Continuous improvement knowledge for anyone ... anywhere ... anytime.

The MRP evolution took us down the road of computer sophistication. It was to be the panacea for solving all manufacturing problems. Little did we know that when we finally arrived at the final phase---ERP---that we would still 
be facing daily parts shortages, shop floor disasters and end-of-the-month chaos. What happened to all those promises?

MRP/ERP, at first look, are not complicated systems. We input a master schedule that uses bills of material and parts procurement lead times to calculate gross requirements. These requirements are then balanced 
against the aggregate of on-hand inventory, work-in-process and open purchase orders to determine the net, time phased requirements. The resultant is subjected to lot size algorithms and planned orders are created. (The final output is notification to planners in the form of action messages to either reschedule, reorder or cancel shop and/or purchase orders.) 

If we go deeper into what is happening in the gross to net requirement process, we find that many calculations are made based on the data and systems parameters supplied and maintained by planners. While a computer 
is flawless in its ability to calculate the answers, the data supplied by the planner is not. Consequently, the answers are subject to human error.

In our "ShowTime!" presentations we do an exercise in statistical probability. Each participant writes down what he/she knows (or guesses) to be the percentage accuracy of their company's master schedule input data. To arrive at the aggregate input accuracy of the master schedule, they convert the percentages to decimal equivalents and multiply each to the other. (statistical probability is not the averaging of the decimals, as many people think). 

Using the same statistical probability approach, the resultant decimal is used as the master schedule accuracy input into the requirements planning step to calculate a shop order launch accuracy. An accuracy level of 0.70 or 70 percent (70%) is quite common and indicates that their order launching and rescheduling efforts are based on a system error of 30 percent. Is 
there any wonder why MRP and ERP are not the panacea we once thought them to be!

Continuous improvement knowledge for anyone ... anywhere ... anytime.

An effective method for evaluating how well a company is doing in managing their MRP input data is to ask questions as to how accurate are their bills of materials, how accurate is their purchase order status, how accurate 
are their inventory records, etc. If the answers you get are vague, like---good, OK, not too bad---then you know that this is a company that needs help in stepping up to the problems of poor information integrity. If a company is 
not measuring their system's data integrity, nor in constant pursuit of continuous improvement, then their results will always be poor and their production environment will surely produce shop floor chaos and late 
deliveries to internal schedules and to customers.

For a measure of MRP/ERP shortcomings, one needs only to spend some time in a manufacturing facility---especially during the last weeks of the final financial quarter. In a typical company, you'll find that converting the quarterly
financial forecast into reality still requires overtime, internal/external expediting, last minute on-the-run product changes and even a little smoke and mirrors. Results are scrap, rework and warranty costs that negatively impact a company's bottom line performance. 

In addition, marginal quality and late shipments deliver less than acceptable customer satisfaction. Companies that have spent thousands of dollars in pursuing MRP/ERP are devastated when they experience a business decline due noncompetitive pricing caused by uncontrolled operating costs. Is there an alternative? Certainly, we call it Kaizen Based Lean Manufacturing™.

Continuous improvement knowledge for anyone ... anywhere ... anytime.

Kaizen (pronounced Ky'zen) is the Japanese word that means gradual, continuous improvement. In my experience, managing a continuous improvement project is difficult but a kaizen program presents a unique challenge. The kaizen program has no end. It is sustainable and successful only when management has made a commitment to stay the course--- discipline and tenacity are basic requisites for kaizen success. 

Kaizen Based Lean Manufacturing™ (KBLM) is a proven methodology that employs practical tools and techniques that optimize manufacturing performance and helps companies to consistently exceed performance expectations.

KBLM involves arranging and defining manufacturing resources so that products flow most efficiently through the manufacturing process. Today, most manufacturing companies are still organized for functional manufacturing---mechanical assemblies, electronic boards, cables, 
machined components and purchased parts are produced or purchased in lot sizes and received, inspected and moved to stockrooms. This process includes the "picking-of-parts" to fill shop orders and the movement of shop 
orders to the production machining and assembly build areas. When the parts are completed, they are returned to the stockroom to be "picked" for the next higher assembly shop order. Finally the end product is "picked", assembled, tested and accepted. KBLM eliminates all the non-value-
added tasks in this "order launch and expedite" system---the result: A significant increase in quality, speed and profits.

Continuous improvement knowledge for anyone ... anywhere ... anytime.

No matter how much sophistication is added to computerized shop floor control systems, if we fail to master the eight basics of KBLM, we will never eliminate the chaos that grips our shop floor day-to-day activities!

How can you learn more about the shortcomings of MRP/ERP and the benefits of Kaizen Based Lean Manufacturing™? We are planning a special 4-hour breakfast presentation on "ShowTime! A Bill Gaw MRP/ERP Wake Up Call." It will be an action learning experience that will feature MRP/ERP and KBLM simulation exercises followed by an interactive forum. This cost- effective presentation will help your manufacturing team:

• Understand the power of Kaizen Based Lean Manufacturing™ (KBLM)
• Realize the shortcomings of typical MRP/ERP scheduling systems 
• Question current manufacturing paradigms and operating methods
• Commit to planning and implementing KBLM to help:
  --- Eliminate shop floor chaos and "end-of-the-month" syndrome 
  --- Step up improvements in quality, speed and profitability 
  --- Shift paradigm from "firefighting" (reactionary) to proactive problem   solving

Continuous improvement knowledge for anyone ... anywhere ... anytime. If you seek additional information about continuous improvement, click here: Good Manufacturing Practices