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HOW EXTENDED ERP RELATES TO OTHER CONCEPTS, TECHNIQUES, AND TECHNOLOGIES

Those involved in the manufacturing industry today are swimming in a buzzword "soup." This soup consists of

     ERP

     JIT

     APS

     Workflow

     e-Commerce

     Supply chain management.

How do all these concepts, techniques, and technolo­gies relate to extended ERP? Are they compatible? Is there a logical sequence of implementing them? We will discuss these questions and answer them in this section.

First I'd like to start with the question of sequence of implementation, that is, what comes first. For example, should e-commerce be put in place first followed by ERP? Shigeo Shingo, the ar­chitect of the Toyota system, said, "Now you think that Toyota Motor is wearing a smart suit, so you would intend to pur­chase one, a suit called 'Kanban System' (JIT), but your body was bubbled-up so fat that you could not wear it."

The point Mr. Shingo was trying to make was that without a rational frame­work one could easily make the wrong part at the wrong time with the utmost effi­ciency. Yes, THE SEQUENCE IN WHICH A SYSTEM IS IMPLEMENTED AND IN WHICH ORDER IS IMPORTANT.

 

What is the correct sequence? Figure 4 depicts the sequence; the left-hand side of the graphic represents the earliest point in time, the right-hand side the latest.

 

Why this sequence? First you need stability in factory operations. ERP pro­vides a proven integrated planning and transactional backbone. Without stability, every prob­lem-solving effort attacks a moving target. The pos­sibility of confusing a symptom as a root cause is likely. We all crawled before we walked and walked before we ran.

 

Once an organization has achieved stability, which is accurate data, schedule integrity, and process reliabil­ity (even if less then efficient), it's time to identify op­portunities for improvements in factory operations. Enter JIT.

For the record, JIT is not passe; the underlying prin­cipals of JIT transcend time and situation. The fashion-conscious miss that point.

JIT is all about manufacturing excellence, task and process simplification, and worker involvement (a.k.a. empowerment). Real industrial engineering and manu­facturing engineering are the keys to successful and ef­fective application of JIT. Even through JIT emphasizes continuous improvement, when factory operations are relatively "tuned up," new investments can now be ap­plied to other areas.

The next milestone in progressing toward manufac­turing excellence is streamlining the administrative pro­cesses. The tool of choice for this is workflow. With a rational framework in place and processes improve­ments put in place, the need to improve supportive ad­ministrative process becomes more apparent. Just as with JIT, the reengineering of business processes using workflow is a continuous process. In parallel with the refinement of administrative processes is the possibil­ity of improving the planning and scheduling cycle through APS. provide many benefits in a predictable, stable en­vironment. The benefits include very fast planning cycles and consistency of decision-making. APS contributes to organizational velocity. Internal velocity is required to be effective in conducting e-commerce.

APS requires high levels of data accu­racy. Data accuracy has historically been an obstacle in achieving effective business system use, starting with MRP. It has never been easy, and never will. High lev­els of data accuracy can be achieved; there are hundreds of "world class" or "class A" users of resource planning systems today. Data accuracy is best addressed during the implementation of ERP. Poor data accuracy will prove to be the undoing of those trying to conduct e-commerce or e-business processes.

 

E-commerce can reduce the cycle time for both buying and selling. It can also reduce the costs of buying and selling. E-commerce has two major forms, busi­ness-to-consumer (B2C) and business-to-business (B2B).

 

E-commerce is not a recent innovation. EDI preceded the use of the Internet for B2B e-commerce. EDI is well established in tens of thousands of companies. The In­ternet is predicted to prove superior to conventional EDI transacting (buying and selling) in three ways: (1) lower cost of transacting, (2) real-time transactions vs. batch, and (3) a more descriptive and flexible transaction. In addition, Internet-based e-commerce has the potential of evolving into e-business, which includes enterprise-to-enterprise collaboration.

 

By reducing the non-value-added time (a.k.a. latency) in buying and selling, Internet-based e-commerce in­creases the velocity of the supply chain. In Internet-based e-commerce, buying can often be conducted on a "self service" basis.

 

Companies that have adopted or are in the process of implementing the virtual enterprise operating model will benefit the most from Internet-based e-commerce. E-commerce is the "lubricant" to their virtual network of partners.

 

E-commerce is an enabler to those attempting to more closely manage their supply or value chain.

 

At the heart of each node or enterprise in an e-com­merce transaction is an extended ERP system, planning and managing the inputs (sales) and outputs (shipments).

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 13


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