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Enterprise Profitability
Part 1 of 8

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Lean Manufacturing, Basics, Principles, Techniques

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ERP's competitive edge is not in the individual modules or functions, no matter how important or robust those might be. It is, instead, in the integration of those functions, so that the ERP system serves as the communications medium for the entire organization.
First, let's review a little background. ERP evolved in the mid-1980s and 1990s from MRP II, which had evolved in the late 1970s from MRP. Because ERP systems do not yet incorporate all business information and communica­tions functions of most manufacturers, we have created a new term, Total Enterprise Integration (TEI), to describe the concept. The evolution of these systems is illustrated in fig­ure 1.
The power of TEI or ERP is in the integration across the entire manufacturing company, and out through the supply chain to customers and suppliers. It is in the communication, letting everyone know the full ramifications of a new order that was just received, or a supplier shipment that will be late, or a qual­ity hold on an outgoing shipment, or unscheduled maintenance on a given machine. It is the intelligent use of work flow to push responsibility to the most appropriate decision-makers in the organization, while maintaining proper budgetary and op­erational controls.
Figure 2 illustrates the high-level integration across a complete TEI system. This presentation will outline some of the highlights of the key areas of integration.
We have organized the TEI functions into the following groupings:
1. executive support
2. customer integration
3. engineering integration
4. manufacturing integration
5. support services integration.
TEI systems are the means of communicating executive di­rection throughout the company; they also provide informa­tion that enables executives to get better answers to questions, and to project more accurately the probable business results of their decisions. Many executive-level TEI systems are spreadsheet or PC-based, still outside of typical ERP func­tionality. The functions in this area include the following.
Strategic Planning
A strategic plan, properly created and communicated throughout the organization, is absolutely vital for a company's long-term prosperity. A well-implemented TEI system can provide essential support for com­municating the tactics that implement strategy, and for providing feed­back about the results of the company's efforts.
Marketing listens to the customer to create the environment in which the customer decides to buy. This includes defining new products and services that the customer wants, and providing the means for the customer to understand how the products benefit their business. Two techniques that can be successfully applied to determine what the customer really wants are voice of the customer (VOC) and qual-
ity functional deployment (QFD). Marketing also maintains the new product idea database.
Voice of the Customer
VOC is a proven methodology for quickly and economically deter­mining, ranking, and quantifying the needs, wants, and expectations that drive customer decision-making. A VOC audit involves selecting and interviewing key executives from selected customers to learn what they really want. VOC information forms the basis for designing the TEI/ERP integration with each customer, because each customer can potentially be integrated into a manufacturer's system in a different way. VOC information also is the basic input into QFD.

To Be Continued


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