies of S&OP are in general non-existent, and of the not very realistic promises of delivery are made on many sale orders. Several systems without ceremony or parallels are required to coordinate activities of supply and production, typically with the excessive maintenance of acceleration of efforts and data of reproduction. The applications of accountancy are not with intermediate coupling with the activities reported in the production. The system of ERP reflects an old version of the software package.

User of class D. the formal system of ERP is not employed to run part of the company very, and could be operation only in the function of the management operating system (put). Systems without ceremony and parallels are employed to control the businesses.

During twenty-five last years, the investigations of field about the success of ERP indicate that roughly companies 10percent carry out the statute of the class has, 40percent are the class B, 40percent are the class C and the remainder (10percent) is defective.

Many manufacturers think that they need has again system when they must really improve and Re-instrument their software package running of ERP. They can be characterized as has class B or class C user, and do not carry out the possible advantages--.both quantifiable and intangible. In much of case, they employ an older version of the software package and the significant personalizations made by havve. The estimated costs to improve and the Re-instrument are typically less than has new system , as illustrated on diagram 3.6. In this example, some general basic principles (or reports/ratios) were employed to consider the costs disposable.

The Re-instrument of costs a system of ERP should be appreciably lower applying a new system. The users have the knowledge of the use of system, and should know the forces and the weaknesses of system. Many companies can live with the weak points of their current system. The external assistance of the supplier of software and the advisers can help to develop solutions at the weak points, and should in any case belong to uninterrupted efforts of improvement. With a firm arrangement of the costs and weak points of re-execution, the decision of investment should be justified on the basis of advantage.

Many manufacturers are confronted with the decisions about replacing their software package running of ERP or system of the vintage. The decision of replacement can come from any number of situations. The software package running of ERP is not constant any more; is too expensive to maintain; is strongly adapted and cannot with the customer requirements improved being; races on old technology; is too complex and expensive to apply; and so on. A system of the vintage of ERP provides the partial solutions or the solutions non-integrated; he 's not on the good platform of technology; nobody knows the system and can support it; nobody can improve the system; and so on. The decision of investment in these cases tends to employ comparisons of the costs between the alternatives.

The starting point for comparisons of the costs should be the classification discussed beforehand of the costs, disposable and continuous annual costs. The following case study illustrates the use of the displacement of cost as bases for investments of ERP.

Case study: Displacement of cost as bases for the replacement of system of ERP

Several autonomous factories of a multisite manufacturer applied a package microphone-based autonomous of ERP to each site because it was an alternative cheaper than the standard of corporation. The system of corporation of ERP was a complex system of central processing unit which required very the elevated levels of the external assistance, great expenditure for personalizations, and high charge-outside the rates with the function of corporation with put. The disposable and continuous costs for the system of corporation were two to three times higher. The direction of company even discussed (successfully) that they could apply the new system in three months, obtains the allowances over one six months period of refunding, and throws them finally far in two years when the function of corporation of put was finally ready to apply the system of central processing unit to their factories. Three years after these factories successfully applied the system of ERP of simple-site (with some three months periods of execution), the factories always employ the system while other sites within the company fought to apply even partially the system of central processing unit. It was estimated that displacements of cost (and they advantages) are more than one million dollars.

Justification of the investments of ERP Part three: Costs to apply a system of ERP �

Costs to apply a ERP System*

Costs of execution of the planning of entrepreneurial resource (ERP) can be divided into disposable costs and continuous annual costs. The two types of costs can be segmented in the hardware, the software, the external assistance, and the internal personnel.

the *This is the part three of an article with four parts reprinted to maximize your system of ERP by Dr. Scott Hamilton. The transition from the theory and realities of the current systems of ERP, maximizing your system of ERP provides practical advices for the manufacture of management in various environments. Drawing on case studies from Dr. Scott Hamilton 'from a first hand experiment from S from the consultation with more than thousand companies, it covers common problems and solutions of operation so that the way indeed applies and employs systems of ERP. The book can be ordered on amazon.com. It on extract justification of the investments of ERP is presented in four shares:

* Quantifiable advantages of a system of ERP

* Intangible effects of the ERP

* Costs to apply a system of ERP

* Substitute or giving in application a system of ERP

Reprinted with the permission of the McGraw-Hill.

Software. The cost of a software package of ERP varies considerably, extending from $30.000 (of USD) for the packages microphone-based to several million for a few packages of central processing unit. The number of convergent users generally leads the costs of software, so that more reduced systems cost less. For the orientation of illustration and purposes, the range of costs of software package from $50.000 to $200.000 (of USD) for smaller manufacturers. In addition to the software package of ERP, the disposable costs can include the software system, the development of the software adapted to the customer requirements, or integration with other applications.

Material. The choice of material is led by the company 'choice of S of a software package of ERP. The supplier of software of ERP generally certifies which material (and configurations of material) must be used to exploit the system of ERP. The material can have to be replaced or improved. In general, small with the manufacturers of intermediate size have already the microcomputers and a lan, so that a system microphone-based of ERP established on de facto standards requires little additional investment in the material.

External assistance. The external assistance includes the costs of consultation and formation to apply the package of ERP. The supplier of software, the retailer or the groups independent of advising can provide the external assistance. The quantity of external assistance required depends on several factors, such as the complexity of the package of ERP, the experiment or the knowledge of the internal personnel, and the point to which the external personnel is accustomed instead of the personnel interns to apply the system.

An orientation at these costs was the relationship with the cost of the software package of ERP. A package microphone-based complete of ERP typically has a report/ratio .5 to 1.0; the manufacturer requires $.50 to $1.00 (of USD) of external assistance for each dollar of costs of software package. The time passed for the execution of the whole application of ERP typically needs four to six months. Several of the packages of ERP of central processing unit have a report/ratio three to five at the costs of external assistance. The software package costs typically more, and the time passed for the execution needs nine to twenty-four months.

Internal personnel. The personnel interns stop watch reflects engagements of time for the team responsible for the project of execution, the executive steering committee, the users in various functional fields, and the personnel of the management operating system (put). Engagements of time include classes of formation, development of the internal procedures for the use of the system, the reports/ratios and the applications adapted to the customer requirements involutes, preparation of the data, the meetings with the external advisers, and of the meetings of team. An orientation at internal costs of personnel can also be expressed like relationship with the costs of software of ERP, where a typical report/ratio is from .5 to 1.0.

The disposable costs to apply a system of ERP can be in a simplistic way considered using typical relationship with costs of software of ERP. These reports/ratios are recapitulated on diagram 3.4 at the disposable and continuous annual costs, with calculations of example for (of USD) a software package of ERP $100.000.

Software. The continuous costs of software should include the annual agreement of support to the customers with the software and the supplier of ERP. This support with the customers typically provides levellings of assistance and software of telephone and has the price indicated typically approximately 15 percent to 20 percent of the price of software. Levellings with the releases of software system will be also required.

The way of levelling for new releases of the software package of ERP is critical. The new releases contain improvements for difficulties of functionality and bug, and make sure that the software functions on the last platform of technology. Of the user from the 'point of view of S, the way of levelling makes it possible to the manufacturer to benefit from one hundred of year-man of development efforts made by the supplier of software of ERP (and other suppliers of technology) with the minimal investment. From the point of view of supplier, it is much easier to support users on the last releases. However, the changes of user to the source code and other personalizations of user can make it even impossible very expensive or to improve. Additional costs must then be committed to ensure the work of personalizations with the last levelling. According to the indications of the evaluations of example on diagram 3.4, a ratio of .25 was employed at total annual costs related to the software of ERP.

An approach by stages of execution can mean that the additional software must be bought. A system of data acquisition, for example, can be applied as an element of a second phase. Material. The continuous costs of material will reflect new conditions defined by the supplier of ERP to run the software.

External assistance. The external assistance should be employed as an element of a rolling programme of improvement to employ indeed an application of system of ERP to direct the company. The formation and the consultation can concentrate on new or misused functionality improved of process of businesses, software, and the training of the new personnel. An approach by stages of execution needs the additional assistance to each phase. Additional personalizations can be required, particularly with the sophistication in evolution of user. According to the indications of the evaluations of example on diagram 3.4, a ratio from .1 to .2 could be employed at total annual costs related to the external assistance.

Internal personnel. The team responsible for the project of execution does not finish necessarily her responsibilities at the period for the swing for system. An approach by stages of execution and the uninterrupted efforts of improvement will require continuous engagements of time. The turnover of the employees and the rotation of station will also require continuous efforts of formation. The nature of the software package of ERP (and software associated system and material) typically requires the number and the expertise of employees of put necessary for the continuous support. It can extend from a person of part-time secretary (to manage a package microphone-based of ERP) to a great group of expert as regards put (for a few packages of ERP of central processing unit). According to the indications of the evaluations of example on diagram 3.4, a ratio from .1 to .2 could be employed at total annual costs related to the internal personnel.

the *This concludes the part three of an article with four parts reprinted to maximize your system of ERP by Dr. Scott Hamilton. The transition from the theory and realities of the current systems of ERP, maximizing your system of ERP provides practical advices for the manufacture of management in various environments. Drawing on case studies from Dr. Hamilton 'a first hand experiment from S from the consultation with more than thousand companies, it covers common problems and solutions of operation so that the way indeed applies and employs systems of ERP. The book can be ordered on amazon.com. It on extract justification of the investments of ERP is presented in four shares:

* Quantifiable advantages of a system of ERP

* Intangible effects of the ERP

* Costs to apply a system of ERP

* Substitute or giving in application a system of ERP

Reprinted with the permission of the McGraw-Hill.

Justification of the investments of ERP Part two: Intangible effects of the ERP

Intangible effects of ERP*

Intangible advantages or not - financial of an integrated system of the planning of entrepreneurial resource (ERP) can be looked at several prospects. For goals of illustration, the discussion will concentrate on the advantages for accountancy, the product and the design of process, the production, the sales, and the functions of the management operating system (put). From the total point of view of company, the ERP provides a framework to work indeed together and to provide a coherent plan for the action.

Each intangible effect could be measured in terms of economies. The maintenance of data doubles, for example, needs the time of personnel in entering data (and probably administrative time while determining which whole of data should be employed for decision making). By accelerating efforts have an obvious effect to spend the time of personnel. Those of the measured economies can also be employed to show impacts on financial results.

the *This is the part two of an article with four parts reprinted to maximize your system of ERP by Dr. Scott Hamilton. The transition from the theory and realities of the current systems of ERP, maximizing your system of ERP provides practical advices for the manufacture of management in various environments. Drawing on case studies from Dr. Hamilton 'a first hand experiment from S from the consultation with more than thousand companies, it covers common problems and solutions of operation so that the way indeed applies and employs systems of ERP. The book can be ordered on amazon.com. It on extract justification of the investments of ERP is presented in four shares:

* Quantifiable advantages of a system of ERP

* Intangible effects of the ERP

* Costs to apply a system of ERP

* Substitute or giving in application a system of ERP

Reprinted with the permission of the McGraw-Hill.

With a common database of ERP, accountancy does not require any more the double files and the superfluous data capture. The calculation of the costs of product, for example, can be carried out using the structures of product precise and up to date. Simulations of calculation of the costs of product can be employed to analyze the impact to change material costs, wages, and air attributions like the changes envisaged with the invoices and the routes. Differences between the real costs and standard are accentuated like dissensions. The order brought back dissensions help of the specific problematic fields.

Invoices of customer can be based on real forwardings (without data capture doubles), which helps the treatment of invoice speed. The sums to be poured can employ the buying order and the data of receipt for the set with three ways with invoices of supplier.

While transactions of manufacture are recorded, the financial equivalents are automatically produced to update the book. This provides a recording of complete audit of the totals of account to the documents of source, ensures the precise and up to date financial information, and allows the advance of reality against saved expenditure. The detailed activity of transaction can also be easily reached on the line for investigations of answer of account.

Since manufacture one can eliminate the transactions update automatically the book, the long manual entries. Closing procedures of end of period can be carried out in hours or days, rather than of the weeks. This improves reduced work of secretary of accountancy, and improves opportunity of the financial reportings.

Financial reportings can be easily adapted to the customer requirements to meet the needs for various decision makers. Financial projections can be based on detailed calculations of ERP for future conditions. The money planning cash, for example, can explain current and projected sale orders and purchases envisaged, as well as of the sums to be received and sums to be poured current. The tools of decision-making aid (such as assessments, graphic softwares and directors of data) can employ the financial data maintained in the database of ERP.

The database of structure of product offers machiner a control much larger of product and design of process, particularly in terms of technical ordering of change. Changes envisaged can be put in phase inside and changes of help can be communicated immediately.

The systems of ERP offer many analytical tools for the function of technology. By diagnosing the impact of the changes to materials and the resources, for example, the engineers can check where information used to identify the affected products. The efforts of reduction of completion period can employ the analysis of the critical path of critical path of the completion periods of article in the invoices with multilevel to turn the attention on these key components affecting the cumulative completion period of manufacture. Cost invoices with multilevel can be employed to concentrate efforts of reduction of the costs on articles of high values. Comparisons of Bill can be employed to accentuate differences between the products or the revisions of the same product like identifying conditions of the adaptation kit.

Configurations of product made on ordering of support of systems of ERP. The configurators based on the rules reduce the need for specialized assistance of the engineers, and make sure that personnel of sales (or even customers) can develop convenient precise configurations. Estimates of the costs and the evaluation for configurations of product made on order can also be quickly calculated.

Justification of the investments of ERP Part:1 Quantifiable advantages of a system of ERP

Justification of ERP Investments*

The return on investment envisaged provides the justification and the motivation of cost to invest in the ERP. There are the quantifiable advantages as well as the intangible advantages in the decision of investment of ERP. The quantifiable advantages have an impact of basic line on profitability, the turnover of capital, and a potential effect on the current price.

This section discusses the advantages quantifiable and intangible of a system of ERP, which compares the execution closes before and after applying the ERP. Other scenarios are produced by justifying investments of ERP. For example, a company can consider the replacement against the levelling or the re-execution of a software package of ERP.

There are significant costs to successfully apply not a system of ERP. Wages of manufacturers often more for the lack of systems which they would have paid the improved systems. They carry the excessive inventory or provide the service to the poor customers, for example. And the manufacturers can invest in the ERP without gaining the advantages because the systems are partially applied, without success applied, or the use deteriorates with time.

the *This is the part one of an article with four parts reprinted to maximize your system of ERP by Dr. Scott Hamilton. The transition from the theory and realities of the current systems of ERP, maximizing your system of ERP provides practical advices for the manufacture of management in various environments. Drawing on case studies from Dr. Hamilton 'a first hand experiment from S from the consultation with more than thousand companies, it covers common problems and solutions of operation so that the way indeed applies and employs systems of ERP. The book can be ordered on amazon.com. It on extract justification of the investments of ERP is presented in four shares:

* Quantifiable advantages of a system of ERP

* Intangible effects of the ERP

* Costs to apply a system of ERP

* Substitute or giving in application a system of ERP

Reprinted with the permission of the McGraw-Hill.

Quantifiable advantages of a system of ERP

The studies which examined manufacturers about the impact of the systems of ERP on the firm execution indicate that the size and the industry of company do not affect the results. Advantages were indicated for the large ones and small companies, if they make the standard products or facts on order or are in the discrete environments of manufacture or process. This section explains the quantifiable advantages in terms of several fields of improvement.


Typical advantages

The quantifiable advantages most significant comprise reductions of inventory, costs material, and work and overheads, as well as of the improvements of service to the customers and sales.

Reduction of inventory. The practices of planning and establishment of the program improved carry out typically to inventory reductions of 20 percent or to improve them. This once provides not only one reduction of capital (and inventory a great proportion of capital constitutes typically), but also provides the saving continues countable costs of inventory. The cost to carry the inventory includes not only the interest but also the costs of storage, handling, obsolescence, the insurance, the taxes, the damage, and the contracting. With interest rates of 10 percent, the countable costs can be 25 percent to 30 percent.

The systems of ERP carry out to lower inventories because the manufacturers can only make and buy what is necessary. The requests rather than require the not very significant points of order lead plans spread out per time. The deliveries can be coordinated at the real dates of the need; orders for the useless material can be given or countermanded with later. The nomenclatures make sure that matched units are obtained rather not enough that too many a component and others. The changes envisaged of the invoices also prevent the accumulation of inventory of obsolete materials. With few lacks of part and realistic programs, work orders can be treated with the achievement more quickly and inventories of work-in-process can be reduced. The execution of philosophies of JIT can reducing further completion periods of manufacture and the inventories corresponding.

Material reductions of the costs. The matter practices improved of supply carry out to improve of the negotiations of supplier for prices, typically having for result of the reductions of the costs of 5 percent or to improve them. The valid programs let buy people to concentrate on negotiations of supplier and the improvement of quality rather than on accelerating lacks and obtaining the material at the prices of best quality. The systems of ERP provide information of negotiation, such as requirements out of materials projected by statistics for execution for group and supplier for the products. To better give to visibility of suppliers of future conditions the assistance to carry out the effectiveness which can be transmitted as lower material costs.

Reductions of cost of labor. The practices as regards manufacture improved carry out to few lacks and interruptions, and to less of recovery and of overtime. The typical saving of work of the successful ERP is a reduction of 10 percent in costs of labor direct and indirect. By to the minimum reducing urgent work and lacks of parts, less time is necessary for handling and additional dispatching and material installations, ruptures, and the fates or work of slit of advance which were put on side. The supervisors of production have a better visibility of requested work and can adjust the capacity or the responsibilities of meet programs. The supervisors have more time for people of management, direction and formation. The personnel of production has more time to develop better methods and to improve quality and the exit.

Service to the customers and sales improved. The coordination improved of the sales and the production carries out to improve the service to the customers and the increased sales. The improvements of the contacts of customer of management, to make and meet promises of delivery, and a shorter order to embark completion periods, lead to a satisfaction of the customer more raised and repeat orders. The people of sales can concentrate on being sold instead of the checking or making excuses for the late deliveries. In the environments made on ordering of product, of the configurations can be quickly identified and have the price indicated, often by the personnel of sales or even the customer rather than the technical personnel. Catches together, these improvements of service to the customers can lead to few lost sales and real increases sales, in general 10 percent or moreover.

The systems of ERP also provide the capacity to react to the changes of the request and to diagnose problems of the delivery. Methods of recovery can be taken early, like determining priorities of forwarding, informing of the customers of the changes to the promised delivery dates, or to change the production schedules to satisfy the request.

Improved orders of accountancy. The procedures improved of collection can reduce the number of days of the sums to be received exceptional, providing of this fact the money available cash additional. While being at the base of these improvements be quickly precise creation of invoice directly transactions of forwarding, convenient reports/ratios of customer, and follow through on accounts. The control of solvency during the recording of the orders and the handling improved of the investigations of customer further reduces the number of accounts from problem. The management of the credit and the matter practices improved of sums to receive reduce the days of the sums typically to be received exceptional by 18 percent or improve them.

The commercial credit can also be maximized by benefitting from the discounts of supplier and the money planning cash, and the payment only of these invoices with the set discharges. This can carry out to lower conditions for the money-on-hand.

Advantages of system of ERP on the assessment

The advantages of the processes improved of businesses and the information improved provided by a system of ERP can directly affect the assessment of a manufacturer. To illustrate this impact, a simplified assessment is shown on diagram 3.1 for a typical manufacturer with the annual income of $10 million. The greatest impacts will be on the inventory and the accounts receivable.

In the example, the company has $3 million in the inventory and $2 million in accounts receivable exceptional. Based on former research about the averages of industry for improvements, the execution of a system of ERP can lead to a reduction of inventory of 20 percent and to a reduction of 18 sums to receive percent.


Running Typical improvement Favours
Current assets


Money cash and other
500.000


Accounts receivable

2.000.000
18%
356.200

Inventory

3.000.000
20%
600.000

Fixed immobilization

3.000.000


Total capital
$8.500.000

$956.200
Passive exigible
xxx, xxx


Passive nonexigible
xxx, xxx


Shareholder 'stockholders' equity of S
xxx, xxx


Total responsibilities and stockholders' equity
xxx, xxx


* Reduction of inventory. A reduction of inventory of 20 percent has like consequence $600.000 less inventory. Improved the purchase of the practices (this result in reduced material costs) could lower this number even more.

* Accounts receivable. Accounts - admissible currents represent soixante-treize days of sums to be received exceptional. A reduction of 18 percent (at sixty days of the 'sums to be received) has like consequence $356.200 of additional cash money available for other uses.

Advantages of ERP on the report/ratio of the incomes of results

A report/ratio of the incomes of results simplified and summary for the same manufacturer $10 million is shown on diagram 3.2. For much from manufacturers, the cost of sales extends from 65 to 75 percent of sales (the example will employ 75 percent). Using averages of industry for each principal advantage, the processes improved of businesses and the information system associated almost double income running with pretaxation.

* Reduction of inventory. A reduction of 20 percent of the inventory running of the results $3 million in the continuous advantages of the lower transport costs of inventory. Using a countable cost of 25 percent as consequence $150.000 in the transport costs lower every year, identified here as an element of the overheads.

* Material reductions of the costs. A reduction of 5 percent in material costs because of the practical purchase improved of the results in annual saving of $225.000.

* Reductions of cost of labor. A reduction of 10 percent in costs of labor because of less overtime and of improved productivity has like consequence the annual saving of $100.000.

* Increased sales. The improvements of the service to the customers typically lead to the 10 sales of percent an increase; this is not shown on diagram 3.1.

The annual advantages assembling itself to $475.000 in this example equalizes almost the income running of pretaxation of $500.000.

Diagram 3.2 recapitulated the report/ratio of the incomes of results for a typical company $10 million


Running Typical improvement Favours
Sales $10.000.000 10%

Cost of sales

7.500.000

Material 4.500.000 60%
Work� 1.000.000 13%
Air 2.000.000 27%
5% $225.000
10% $100.000


Overheads

2.000.000
$150.000
Income of pretaxation $ 500.000
$475.000

The analysis of ration provides another manner of looking at the impact of a system of ERP. Three reports/ratios illustrate the effect---two referred to the liquidity and one to the execution of operation.

* Inventory turnover (cost of sales/inventory). The low inventory turnover can indicate the possible obstruction of stocks and obsolescence. It can also indicate major problems of too false kind of inventory which can create shortages of inventory necessary for the production and the sales. The high turnover indicates a better liquidity and an inventory management higher and a sale. Being given the example the company $10 million, the number running of turns of inventory is 2.5. With a reduction of inventory of 20 percent, the number of inventory turns of the increases to 3.1.

* Days of the sums to be received (365 * 1 (sales/sums to be received)). This report/ratio expresses average time in days that the sums to be received are exceptional. It is a measurement of the management of the credit and collections. Generally, more the number of exceptional days is large, more the probability of the delinquencies in the accounts receivable is large. The lower the number of days is, the more the availability of money cash is large. With a reduction of 18 percent of the sums to be received, the admissible current days of soixante-treize days can be reduced to sixty. This means that $356.200 is available for other goals.

* Output of the credit (benefit before taxes/capital totals). This report/ratio measures the effectiveness of management by using the available resources with him. Several calculations are necessary to determine the output of the credit. In this example, the output of the credit can be improved from 5.9 to 12.9 by applying indeed a system of ERP.

The performance evaluation based on the indicial analysis can also employ comparisons between a 's to have the company and the similar companies in terms of size and industry. The annual studies of report/ratio provide comparative reports/ratios for this purpose. This use of comparative indicial analysis will employ same the three reports/ratios for the inventory turnover, admissible day, and output of the credit. To carry out the analysis, you identify the reports/ratios of median and higher quartile for companies in same industry. Those correspond harshly to the average and good execution. By comparing the ratios with your company 'execution current of S, you can calculate how much best your company should carry out to be competing. The same analysis can be carried out using BenchmarkReport.com Web site.

Using the report/ratio of turns of inventory for the example the manufacturer $10 million, supposes that the annual studies of report/ratio indicate that the median and higher quartile are four and six turns for other companies in same industry. The average execution of four turns of inventory translates into inventory envisaged of $1.875 million ($7.5 million divided by four). If the company of example had this report/ratio, it would have had $1.125 million less in the inventory. With countable costs of inventory to 25 percent, this would produce the $281.250 every year saving.

For the admissible report/ratio of days, suppose the annual studies of report/ratio indicate that these sixty and fifty days are the median and higher quartile. The admissible days in the example the manufacturer $10 million is currently of soixante-treize days; an improvement at sixty days would reduce sums to be received from $356.200 (using a rate of sales of newspaper of $27.400 and one thirteen days reduction). This means that the money cash is available for other goals.

Note that the output of the credit the report/ratio is 5.9 for the company of example. By assuming the annual studies of report/ratio indicate that the output of the credit is ten and fifteen for companies in same industry with the median and higher quartiles, improving the output of the credit at the equivalent levels benefit or the turnover of increased capital would mean.

The ERP carries out on the stock exchange of actions

If integration and the information improved of the results of a system of ERP in a better assessment and increased benefit, these improvements carry out the stock exchange of actions of the company. Although the stock exchange of actions is affected by a series of factors, the typical effect of the benefit and improved reports/ratios of assessment can be estimated. Using the example already described of the manufacturer $10 million and typical advantages, and to assume 100.000 outstanding shares and an existing stock exchange of actions of $30.00 per share, the stock exchange of actions shows the effects of an effective ERP, like diagram 3.3 shows. With a multiplying price/of incomes of six, the stock exchange of actions of the company of example could be climbed $30 up to $58.80 per share.

Diagram 3.3 calculating the potential current appreciation


Before ERP After ERP
Before benefit of taxes $500.000.00 $980.000.00
Earnings per share $ 5.00 $9.80
Cours des actions of actions current $30.00 6 * 9.80 = $58.80
Multiplier 6 6

Five stages with the success of project of business intelligence

The successful projects of business intelligence (BI) surround more than the execution of one solution per hour and in the budget. True success should be measured by the way in which the BI solution improves the organization the execution total of S by the effectiveness increased in the report, planning, the financial functions, and measurements of execution. This will help to ensure of the organizations falls of projects of BI in the index of success envisaged of 30 percent.

Much was written about the return on investment measurement (KING) for BI, and the general conclusion is that which gains real perspicacity in the initial advantages is not easy. The identification of the long-term advantages becomes all more practical than planning and the analysis, conformity, and them approaches progressists become more traditional in organizations. To gain perspicacity in the way of successfully applying a BI solution, the organizations should evaluate the success of another organization included/understood there their achievements and use of Bi-against their current own initiatives. It is also important that the organizations learn from other organizations 'failure-and avoid repeating them.

This article identifies and explores five stages which the organizations should take to avoid the common traps produced per many companies by applying a BI solution. These stages also provide an overall picture of the articles which must be considered before applying BI in a unit of organization or company.

Stage 1. identifying the commercial problem

The identification of the commercial BI problem is the first stage to ensure a successful project. Once an organization knows what is broken, can not only it start to find means of fixing the problem, but it can also identify the adapted resources, creates the user buys, and gives the priority to how to approach the project. To produce a KING, a BI solution must tackle specific commercial problems. Otherwise, applying an ad hoc tool of question, a cube (OLAP) of analytical process on line, or an instrument panel will not have like consequence the durable advantages.

Unfortunately, it is common so that the BI solutions are pushed on a unit of company in order to meet it rather objective than a need for organization. Sometimes the organizations obtain caught up with general initiatives and lose sight of the fact the real advantages that BI provides in terms of management of the output, collaboration, the course of operation, the improvement of process, etc

To reach buy, the community of user should be part of the process of identification of problem. A decision of execution which always comes from the management requires to enter of the users as for what are their conditions, and of this information can make the difference between the execution of a tool which functions like proposal for a value and execution which can be seen like useless.

Hopes of determination of stage 2. of use

Once BI is applied in an organization, its use usually develops beyond the initial hopes. For example, an organization can suppose that its BI solution will be employed by 10 to 20 users, when actually more than 400 data of question of users on a monthly basis. Since the initial design of the platform will have been based on a number relatively low of the potential users, the system can not be able to support a so high number of questions, and most probably accident (to fail), involving users to lose the faith in the new system and to turn over potentially to their pre-BI environment for stability. In addition to missing confidence in new system, the organization can see the challenge to obtain an unstable system in service as step in value the effort, the delays, and time necessary.

With not very realistic hopes, the destruction can make reconsider the organization its use of BI. Generally, once the adoption of BI occurs with less on the one hand organization and other departments or units of company see its advantages, the adoption starts to draw aside in all the whole organization. So that a BI solution meets these increasing needs, the organizations should envisage the use of BI before execution of a solution.

Another consideration is the type of use of BI tool. For example, if a business manager must increase sales and wants to thus analyze tendencies, the distribution of product, and the execution of sales, the creation of a whole of static reports/ratios will not be useful. A tool for visualization of data to control these articles and to develop a plan based on the analysis of tendency will more probably produce the suitable results.

Delivery of comprehension of stage 3. data

The BI solution the 'capacity of S to collect good information for the report and the analysis is essential if it is to provide the value to the organizations. Although the identification of the data required is long, it is the backbone of BI. Moreover, determining how data will be provided, which to be the activities of cleaning of suitable data would owe, and if the data must be delivered in the group or in real-time, should all be defined in advance. So data are not cleaned or are not delivered when necessary, then the tools of BI entry will not provide the value appropriate to the organization. The BI solutions give the value by the data analysis, thus it is essential that the data arrive once required, in the adapted format, and at the good moment.

In addition to the extract, transform, and of the tools of load (LTE), quality of data and need for cleaning of data to be inherent aspects of the delivery of BI in the organization. Actually, soon from a principal initiative on the scale of the management engineering of data (MDM), the responsibility to provide precise data will fall on the shoulders from the units from company applying BI.

Some organizations are badly directed and think that their BI solution will provide the tools to fix their problems of data. The BI solutions can provide continuous processes of quality of data, but they are not innate with the offers of software. Some suppliers of the 'BI tools include the increased devices of quality and integration of data, and other suppliers suppose that this responsibility should fall to the organization. The organizations should put pursuant to the structures of management of the data to the minimum to reduce the destructions which result from the exits of data.

Initiatives of course of formation of stage 4.

The decision when to unroll the formation contributes to the success of project. The initiatives of formation should start well before or during the production run. However, in much of organizations, being exerted months before the real execution are unrolled, creating the exaggeration among the employees about the new system and what they will be able to make with him. Before the execution produces-sometimes really excitation of initial of later-tea of month and buys dropped, and in a paramount way, the users forgot their recently discovered qualifications. To still establish the dash, need formation repeat-to waste time and the money.

Never buy related with the change is easily realized in organizations. The users become attached to their current processes, if these processes are productive. Buy does not occur immediately at the time showing with users the inherent value of BI because it means that the whole manner that they make deals will change. The creation of a formation program-and to provide this formation in a convenient mode-assistance of the users apply their qualifications recently immediately discovered, of this fact while helping to increase the user buy.

Stage 5. choosing a vertical or a solution Horizontal-based

The organizations should identify so more value will be provided by a vertical solution which is established specifically for the organization the 'industry or department of S, or by a horizontal solution which can develop with the organization. For example, the organization does it need a report, a question, and a tool for analysis credits which will be prolonged through the organization, or the organization must develop a process and a conformity which will adhere to the standards the USA Sarbanes-Oxley act (SOX) or of act of portability and responsibility for medical insurance disease (HIPAA)? The answer to this question will help the organization to define which type of solution will meet its needs better.

Moreover, the envisaged use of BI in the future can help to determine if a horizontal or vertical solution will answer better the organization with the 'needs for S. the organizations which must adhere to the standards conformity should benefit from the solutions vertical-based, because the suppliers developed the solutions which answer specific requirements for conformity. The horizontal solutions need a great degree of personalization to bring them until the par, driving at extra times and the money spent to develop the solutions of them.

The organizations in principal vertical industries should strongly consider the solutions vertical-based which will meet their needs, out of the box. the solutions Vertical-based are likely to satisfy the general terms of an industry or a specific department, but since the horizontal BI solutions are not based on the specific data models, they can be more flexible at the requests of change of the organization. Consequently, if an organization envisages the BI rapid growth through the organization, to have the capacity to develop solutions based on the various needs can be more salutary. This is referred to identify the commercial problem and to envisage the future needs for the organization.

Conclusion

Too much often, the projects of BI does not manage to reach an organization hopes of S. But with research, planning, and a full methodology, failure can be avoided. To help to ensure the success of project of BI, the organizations should function by these five crucial steps: identification of the commercial problems, determining how a BI solution will be employed, knowledge how and when data are provided, initiatives of course of training of the users at the adapted times, and to develop a framework to choose the type of solution which normal adjustment their organizations needs.

Wednesday, July 8, 2009

Warehouse Management for Manufacturers: Why Extended ERP Might Be the Right Choice

Any manufacturer that makes a substantial number of shipments from a distribution facility has likely considered bringing a degree of automation to its warehouse and shipping functions. For some companies, a full-blown warehouse management system (WMS) is a necessity, particularly if their operation relies on an automated racking system, perhaps housed in a rack-mounted structure with its own track-mounted materials-handling system.

However, for the vast majority of manufacturers—even those that complete a large number of shipments every day—a WMS that is separate and distinct from their other business systems will be counterproductive. Even a full integration of WMS with an enterprise application like enterprise resource planning (ERP), designed to eliminate entry of the same data into two different systems, will result in redundant systems and substantially greater expense than a unified system would. Moreover, WMS-ERP integrations that rely on batch updates will create opportunities for inaccurate information and will often slow operations down rather than expedite them.

This article explores the drawbacks of integrating stand-alone WMS and ERP systems, and makes a case that for many companies, it makes more sense to extend the manufacturing application already used by the organization as a whole, as opposed to integrating with an entirely new technology stack. Also offered is advice on selecting and implementing a warehouse automation solution that works well with a client’s manufacturing enterprise suite.

Basic Warehouse Management versus WMS

At a certain point in a manufacturing organization’s development, management will begin to look for ways to automate the movement of materials from manufacturing to distribution, and into the customer’s hands. A broad spectrum of WMS can in fact help manufacturers to better use their workforce by automating the picking, staging, and shipping processes. The ultimate goal, of course, is to increase the speed and reduce the cost of getting the right product to the right customer at the right time.

The primary business trigger that often prompts a company’s management to begin considering some type of WMS solution is the sheer number of shipments the company has to handle each day. As the number of shipments increases, it becomes more attractive to move the distribution process from an order-by-order environment toward an arrangement that makes better use of labor in the warehouse. Rather than send someone into the warehouse each time for individual orders, warehouse management technology makes it possible for workers to

* pick multiple orders in a single pass through the warehouse
* bring those orders to a shipment staging area
* crate the orders up appropriately for each carrier
* see that the orders are in the right place for pickup

Warehouse management can also help automate the work of warehouse laborers who might be picking different items that are all part of the same order. Through automation, these workers can reliably be directed so that these items are staged at the shipping area for proper inclusion in the combined order.

Moreover, it should be the goal of managers planning a warehouse management project to have warehouse workers use handhelds or other mobile devices to receive instructions on what to pick. The use of such devices eliminates the need for workers to travel repeatedly to and from a centralized dispatch station, where pick lists are printed as hard copies and distributed.

Most manufacturers are producing a product that will be moved into an on-site or close by warehousing or shipping area. If they are already running an enterprise suite, like IFS Applications, for example, they have access to some preexisting logistics functionality, which is integrated with inventory functionality and information on the customer orders to be fulfilled.

Extended ERP

Extending that existing enterprise suite with straightforward technology designed to direct workers in the warehouse can be easily achieved without a stand-alone WMS solution. Moreover, the extended ERP approach can facilitate the more comprehensive approaches to picking and warehouse management, including the following:

*

Batch and wave picking. Batch picking involves combining the picking requirement for several orders, and then sorting the materials for individual orders as the picker goes along. Wave picking entails accumulating a large number of orders for picking as a batch.
*

Voice-directed and light-directed picking. Both voice and light inputs can instruct workers what to pick, and extended ERP strategies can accommodate each of these methods.
*

Picking by carrier. For some companies, it makes sense to pick by carrier, particularly if they have a large number of small shipments that need to be packaged according to carrier specifications (UPS or FedEx, for example), while larger shipments are treated much differently, since they are to be shipped by the pallet or by truckload.
*

Communicating picking information to warehouse workers over handhelds in multiple languages. Even companies that are strictly domestic in their footprint likely employ people for whom English is a second language, and can benefit from making other languages available in the warehouse. Global companies obviously need broad language support in their enterprise suite and in their warehouse solutions, including through handhelds.
*

Accommodating requirements to pick and ship items according to first-in, first-out (FIFO) or in accordance with expiration dates.
*

Picking products that are subject to revision levels. Revision levels present warehouse workers with the challenge of looking at two of what appears to be the same item, but that in fact differ on the basis of detailed revisions or engineering change levels, which are tracked in the manufacturing system. While these revisions are documented in inventory records, they may not be visually obvious. Validating picking requirements at the revision level on the handheld scanner eliminates these potential errors.

We believe that many companies will benefit more from extending the logistics and shipping functionality within an enterprise environment than by rolling out a full-blown WMS. After working with a number of companies that have integrated a full-blown WMS with their ERP system, we have found that there is a definite gap between ERP distribution capabilities and WMS distribution logistics. Furthermore, these full-blown WMSs duplicate many of the systems within the ERP environment and deliver numerous capabilities most manufacturers will not use. Most manufacturers simply need a few pieces of key automation, logistics support, and labor- and productivity-enhancing features; they don’t need all the bells and whistles of a complete WMS.

In our experience, we have had success extending the warehousing capabilities of ERP systems by blending them with our automated workforce productivity suite, which includes data collection, mobile devices, truck mounted devices, and the ability to direct workers to the next task. This approach delivers functionality for picking and warehouse automation, driving efficiencies to and automating the work of people performing those functions. A WMS might accomplish some of the same things, but it brings the added cost of additional licenses for the application and database, additional server hardware, additional support and maintenance fees, and additional staff time to maintain expertise on two disparate systems. Moreover, the integration of the ERP system and WMS will add cost not only in the initial implementation, but during each upgrade as well, since the integration will need to be “uplifted” to accommodate new software for both the ERP system and the WMS.

Furthermore, integrating a WMS technology stack with a preexisting enterprise suite can effectively slow down processes and sabotage lean inventory initiatives. The typical means of integrating a WMS and a manufacturing system is to periodically refresh data in the WMS in a batch process from the manufacturing software. In situations when product must be shipped literally right after it comes out of manufacturing, that batch integration is often not fast enough. In these situations, an up-to-the-minute snapshot of the manufacturing system is essential.

Additionally, many companies today are turning inventory too quickly to accommodate a batch process update to a WMS, and they can experience even more problems with visibility of current inventory from the manufacturing side. In a make-to-stock environment, manufacturers are always trying to make just enough product and have the correct amount of finished goods in inventory. Lacking up-to-date visibility of what is in the warehouse, the manufacturer has a harder time managing that lean inventory, and it might make too much of a product. Moreover, product that shows up as still available according to the manufacturing system in the warehouse may have in fact already been shipped, making it impossible to make good on promised delivery times.

Planning the Warehouse Automation Implementation Project

When preparing to implement warehouse automation technology—whether a full-blown WMS or tools to extend existing ERP functionality—a number of hard questions need to be asked. The decisions necessary to chart a course of action should not be rushed, as the results of these decisions will impact your business for many years to come. Here are a few guidelines:

1. Handle diverse customer needs.
Understand clearly what your customer’s requirements are. Many organizations have a single, static process they follow when serving their customers. Yet most customers have varying needs and requirements. Understanding and categorizing the various needs of different customers can allow implementation of a more flexible solution, as opposed to a rigid warehouse solution that meets 100 percent of the needs of only 50 percent of customers.

Consider for a moment that a business has high-volume customers, high financial reward customers, demanding customers, and low-volume customers. A manufacturer may have customers in different industries, needing things to be done in a slightly different way. In some cases, the expectations of or regulatory demands placed on the customer’s customer may impact the shipping process. In situations like this, integration may be critical not only with the manufacturing and inventory systems, but with the customer relationship management (CRM) system as well.

Diversity in order size alone may require parallel picking and shipping systems: some customers may order by the hundred gross, while others order by the dozen. In this case, 50 percent of orders might be packaged for delivery by UPS, while others might be palletized and prepared for intermodal transport.

2. Respect the nature of the workforce.
In planning a warehouse automation project, it is critical that management understands the capabilities of its workforce. Can employees handle the learning curve of various automation solutions, and will they be receptive to the resulting change? Remember that employees may need a very concrete overview of how automation will affect them and benefit the company, particularly if warehouse staff is currently performing manual processes.

3. Attain interdepartmental cooperation.
While warehouse automation is facilitated by technology, it is not strictly an IT-driven initiative. The ultimate solution must be driven not only by customer needs, but by 1) the business intelligence requirements of manufacturing, which include the need to know what is in the warehouse at any given time, and 2) senior management, which needs to assess inventory levels and monitor business performance.

Senior management must be directly involved at the early stages of an implementation plan, to establish goals and deliverables. Once the goals are identified, it is essential that key and knowledgeable members of manufacturing, distribution, and IT departments work closely together to achieve those goals. In most cases, a lot of the information necessary to achieve warehouse automation resides in the manufacturing and CRM systems, so a thorough audit of existing systems and functionality should be performed prior to selecting additional technologies to add to the mix.

Why Selecting an ERP System Is Like a 12-Step Recovery Program

So, I was looking over this article, and it suddenly occurred to me that there are uncanny similarities between AA’s 12-step program and the ERP selection process.

Is your business on the road to recovery? Find out!

*Step 1
“We admitted we were powerless over alcohol—that our lives had become unmanageable.”

ERP selection translation: For “alcohol,” substitute “broken business processes” (by extension, for “alcoholics,” read “employees”).

Step 2
“… came to believe that a Power greater than ourselves could restore us to sanity.”

ERP selection translation: For “Power,” substitute “project team.”

Step 3
“… made a decision to turn our will and our lives over to the care of God as we understood Him.”

ERP selection translation: Creating the business case for a new ERP system. For “God,” substitute “ERP system.” [Warning: do NOT substitute “CEO” for “God.” That’s just foolishness.]

Step 4
“… made a searching and fearless moral inventory of ourselves.”

ERP selection translation: Interviewing your stakeholders.

Step 5
“… admitted to God, to ourselves, and to another human being the exact nature of our wrongs.”

ERP selection translation: Business process modelling, part 1—defining your “as is” processes.

Step 6
“… were entirely ready to have God remove all these defects of character.”

ERP selection translation: Business process modelling, part 2—defining your “to be” processes.

Step 7
“… humbly asked Him to remove our shortcomings.”

ERP selection translation: Sending your RFI to system vendors.

Step 8
“… made a list of all persons we had harmed, and became willing to make amends to them all.”

[Note: Applicable to CRM systems only]

Step 9
“… made direct amends to such people wherever possible, except when to do so would injure them or others.”

ERP selection translation: [redacted by Legal Department]

Step 10
“… continued to take personal inventory and when we were wrong promptly admitted it.”

ERP selection translation: Reducing your customization requirements.

Step 11
“… sought through prayer and meditation to improve our conscious contact with God as we understood Him, praying only for knowledge of His Will for us and the power to carry that out.”

ERP selection translation: For “prayer” and “meditation,” substitute “scripted vendor demos.”

Step 12
“… having had a spiritual awakening as the result of these steps, we tried to carry this message to alcoholics, and to practice these principles in all our affairs.”

ERP selection translation: User training.

*

Sadly, selecting an ERP system requires a number of additional steps that AA doesn’t address. Find out more. And for the record: AA’s 12 Steps.

Oh, and our sales department will kill me if I don’t insert a plug for our ERP Evaluation Center. Here. Note: It’s only as anonymous as you make it. For best results, you may wish to define your requirements explicitly and accurately.

Ramco OnDemand ERP Certification

This is the first time Alex Hankewicz and I have completed a certification for a software as a service (SaaS) ERP–designed product.

Ramco OnDemand ERP is a full-function SaaS ERP product for the small to medium business (SMB) environment. The entire product is Web-based, accessible by your web browser, and fully supported via the Web.

First Impressions
The forms layouts and many of the detail screens allow for data field relocations and reconfigurations via drag and drop. The default color schemes are easy on the eyes, and screen layouts are ergonomically designed. A user can take more frequently used fields and bunch them together; fields that are not used can be squeezed to insignificant size.

The product handles everything from the sales quotation to the final shipment, including all financial, inventory, and manufacturing aspects. We noted good functionality in the sales and purchasing areas.

Inventory management is thorough and supports multiple locations (such as warehouses, and even multiple aisle and bin locations for a product).

In the fulfilling of a production order, Ramco demonstrated that material would be drawn from the nearer warehouse and bin location according to first in, first out (FIFO); last in, first out (LIFO); and other rules. Full lot and serial number support were included.

Choosing an ERP Product
If your organization is making the transition from a small start-up operation to a medium sized organization, then Ramco’s SaaS product offering might be a smart choice since it includes standard accounting functionality, such as A/R, A/P, costing, and sales. More functional purchasing, HR, and CRM interfaces, as well as an advanced planning tool, are currently under development and should be available soon.

The manufacturing scheduling functionality is work area–based, where mixed types of the same machines can be pooled together to add to capacity. Work center reports are available to show how much of the work center capacity is remaining. The product’s material requirements planning (MRP) and master production scheduling (MPS) interfaces are easy to use, intuitive, and what other vendors will have to compete against for the same class of product.

Being a SaaS product, all of Ramco OnDemand ERP’s functionality is global. Accepted customizations become global on demand enhancements. These enhancements, patches, etc. when implemented, become effective immediately.

Where Does On Demand Fit?

The Ramco on demand SaaS product appears as an excellent entry point for emerging businesses such as light manufacturing. For light manufacturing or small shops, SaaS is a money saver, and coupled with Ramco’s virtual machine access facility, provides an economic ERP solution. For the aerospace or automobile industries, where deeply nested multi-level bills of material (BOMs) are the norm, the product is usable, though in these industries, reporting by machine within a work-center obligates more data capture and more drill-down reporting.

Ramco OnDemand ERP cannot be used by manufacturing organizations that require the ability to track global efficiencies by work center, since this functionality is not yet available in the product. However, for companies looking for a robust scheduling and work order planning tool, which allocates materials to specific work orders, Ramco’s SaaS ERP product offering can satisfy such requirements effectively.

Because the product is SaaS-based, the client is saved from performing backups and system maintenance, and from up-front licensing fees. At this time, costs are per seat, and an amount is charged for data storage and by quantity of business transactions.

Ramco OnDemand ERP is configured to your business requirements and typically takes less than a week to deploy. As your business grows, the solution can be scaled up to accommodate multiple locations, currencies, and business units. The application stays tuned to your business all the time.

Ramco OnDemand ERP integrates multiple functions and systems into one solution and gives you total visibility and control of operations. In the process, it helps you focus on growing your business.

As a virtual machine application, no separate processor is dedicated to running the on demand application. Contrarily, the virtual machine solution is termed evergreen, in that multiple virtual machines share a real computer on an on demand basis, and allow for lower operating costs. These lower operating cost benefits are passed on to the clients.