Still, with spreadsheets, there was no clear drill down process.  Further, as organizations grew and required maintaining thousands of spreadsheets rather than a few, the accuracy and integrity of the data became questionable, and for good reason.  Now, the ERP system has taken away some of the burden of manual reconciliation and spreadsheets, but even large ERP systems don’t reflect the fact that companies change.  There are countless places that are touched when making changes in a relational database, and it is difficult to perform all of the changes required to maintain the relational integrity of the underlying structures that were initially set up.  But it is also difficult and time-consuming to re-implement or reconcile, or to migrate to a new chart of accounts, a new organization unit, or a new ledger and go through a complete test cycle every time a company reorganizes, acquires another company, or sells part of the business (or, if they have just outgrown their current system).  That difficulty, along with the deterioration of data integrity that results from companies having to resort to thousands of spreadsheets to reconcile the changes, doesn’t make a manual process any more accurate or auditable, and it severely limits a company’s agility.

eprentise and FlexField software products deal with the technical aspects of the change so that EBS can re-align to the current business environment.  The ability to change is now part of the normal lifecycle and ongoing maintenance of an enterprise application.

Manufacturers in North America and Europe are struggling to meet the challenges of a stressed economy. The good news is that the coming recovery is expected to see early signs of a sharp increase in demand for steel because the street thinks that the steel industry will be among those to lead us out of the recession.

Many manufacturers realize that they must make changes if they are to survive and flourish in a world that promises to be very different from the past. A quick look at some of the factors that are already impacting our world gives us a small taste of what we can expect as we move into the 21st century.

•    Customers are placing smaller orders.
•    Customers are looking for faster turn around times.
•    Customers are demanding more custom products
•    Customers are constantly changing as they try to keep up with their customers’ demand.

In addition to these external factors, manufacturers are being pressured to be more profitable by reducing waste, improving efficiencies and becoming more responsive. The new paradigm is clear; manufacturers who want to be successful must be able to reduce inventories while learning to react faster and smarter to change. For those paying close attention this is not breaking news, but it appears that many companies do not yet have a clear understanding of the underlying problems and what they need to do.

Doing the same old things but faster is unlikely to work and is not the answer. This has been proven through the success achieved by companies such as Nucor.  They have become one of the largest steel producers in the United States by putting in place strategies that have made them fast and nimble.

The underlying cause of the problem is that too many manufacturers are running their businesses with Enterprise Resource Planning (ERP) legacy systems that still have their manufacturing roots in early 1980’s MRP (Material Resource Planning) concepts and technology. These systems were primarily designed to address the needs of make-to-stock manufacturers who could rely on excess inventories at every level of their process. Many companies are starting to understand the limitations of this approach.  This article is for those who are looking to be leaner and more flexible.

The limitations of a traditional MRP based planning system can be more easily understood if applied to a real life situation such as planning a wedding at say 2:00 pm on June 24. This is obviously unrealistic but it does highlight the consequences that stem from a system that can’t even create a starting plan that is accurate and precise.

Everyone involved is initially delighted when told that they can book their wedding on June 24 at 2:00 pm.  What the wedding planner doesn’t initially know is whether or not other weddings are booked for that same day and time. This is a potential problem that could quickly evolve into pandemonium.

It would be nice if a planning tool had the ability to recognize a conflict and a need to re-schedule. MRP planning would not be able to do that because it doesn’t know there is a conflict and it has no logic to help it determine which weddings have priority. Even if it could prioritize the weddings, it couldn’t calculate precise new dates and times for each of the weddings. And if it could calculate a new date and time for each wedding, it would have no way of making sure that the priest was available at that time, and even if the priest was available, it would have no way of notifying the photographer and the chef and the restaurant, etc.

The underlying limitation behind all of these problems is that MRP-based planning systems can’t finitely plan even one constraint, and they certainly can’t synchronize multiple constraints. A few years ago a number of smart people who were frustrated with the limitations of such legacy systems started implementing a concept called Lean manufacturing. Lean was designed to remove complexity and waste and was made popular by the success of companies like Toyota.

At the planning and execution level, Lean is built on three key concepts of waste elimination – muda, muri, and mura. Without getting into too much detail, muda addresses the need to remove non-value added work such as overproduction (production ahead of demand) and excess inventories (all components, work-in-progress, and finished product not being processed).

Muri is defined mainly as the breaking down of tasks into their smallest constituencies, and mura refers to the need to make work flow from end to end by removing unevenness in the process rather than buffering it.

Other companies were starting to use a management strategy called Six Sigma that had been developed by Motorola to identify and remove the causes of defects and errors in manufacturing and business processes. Today these two concepts are often combined into one concept, which is sometimes called Lean 6Sigma or Lean Six Sigma.

Although most companies who decided to adopt Lean 6Sigma were able to achieve some level of success, manufacturers who had highly predictable demand patterns and a limited number of products were able to achieve the best results.

Other manufacturers who were still looking for ways to manage the daily bombardment of change saw only limited success. One of the reasons for this was that early Lean 6Sigma systems were manually intensive so they were unable to replace all the functions that had previously been performed by their Legacy planning systems.

So while Lean 6Sigma initiatives were working to reduce inventory levels their old planning systems were telling them to increase inventory levels. Because of the obvious conflict, mistakes were made resulting in inventory shortages, which led to late shipments and mass confusion. Faced with this situation, manufacturers realized that they either had to abandon their Lean initiatives or find planning systems that would not only dovetail with their need to reduce waste but would automate it where it made sense.

Without planning software that can prioritize and plan events at the detail level it is not possible to synchronize material and capacity constraints; without synchronizing multiple constraints, there is no basis for planning reduced inventory levels. Similarly, if something changes and specific materials are not available, this information must be synchronized back to the plan.

When the plan changes the new planning system must be able to instantly re-calculate the impact of each change on downstream activities, which, in turn, kicks off a new round of synchronizing and re-synchronizing. Right about now you should be starting to understand the problem because none of these things can be done with traditional legacy systems that rely on MRP planning concepts.

We believe that every second spent making the wrong product takes away capacity that could be used for products for which the customer is waiting.

Many industries, such as the steel industry, find it difficult to make only what their customers order because the efficient size of a production run is often much larger than the size of individual customer orders. Traditionally this means that they end up making additional stock that sits around forever.