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News & views: Beauty is in the Eye of the Beholder - Enterprise resource planning Article
The article entitled: "News & views: Beauty is in the Eye of the Beholder" is in the Enterprise resource planning Articles section of Operations Management Papers area...
ARTICLE DESCRIPTION: At the recent ‘Don Ralston Lecture and Dinner’ at which my wife and I were honoured to attend, there was a lively discussion about the success or otherwise of IT in the manufacturing supply chain. Some took the view that none of the MRP/ERP systems that they knew had been a success. Others said that all the MRP/ERP systems they had been associated with had been successful. I think one difference lies in the perception of these systems. Success is a relative term.
MORE INFO: News & views: Beauty is in the Eye of the Beholder At the recent ‘Don Ralston Lecture and Dinner’ at which my wife and I were honoured to attend, there was a lively discussion about the success or otherwise of IT in the manufacturing supply chain. Some took the view that none of the MRP/ERP systems that they knew had been a success. Others said that all the MRP/ERP systems they had been associated with had been successful. I think one difference lies in the perception of these systems. Success is a relative term. This then achieves a reduction in stock, WIP and lead time (but nobody can tell you exactly by what percentage beforehand), along with improved customer service, a recognition of the need for accuracy of data, better ‘Management Control’ and having everybody reading from the same hymn book. However, it is largely a one off hit. Stock and WIP don’t reduce further. Also the system does nothing to improve quality, reduce product costs, promote teamwork nor eliminate waste. Nor does it tell you how to improve them. These all have to be done outside the system. An IT Consultant may say that it was never designed to do this, but it is too often sold as the panacea to all manufacturing’s problems. These initial benefits are minimal when compared to those achieved through World Class/ABM/Lean/ Agile/etc techniques (15-20% vs 90+%) which are based on rapid and continuous improvement through total quality management, employee involvement and the elimination of waste. Can MRP/ERP systems be looked on as successful in comparison? It’s probably a case of beauty being in the eye of the beholder. The basic logic hasn’t changed since the 1970’s, so if you swap your old MRPII system for a new one, it will be more reliable, easier to use, have some improved functions, but it will do little to improve the business unless you dramatically improve the Business Processes first. CRP (Capacity Requirements Planning) systems linked to MRP were never really a success. Stand-alone systems like IBM’s KRAUS and CLASS (Capacity Loading and Scheduling System) did produce benefits that justified their implementation (15-30% reduction in WIP and lead times). Again these paled into significance compared to the introduction of JIT/Kanban (90+% reduction). The later CAPOSS (Capacity Planning and Operation Sequencing System) was more sophisticated but not so successful as: a) It was more complex and expensive b) The major benefits had already been obtained with the KRAUS/CLASS systems which used the same basic logic. My thanks again to the IOM and MAS for the Lecture and Dinner which we thoroughly enjoyed. Don Ralston Hon FIOM (Retired)
PUBLISHER: Institute of Operations Management
Page number: 12 Word count: 490
Vol 29 - No 07 - November 2003
The article can be downloaded in full from the publisher's site i.e. the Institute of Operations Management.
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