Enterprise resource planning (ERP) is a mode of manufacturing built upon the notion of a single software program serving the needs of all aspects of the operation. In strict terms, the true ambition of ERP is to integrate all departments and functions across a manufacturer through the single-source software program, while eliminating departmental standalone computer systems. It is hoped that such integration will facilitate the sharing of the same real-time data simultaneously to all areas of the plant, thus coordinating decision-making processes and outcomes. To this end, an ERP approach can have significant on-time delivery improvements and positive ROI--if, the software is installed properly, integrated system-wide, and correctly utilized in operation.
The more robust an ERP software program is, the more encompassing it is in terms of anticipating the most nuanced needs of every department in the manufacturing operation. In other words, the complexity of combining intra-departmental needs with a broader inter-departmental approach to data-sharing is a very tough task. This is achieved today by the use of “install-as-needed” modules in the system whereby department-specific (or vendor-specific) details are incorporated without the need to manually update the entire system. Indeed, some companies moving to ERP might start off with only those modules they need (such as HR or Inventory) and leave the rest for later installation.
An ERP software program has the ability to bring under one umbrella all of the company database for the purpose of smoother system-flow in production. In place of the isolated standalone computer, personnel now log into a local computer connected with all other distant computers through a central data hub. From accounting, inventory, and HR, to sales, scheduling, shop floor, and management, everybody in the plant is looking at the same data and schedule to see what is working and what adjustments are needed for on-time delivery of a job. System information is quickly and easily at hand, and is input and seen through either traditional keying or graphical user interfaces (GUIs).
In addition to eliminating the standalone computer operation, ERP software also reduces the need and waste of paper documents. Take, for instance, shop floor management. In the past, the standard procedure was to generate a work order (WO) attended by riders such as schematics, plans, and so forth. As this WO traveled from sales to scheduling, to the shop floor, valuable time was spent (and lost) while the WO was in transit. On the shop floor, direct versus in-direct time spent in production was hard to account for due to the clocking inconsistencies of personnel taking on a new job or job part.
With the ERP solution, WO’s go immediately into system and are scheduled according to relative due dates of all jobs, the availability of material, and the coordination of similar jobs to enhance a lean production approach. Shop floor employees now can log into and off of a job right onto the GUI interface, and in turn in-direct and direct labor are now accounted for and are used by both HR and management to more accurately assess waste areas in the system. It is this primary lean function—the elimination of waste in manufacturing—that ERP is best suited for analyzing. Also, in GUI-based ERP system paper WO riders are replaced by on-line files that display valuable information and images directly on the local computer screen.
Of course, change does not come easy to any enterprise; however, changing the way people do things is precisely what ERP asks of its users. Thus, system-wide integration is always the most difficult part of an ERP implementation, but without it positive changes in the way the operation functions will not take place. In other words, more than just a simple software installation, the true measure of ERP value is found in changing the ways manufacturers, and their people, actually do business.
http://www.globalshopsolutions.com/optimized/erp-learning-center/erp-howto-guides/what-is-erp.asp
Dusty Alexander is the President of Global Shop Solutions. Global Shop Solutions is the largest privately held ERP software company in the United States.
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By Dusty Alexander
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