competi-tion, and operating ERP at a Class A level is one of the best ways toThe ERP Operating Committee After implementation is complete, the ERP project team should main in place, with
Trang 1TASKS TO BE COMPLETED IN MONTH 3
Complete
3-1 Series of business meetings conducted for
3-2 Series of business meetings conducted by
project team people for all other persons
3-3 Enthusiasm, teamwork, and a sense of
ownership becoming visible throughout
3-4 Inventory record accuracy, including
scheduled receipts and allocations, at 95
percent or better for all slice items
3-5 All slice bills of material at least 98
per-cent accurate, properly structured, and
3-6 All item data for slice products and
com-ponents, plus any necessary work center
data, complete and verified for
TASKS TO BE COMPLETED IN MONTH 4
Complete
4-1 Executive steering committee
authoriza-tion to implement master scheduling
(MS) and Material Requirements
Plan-ning (MRP) on the slice products and
4-2 Master scheduling and MRP operating
300 ERP: M I H
Trang 24-3 Plant schedules, and kanban where
ap-propriate, in place and operating
4-4 Feedback links (anticipated delay
report-ing) in place for both plant and
5-2 Performance measurements in place and
being reviewed carefully by the steering
5-3 Audit/assessment II completed; next
Quick Slice or other improvement
Trang 4PART IV
Beyond ERP Implementation
Trang 6Chapter 15
Operating ERP
Imagine the feelings of the winning Super Bowl team What a kickthat must be! They’ve reached their goal They’re number one.Now, imagine it’s six months later The team, the coaches, and theteam’s owner have just held a meeting and decided to cancel thisyear’s training camp Their attitude is who needs it? We’re the best inthe business We don’t have to spend time on fundamentals—thingslike blocking, tackling, and catching footballs We know how to dothat We’ve also decided not to hold daily practices during the sea-son We’ll just go out every Sunday afternoon and do the same things
we did last year
Does this make any sense? Of course not But this is exactly theattitude some companies adopt after they become successful ERPusers Their approach is: This ERP thing’s a piece of cake Wedon’t need to worry about it anymore Wrong, of course No Class
A or B ERP process will maintain itself It requires continual tention
at-There are two major objectives involved in operating ERP:
1 Don’t let it slip
2 Make it better and better
It’s easy to let it slip Some Class A companies have learned this
305
Trang 7INITIAL EDUCA
Trang 8lesson the hard way They’ve “taken their eye off the ball,” and sumed that ERP will maintain itself In the process, they’ve lost aletter grade They’ve slipped to Class B (Companies who achieveClass B and make the same mistake can become Class C veryquickly.) Then comes the laborious process of reversing the trendand re-acquiring the excellence that once was there The flip side ofthese experiences is represented by the excellent ERP user compa-nies Their attitude is: “We’re Class A, but we’re going to do betternext year than we did this year We’re not satisfied with the statusquo Our goal is to be even more excellent in the future than we arenow.”
as-How should a company address these issues? as-How can they not let
it slip? What’s involved in making it better and better?
Five important elements are involved:
ex-They had arrogance; they lacked understanding ex-They also lacked
any real chance of becoming next year’s Super Bowl champions.Operating at a Class A level is much the same A company needs
to understand that:
• Today’s success is no guarantee of tomorrow’s
• People are the key
• The name of the game is to win, to be better than the
Trang 9competi-tion, and operating ERP at a Class A level is one of the best ways to
The ERP Operating Committee
After implementation is complete, the ERP project team should main in place, with the following changes:
re-1 The group now has no full-time members; therefore, it’s ably a bit smaller than it was Its membership is now at or near
prob-100 percent department heads
2 Because ERP is no longer a project but is now operational, thename of the group might be changed to ERP operating com-mittee or something along those lines
3 Group meetings are held about once a quarter rather thanonce a week
4 The chairmanship of the group rotates among its members,perhaps once or twice a year First, a marketing managermight be the chairperson, next a manager from accounting,then perhaps someone from engineering or purchasing Thisapproach enhances the collective sense of ownership of ERP
It states strongly that ERP is a company-wide set of processes.
The group’s job is to focus formally on the performance of theERP processes, report results to top management, and develop andimplement improvements
Spin-off Task Forces
Just as during implementation, these temporary groups can be used
to solve specific problems, capitalize on opportunities, and so forth
308 ERP: M I H
TE AM
FL Y
Team-Fly®
Trang 10The Executive Steering Committee
Following implementation, the executive steering committee shouldmeet about once every six months.1It receives updates on perform-ance from the ERP operating committee Its tasks are much the same
as during implementation: reviewing status, reallocating resourceswhen necessary, and providing leadership
Measuring the effectiveness of ERP performance requires both erational and financial measurements Let’s look at operationalmeasurements first
op-Operational Measurements—The ABCD Checklist
for Operational Excellence 2
Section 5 of the ABCD Checklist is the essential operational surement of “how we’re doing” operating ERP
mea-This part of the ABCD Checklist should be reviewed by the ERPoperating committee formally, as a group, at least twice a year.Agreement should be reached on each of the 22 overview questions.For any answer that’s lower than excellent, this group should fo-cus on:
1 What’s causing the no answer? What’s going wrong? Use thechecklist’s detailed audit questions for diagnosis
2 What’s the best way to fix the problem? Does the problem ist only within one department? If so, that department man-ager should be charged with correcting the problem On theother hand, if the problem crosses departmental boundaries,should the company activate a spin-off task force?
ex-3 How quickly can it be fixed? (Set a date—don’t let it drift.)
1 This can happen in a separate meeting or as a part of a regularly scheduled ecutive staff meeting.
ex-2The entire list of questions with instructions to their use is titled The Oliver
Wight ABCD Checklist for Operational Excellence (New York, NY: John Wiley &
Sons, 1992).
Trang 11Each time the ABCD Checklist is reviewed, the results are mally communicated to the executive steering committee: the scoreachieved, the class rating (A, B, C, etc.), what the no answers are,what’s being done about them, and what help, if any, is needed fromtop management.
for-Who does this communication? for-Who presents these results? Thepart time successor to the full-time project leader In other words, thechairperson of the ERP operating committee
Some companies do a formal re-certification once per year Once
a given business unit hits Class A, their challenge is, first, to staythere and, second, to get better and better The Class A certification
is good for only one year, and then it must be “re-earned.” We dorse this approach It’s so easy to let things slip with so manythings competing for attention Re-certification helps to really fo-cus attention once per year, and “get everyone’s heads” back intoERP
en-Operational Measurements—Other
Listed below is a series of detailed technical measurements, not plicitly covered in the ABCD Checklist, relating to the specific ope-ration of certain ERP functions This list will probably not be 100percent complete for any one company, and, further, it containssome elements that may not apply in some organizations We includethem here to serve as a foundation for companies, to be used alongwith the ABCD Checklist, in developing their own measurementsprogram
ex-In master scheduling, some companies measure:
1 Number of master schedule changes in the emergency zone.This should be a small number
2 Master schedule orders rescheduled in compared to thoserescheduled out These numbers should be close to equal
3 Finished goods inventory turnover for make-to-stock tions
opera-Typically, the first two of these measurements are done weekly, andthe third monthly In Material Requirements Planning, check on:
310 ERP: M I H
Trang 121 Number of stock outs for both manufactured and purchaseditems.
2 Raw material and component inventory turnover, again forboth make and buy items
3 Exception message volume This refers to the number of tion recommendations generated by the MRP program eachweek For conventional (fabrication and assembly) manufac-turers, the exception rate should be 10 percent or less For pro-cess and repetitive plants, the rate may be higher because ofmore activity per item (The good news is that these kinds ofcompanies usually have far fewer items.)
ac-4 Late order releases—the number of orders released within lessthan the planned lead time A good target rule of thumb here
is 5 percent or less of all orders released
5 Production orders and supplier orders3rescheduled in versusrescheduled out Here again, these numbers should be close toequal
Except for inventory turns, most of these measurements are doneweekly Typically, they’re broken out by the planner including, ofcourse, the supplier schedulers
In Capacity Requirements Planning, some companies track thepast due load Target: less than one week’s work Frequency: weekly
In plant floor control, the following are frequently measured:
1 On-time production order completions, to the operation duedate A good measurement here is to track late jobs in (arriv-ing) to a work center compared to late jobs out (completed).This recognizes that manufacturing departments shouldn’t bepenalized for jobs that arrive behind schedule Some compa-nies expand this to track total days of lateness in and outrather than merely members of jobs This helps to identifypeople who may be making up some of the lost time even whenjobs are completed late
3 Supplier orders refer to the firm orders (scheduled receipts) in the supplier schedule and, for those items not yet being supplier scheduled, conventional pur- chase orders.
Trang 132 Capacity performance to plan Standard hours of actual put compared to planned output A good target: plus or mi-nus 5 percent.
out-The frequency of the above: weekly; the breakout: by ing department Please keep in mind these are ERP-related meas-urements only, and are not intended to replace measures ofefficiency, productivity, and others
manufactur-For purchasing, we recommend measuring stock outs and tory turns on purchased material by supplier and by buyer, as well asfor the supplier schedulers as mentioned above Here, also, don’t neg-lect the more traditional important measurements on quality, price,and so forth
inven-For data, we recommend weekly reports on the accuracy of the ventory records, bills of material, and routings The targets for allshould be close to 100 percent
EDUCATION
Failure to establish an airtight ongoing education program is a jor threat to the long-term successful operation of ERP Ongoing ed-ucation is essential because:
ma-New people enter the company.
Plus, current employees move into different jobs within the pany, with different and perhaps expanded responsibilities Failure
com-312 ERP: M I H
Trang 14to educate these new job incumbents spells trouble It means thatsooner or later the company will lose that critical mass of ERP-knowledgeable people The company then will be unable to operateERP as effectively as before.
People tend to forget.
They need refresher education and training To borrow a conceptfrom the physical sciences, there’s a half-life to what one learns Ifthat half-life is one year, people will remember about half of whatthey learned about ERP last year, 25 percent from two years ago
Business conditions change.
For any given company, its operating environment three yearsfrom now will probably differ substantially from what it is today.Companies develop new product lines, enter new markets, changeproduction processes, become subject to new governmental regula-tions, acquire new subsidiaries, find that they’re operating in a buy-ers’ market (not a sellers’ market), or vice versa, and on and on andon
Operating ERP means running the business with the ERP set of tools, which tends not to change.
However, business conditions do change It’s necessary
periodi-cally to match up the tools (ERP) to today’s business environmentand objectives These may be quite different from what they were afew years ago when ERP was implemented
What’s needed is an ongoing process.
That is, one where people can review the tools they’re using to dotheir jobs, match that up against today’s requirements, and ask them-selves, “Are we still doing the right things? How might we use thetools better? How could we do our jobs differently to meet today’schallenges?” We’re back to behavior change (See Chapter 7.) It’snecessary after implementation, as well as before And the way to fa-cilitate behavior change is via education
Trang 15Ongoing ERP education should be woven tightly into the tional fabric of the company Minimum ERP educational standardsshould be established for each position in the company, and writteninto its job specification New incumbents should be required tomeet these standards within a short time on the job How can on-going ERP education be woven into the operational fabric of thecompany? Perhaps it can best be done by involving the folks in hu-man resources In the H.R office, there are files for each employee.Checklists are maintained there to help ensure that employees havesigned up for programs like health insurance, the blood drive, andthe United Fund Given these files and these checklists, the humanresources department may be the best group to administer the ongo-ing ERP educational program, schedule people into classes, track at-tendance, and report and reschedule no-shows.
opera-Let us add a word about ongoing education for top management
A change in senior management, either at the CEO level or on his orher staff, is a point of peril for ERP If the new executive does not re-ceive the proper education, then he or she will, in all likelihood, notunderstand ERP and may inadvertently cause it to deteriorate Newexecutives on board need ERP education more than anyone else.This requirement is absolute and cannot be violated if the companywants to operate ERP successfully over the long run Here, also, thiscritically important educational requirement should be built directlyinto the executive’s job specifications as a hard-and-fast rule with nolatitude permitted
LEANMANUFACTURING
Lean Manufacturing (formerly called Just-in-Time) is arguably thebest thing that ever happened to ERP The reason? Because LeanManufacturing, done properly, will not allow you to neglect yourERP processes
Let’s take the case of a company that first implements ERP cessfully, and then attacks Lean Manufacturing.4Let’s say the com-pany allows ERP to slip, to deteriorate—perhaps by not keeping theinventory data accurate, or by not managing demand properly, or by
suc-314 ERP: M I H
4 This sequence isn’t mandatory Frequently, companies will go after Lean facturing first Some companies implement them simultaneously.
Trang 16Manu-allowing the bills of material to get messed up, or by violating timefences in the master schedule, or all of the above What will happen?Well, before long, the problems created by not having excellentplans and schedules will begin to affect (infect?) the Lean Manufac-turing processes Poor plans and schedules will inhibit Lean Manu-facturing from working nearly as well as it can and should Thereason: No longer will there be inventories, queues, and safety stocks
to cover up the bad schedules Stockouts are much more painful inthis environment Lean Manufacturing, in that case, will “send up arocket” that there are major problems here It will scream to get ERPback to Class A And that’s great
But that’s not all Lean Manufacturing does more than keep ERPfrom slipping It also helps it to get better and better How so? Bysimplifying and streamlining the real world
• As setup times drop, so do order quantities and, hence, tories
inven-• As quality improves, safety stock can be decreased and scrapfactors minimized
• As flow replaces job shop, queues go down and so do lead times
As these real world improvements are expressed into ERP, it willwork better and better As the real world gets simpler, data integritybecomes easier and planning becomes simpler
SUMMARY
To those of you whose companies haven’t yet started on Lean ufacturing, we urge you to begin as soon as possible You must dothese things, and many others, in order to survive in the ultra-competitive worldwide marketplace of the twenty-first century.ERP is essential but not sufficient No one of these tools—LeanManufacturing, Total Quality, Enterprise Resource Planning, De-sign for Manufacturability, CAD/CAM, Activity Based Costing,and all the others—is sufficient They’re all essential
Man-“How are we doing?” is one necessary question to ask routinely.Another is: “How can we do it better?”
Don’t neglect this second question The truly excellent companies
Trang 17seem to share a creative discontent with the status quo Their attitudeis: “We’re doing great, but we’re going to be even better next year.We’re going to raise the high bar another six inches, and go for it.”There are few companies today who are as good as they could be.There are few companies today who even have any idea how goodthey could be In general, the excellent companies are populated withindividuals no smarter or harder working than elsewhere Theymerely got there first, then stayed there (at Class A), and then gotbetter and better.
With Class A ERP, a company can operate at an excellent level ofperformance—far better than before, probably better than it everdreamed possible High quality of life, being in control of the busi-ness and not at the mercy of the informal system, levels of customerservice and productivity previously thought unattainable—to manycompanies today this sounds like nirvana However, it’s not goodenough
Are all Class A companies perfect? Nope Are there things thesecompanies could do better? Certainly
The message is clear Companies should not rest on their laurelsafter reaching Class A with ERP Don’t be content with the statusquo It’s more important than ever to go after those additional pro-ductivity tools, those “better mousetraps,” those better and more hu-mane ways of working with people Many of these projects can befunded with the cash freed up by the ERP-generated inventory re-ductions alone Look upon your excellent ERP processes as an en-gine, a vehicle, a launch pad for continued and increasing excellence.And we’ll talk more about that in the next chapter
316 ERP: M I H
Trang 18IMPLEMENTERS’ CHECKLIST
Function: Operating ERP
Complete
1 ERP project team reorganized for ongoing
operation, with no full-time members and
2 Executive steering committee still in place
3 ABCD Checklist and financial
measure-ments generated by project team at least
twice per year and formally reported to
4 Ongoing ERP education program
under-way and woven into the operational fabric
5 Lean Manufacturing/Just-in-Time
proces-ses initiated and successfully completed
within the company and with suppliers
Q & A WITH THEAUTHORS
T OM :Mike, you’ve seen ERP operate inside a major corporation
In your opinion, what’s the big issue that prevents some businessesfrom maintaining Class A status once they’ve reached it?
M IKE :Probably the biggest barrier to maintaining Class A is lack
of understanding of ERP’s business benefits If Class A is seen assimply an artificial, project-focused goal, then other business pri-orities will overshadow ERP’s needs for maintenance and im-provement The bottom-line business benefits in customer service,cash, profits, and sales need to be clearly connected to the level
of performance signified by Class A