ERP for Manufacturers

The management of the information is the key in any company. The manufacturing industry experienced the first systems created with the objective to integrate the details and information, and to organize the different productive processes with MRP (Materials Requirement Planning), which have developed what is now known as ERP, or Enterprise Resource Planning. These resources are fundamental to understanding how information technology has contributed to the competitive advantages of the industrial sector.

ERP was created for the big industries, and the cost was usually not an obstacle to reaching the objective of productivity. Traditionally, ERP was expensive and out of reach of SMEs, but today it has been expanded in order to provide for small and medium sized companies. These Businesses now have the ability to implement ERP to satisfy their needs.

The decision to change from manufacturing to enterprise is related to the fact that an ERP system could be applied to a whole enterprise instead of only a manufacturing section. ERP could also be applied to services and other Businesses not related to manufacturing.

The manufacturing resource planning included all the sources in relation to the manufacturing such as material, human resource, equipment and finances. When the competitive strategy changed from low price and great variety to speed, ERP found the right place to give profit to this new strategy.

The difference with previous systems

ERP goes ahead of technological tools. The system connects to all the offices of a group of Business throughout the entire world. This program allows the companies to design products with the entrance of engineers all over the globe, installing factories in various areas to produce pieces and components for many countries, and the information of all the parties involved.

The traditional systems are limited to planning the assignment of the resources for one industrial plant or company, while ERP plans the resources for all the sectors of an enterprise. ERP can also apply to specific services related to the Business.

Is it known that a traditional enterprise bases its manufacturing processes with four pillars: the material, machines, manpower and money. The present needs count another resource as indispensable for manufacturing: the information to manage the rest of the resources. ERP takes into account this new resource and includes the main files of planning and transactions.

The master files contain details or routes, processes, accountancy, personnel, inventory, etc. The planning files include the production plan, the requirements of demand planning, master plans of production, request of material planning and capacity planning. Finally, the transaction files bring together the information regarding the operations like client orders, purchasing orders, working orders, among others.

Problems Related to Manufacturing Control

It is important to have a proper control of the manufacturing processes, but sometimes issues come up and limit the correct performance of this task. One of the most common problems is the fact that there are different demand sources for a product and its components. Some of the requirements of the product are determined by the needs of other products as well as products that are specified by the client.

The previous requirements also have their origin in clients, but not in a direct way. The requirements of the product can be classified as depending and independent demands. The independent demand for an article is not related with the demand of other products (i.e: finished products). However, the depending demand is directly related to the material exploitation for the final product. This type of demand is calculated, and it is not necessary for it to be predicted.

Another relevant problem for the right control are the short lead times and urgent handing, which is due to the shorter life cycles of the products and fluctuations on the client demand.

Some changes in the procedures of engineering lead to more trouble. If any problem occurs and affects the design or quality of the product, it is probable that a change in engineering will take place. Taking into account the client’s preferences, this change will increase, entailing other areas like marketing, production, storage, accounting and purchasing.

The last problem that the control could face is the possibility of a change in the production plan. Since it is not immutable, the only constant in production is the change itself. The clients change their dates of order, changes in the dates of expedition by providers, unexpected absences of employees, damages in machinery, etc. The challenge is not in getting rid of the changes, but confronting it.