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Integrating ERP Systems
Part 1 of 4


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At a prior International Conference, there were a number of sessions related to Enterprise Resources Planning (ERP) and Supply Chain Management (SCM). The irony was that most presentations misrepre­sented these items. In too many instances, attendees were seen to be smiling and nodding when they should have been scowling. If Robert Preston had appeared at the right moment, playing his character from The Music Man, there would have been many more than 76 trombones walking around the Opryland Hotel. Sarcasm aside, the purpose of this paper is to help the reader develop a clearer understanding of these "new" concepts and of their correct application. In doing so, you will become better consumers and not be at the mercy of aggressive mar­keters who claim to have your best interests in mind, but who are re­ally focused on the sale of their particular product.

Through reading this manuscript, it is hoped you will be able to better define the meaning behind the acronyms and realize their role in your organization. You will also learn what they are not, which should help you avoid pitfalls associated with their misapplication. Finally, a case study will reveal the attributes involved in a successful integra­tion of an APS (Advanced Planning and Scheduling) tool with an ERP system, including highlights and gaffs. It should be noted that these materials have been prepared from the viewpoint of a software user, and it is hoped that this perspective will help you navigate the maze of claims currently being offered in the marketplace.

DEFINITIONS AND DIAGNOSES

One is constantly amazed at what gets interpreted as progress. In our profession, progress is too often associated with the development of a catchy new phrase or a new acronym of the three-letter variety. The amazing part is the power that these acronyms have, causing us to aban­don useful software systems and move to purchase the hot new offer­ings. It is eerily analogous to the way in which golf club manufacturers cause a buying frenzy by adding an additional size qualifier to the name of an existing club, i.e., big, great big, great biggest, etc. This is espe­cially true in the case of ERP. With Supply Chain Management sys­tems, it is less exaggeration and more misunderstanding that is causing firms to waste capital, both financial and human.

If you had been on Mars for the past few years, you might not know that ERP stands for Enterprise Resources Planning, but do you know the difference between the formal and practical definitions? You need look no further than the APICS Dictionary, ninth edition, to under­stand the contradictions between the two. The dictionary proposes two definitions; the first contrasts ERP and MRP II and the latter aligns it favorably with MRP II. Worse yet, the initial definition listed reads as if Bill Gates himself wrote it. It states that to be doing ERP you must be using GUI, open architecture, client-server-based software written in a fourth generation language. Excuse me!! Not that these attributes aren't desirable, or even necessary for some applications, but one should not base the quality of an ERP system solely on these criteria. The second definition, led by the phrase "more generally," reads, "a method for the effective planning and control of all resources needed to make, ship, and account for customers orders in a manufacturing, distribu­tion, or service company." This is a much better yardstick with which to measure yourself.

What does this mean in terms of our everyday operations? Do we need to purchase software that offers financial, manufacturing, and dis­tribution in one package? Should we be using PCs exclusively? The answer is a resounding no! You do not have to install a new, expensive package to be effectively practicing ERP. What you need is a system that allows all of the major activities of the business to function, seamlessly, through your machine or network. This includes all major busi­ness activities such as product development, marketing, manufactur­ing, order entry and tracking, distribution, shipping and accounting, along with ancillary functions such as human resources, maintenance and engineering control. These functions do not have to be on the same software or platform, but they should be able to share data and provide users with the ability to navigate all applications from a single work­station. You should not feel compelled to pitch either the bath water or the baby unless your current systems have stymied growth or your customers and associates are angry or frustrated.

Two caveats must be addressed before moving on: do not use the words in this manuscript to justify keeping outmoded and inefficient legacy systems, and do not abandon the principles of MRP II because you now "do" ERP. Well-maintained package (s) will always fare bet­ter than software developed in-house, and the principles of MRP II are as pertinent today as when first revealed in the 1980s, especially if you include S&OP in the equation. S&OP (Sales and Operations Planning) is a formal communications methodology developed to ensure man­agement is properly leading the organization. While it will not be cov­ered in this writing, readers unfamiliar with the concepts are urged to remedy that situation.

To Be Continued


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