The objective of
this article is to expose the participants to the data management
challenges that are faced when implementing an enterprise resources
planning (ERP) system. Data integrity is vital in a complex, and
fully integrated, system such as ERP if the anticipated benefits are
to be realized. This becomes even more critical when additional
applications such as supply chain synchronization, E-commerce, and
sales force automation are also implemented. This paper will
describe what happens if the required data integrity and discipline
break down. The presentation goes on to show how an effective data
management program can be developed so that the organization can
achieve benefits and position itself to achieve a real competitive
As a project manager, you are feeling very pleased with yourself.
You have just successfully completed the implementation of a
multiplant ERP system on schedule and within the planned budget.
This should be a time for celebration, but it is not! There are a
number of concerns that have surfaced in the last few months since
the functional users have started to use the new system. The new
users are even suggesting that they may have been sold a lemon. Some
of the comments that are being made can be summarized as follows:
• System does not work!
• There are an increasing number of part shortages.
• Over the last few weeks, the inventory levels have grown to their
highest level in months.
• Customer order on-time delivery performance has decreased, and
customers are becoming increasingly annoyed about missed promised
• The expediters, who it had been planned to eliminate, have become
increasingly busy, and emergency freight costs have increased
during the last few weeks.
• The divisional controller is suggesting that the margins and
picture are not as good as
they would have thought it
should have been with our
Figure 1. In an ideal world
"super new ERP system."
(Clean data to support system tests)
Data Clean-up___ Tasks
• Manufacturing Engineering
• Inventory Control
• Cost Control
All of the above comments are symptoms of a deeper problem that
should have been addressed during the new system implementation
preparation. The problem is that the data in the new system is not
correct. In the old system the users knew
its limitations and just worked around them. In essence, the plant
ran in spite of the supporting computer systems rather than using
them to run the day-to-day operations.
When one thinks beyond the ERP environment to applications such as
supply chain optimization, E-commerce in its broadest definition,
and sales force automation, it very
quickly becomes apparent that accurate data is a requirement to
effectively support any of these applications. Considering supply
chain optimization and synchronized manufacturing, the need for an
accurate assessment of one's future requirements becomes vital if
these requirement quantities are to be delivered just in time,
straight to the point of usage, to be immediately assembled into a
As a way to explain the problem, let's consider the standard APICS
widget A made from three of component 1, four of component 2, and
eight of component 3. The problem is that our bill of material says
that the usage of component 3 is only six, and this problem
permeates all through the new ERP system that we have just
implemented. The way that this simple error will affect many of our
key business processes is summarized below:
• In the materials planning process, we are requesting smaller
quantities from our supplier than we really need. This leads to
part shortages, expediting, and increasing freight costs caused by
• The pick lists used by the stockroom attendants show the wrong
quantity of component 3 when kiting orders for the shop floor.
• The manufacturing process of part A cannot be successfully
finished, as there are insufficient parts to complete the shop
order. The unplanned issue from the stock room is an indication that
we have a problem and could lead to the bill of material being
• Any cost roll-ups or pricing done using this bill of material will
understate the actual cost of component A.
In the world of E-commerce, the situation is also bad, because we
have now transmitted data to our suppliers quickly but incorrectly.
If the suppliers are using the bill of material information to
assist us with any additional planning tasks, then all their work
will be incorrect to some degree.
Hence accurate data is needed if we are to effectively use our new
system to run our day-to-day operations and position the company to
take advantage of new and emerging technologies. This includes such
applications as sales force automation, E-commerce, supply chain
optimization, and synchronized manufacturing. Not only must the
data be correctly converted, but it must also be maintained on an
ongoing basis. We need an effective data management program.
To Be Continued
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