1. A history of enterprise wide integration
From acronym to acronym
EOQ / BOMP / MRP / MRP II / ERP / ERM / ERPII

2. Time frame and key milestones
EOQ
Safety Stock
BOMP
Work Orders
1950s
MRP
1965
Theoretical / conceptual
Improvements in management
techniques
MRPII
1975
ERP
1990
ERM / ERPII
2000

3. Time frame and key milestones
EOQ
Safety Stock
BOMP
Work Orders
1950s
MRP
1965
Computing power enables completely integrated manufacturing solution
MRPII
1975
ERP
1990
ERM / ERPII
2000

4. Time frame and key milestones
EOQ
Safety Stock
BOMP
Work Orders
1950s
MRP
1965
More functions become
Integrated in the process
MRPII
1975
ERP
1990
ERM / ERPII
2000

5. Time frame and key milestones
EOQ
Safety Stock
BOMP
Work Orders
1950s
MRP
1965
MRPII
1975
More functions become
Integrated in the process + technology improvements
ERP
1990
ERM / ERPII
2000

6. Time frame and key milestones
EOQ
Safety Stock
BOMP
Work Orders
1950s
MRP
1965
MRPII
1975
More functions become
Integrated in the process to add up to complete business solution
ERP
1990
ERM / ERPII
2000

7. Material Requirement Planning
Emerged from BOMP in 60s
Conversion of production plan for parent items (finished products) into a production plan of production or purchasing for component items
Explosion of the requirements for a top level item through the BOM to generate component demand
Executed at each level of Assembly / sub-assembly
Discrete Manufacturing: Manufacturing items based on a definitive bill of material or recipe as opposed to batch formulas. The bill of material or recipe is typically expressed in quantities per each as opposed to percentage per batch.

8. Principles of MRP
System to plan and control production and material flows
core principle:
demand for material, parts and components depends upon the demand for finished product
Chain of causality from finished goods back to inventories:
possible to reduce inventory to the minimum
plan for procurement based on actual needs
able to cater for “lumpy” (i.e. dependent) demand

9. BOM = Recipe or formula How to produce our products
List of components including possible substitutes
How much of each
Special conditions of operation
Expected yields and labour productivity (i.e. standards)
Extrapolate a cost per unit
Stored in a Bill of Material (BOM)

10. Example: Bill of Material for desk
1 – List out the components
2 – describe the steps required for assembly
3 – arrange them in a possible manufacturing
sequence

11. Solution Desk Top (1) Adjustable legs (4) Screw Kit (1) Frame (1)
3 way junctions (4)
Painted tubing (4)
Painted metal legs (4)
Leg Tubes (4)
Paint (0.6 dl)
Long Tubes (2)
Short Tubes (2)
Paint (1 dl)

12. How MRP works
Master production schedule: drives the system based on customer orders
Bill of material (dependent demand)
Inventory status file
MRP package - contains the logic
See diagram next page

13. Is this a good plan??? MRP logic Module Master Production Schedule
Open Purchase Orders
Open Shop Orders
MRP logic
Module
Inventory
master part file
BOM
Reports:
+ planned order releases
+ Purchasing plan
+ work orders
Is this a good plan???

14. Is this a good plan??? MRP logic Module Master Production Schedule
Open Purchase Orders
Open Shop Orders
MRP logic
Module
Inventory
master part file
BOM
Reports:
+ planned order releases
+ Purchasing plan
+ work orders
Is this a good plan???

15. Benefits of MRP
Understanding the implications of changes in production schedule (by de-expediting parts)
Keeping inventory low (25% decreases reported) while removing risk of stock-outs
Better planning leading to:
reduction in lead times
better use of capacity
lowered risk of obsolete production (e.g. engineering firms)
Early warning system: earliest delivery dates are known before promises are made

16. Without MRP
Safety Stock
Demand variations

17. With MRP
Safety Stock
Demand variations

18. Integration of design and manufacturing
integration of operations with upstream design activities and downstream sales activity
downstream: e.g. by integrating CAD with Bill of Material
new designs go on-line immediately
no production of obsolete products / assemblies
shorter time to market for new pdts

19. The Rise of MRP
Snowball effect as companies moving to MRP imposed business changes to their partners
MRP logic was always around, but switching costs in manufacturing made it worthwhile:
data processing costs decreasing
inventory costs rising
Sophisticated CIM systems easier to justify
Other external pressures mean that tighter control is required

20. MRP II logic Module Move to MRP II Master Production Schedule
Planned production
Sales orders
Open Purchase Orders
Open Shop Orders
Bill of resources
MRP II logic
Module
Inventory
master part file
BOM
Product routings
CRP / RCCP
Reports:
+ planned order releases
+ Purchasing plan
+ work orders
+ dispatch plan
Move to MRP II
OK Y/N?

21. Extension to ERP functionalities
Natural extension of MRPII
Mix of two competences:
Engineering
Finance
Mix of targets
Efficiency
Control / consolidation
End to end business processes

22. ERP Capabilities Accounting / finance:
Fixed Assets
cash management
product cost accounting
A/R & A/P & G/L…
Production planning and materials planning
Purchasing / purchase order management
p/o receiving
inventory management
Bill of materials
Engineering changes
Product routings
MRP, production planning, CRP
Work orders
Warehouse management
maintenance

23. ERP capabilities (2) HR management sales and distribution
travel expenses
Payroll
personnel planning
sales and distribution
sales planning
Sales order management
quality control
Forecasting
Configuration management / sales quotes
Address book function:
Customer file, supplier file, employee file etc…
e.g. Microsoft spent 10 months and $25 ms replacing 33 different systems in 26 sites with SAP

24. ERP stories
Whirlpool: hundreds of distributors receive no deliveries after the update of the SAP software.
Hershey: Despite $112 million spent on SAP R/3 all shops empty on Halloween week.
Allied Waste Industries: ERP project stopped after $130 million investment
Waste Management Inc.: same after $45 million investment
Unisource Worldwide and Dell also cancelled their projects
Foxmeyer: after three years of unsuccessful implementation, company sues SAP and AA before going bankrupt……………

25. Buying software Untypical IS projects
Balancing analysis of requirement with search for right supplier
Trading off conflicting requirements
Preparing for the project
Project management
Handling business disruption
Measuring progress and success

26. AcceleratedSAP - The Tool for Successful Implementations
Provide initial planning, scoping, and preparation for SAP transformation projects.
Conceptualise and document the final SAP and non-SAP operational environment based on new information and business process designed requirements.
Implement the information, business process and technical requirements based on the Business Blueprint developed during the previous phase.
Complete testing, end-user training, system management and cutover activities.
Take client from a pre-production environment to a live production operation and to design and implement a long-term end users support organisation.
Business
Blueprint
Project Preparation
Realisation
Final Preparation
Go-Live
Support

27. Decision making process
Intelligence Design Choice Review
(Herbert Simon)
ERP Software
Implementation
ERP
Software
Selection
Vendor Independent Process
Vendor guided Process
Organisational Analysis Business Process Selection Implementation Review
Preparation of needs Design of Software of benefits

28. Issues/Obstacles Until Now0% 2% 4% 6% 8%
10%
12%
14%
16%
18%
Issues/Obstacles Until Now
Top Issues Organisations Face During Enterprise Resource Planning 1%
KNOWLEDGE ASSETS 3%
Data
Reporting 3% 5%
Program Management
Process Reengineering
Stage/Transition
Benefit Realisation
PROCESS 20%
TECHNOLOGY 7%
Software Functionality
Application Portfolio Management
Enhancements/Upgrades 7%
15%
PEOPLE 57%
Change Management
Internal Staff Adequacy
Training
Project Team
Prioritisation/Resource Allocation
Consultants
Ownership (of benefits to others)
Top Management Support
Percentage of Total Mentions (Multiple answers per respondent)

29. Intelligence phase / requirements analysis
Understand
Identify stakeholders
Develop common vision
Make up a business case
Design
Draw up business maps
Design the ITT
Identify vendors
Solicit tender documents
Choice
Analyse / find best fit
Negotiate
chose

30. Analysing Fit Functionality grid Break down per functional area
Down to process stage level
Ask vendors to rate fit
Not supported
Supported with mod / workaround
Supported with minor alteration
Fully supported
Score and recommend (see diagram)

31. Package Enabled Approach
Develop Workaround No
Yes
Business Impact?
Implement ERP Base Package
Does ERP Fit?
ERP Enabled Reengineering
Best
Practice?
Review As-Is Process

32. Team creation Multi-disciplinary Full time Decision making power
Budget
Representative – team leads
Balance between allegiance to team and to area of competence
Team spirit
Team awareness
Must have support from organisation