[原创]Solve Problems Systematically

Solve Problems Systematically

 

Key points:    After the right ERP system has been selected, successfully goes live and is implemented; periodically conduct basic data and system maintenance. This should be a never ending dynamical process. In short, a best run company runs a best maintained ERP, which is in contrast with an ill-maintained ERP whose result is “right data in, garbage out”. A best maintained ERP system is ensured by the attempt to solve problems systematically.

 

 

If an ERP system has been implemented for years and it has become the cornerstone of the company, in other words, the company stops running proper if the ERP system refuses to work, can we comfortably draw such a conclusion that the ERP system works well and people in the company have already cultivated a habit of solving problems through the ERP system? Most people may answer “YES” without any hesitation. Well, I must say “Congratulations” if your answer is still “YES” after having a quick glance of the phenomena described below.

 

 

l         Source Code Problems

 

It’s a common sense among the ERP community that the source code of a part determines

n         how the part becomes available for use, say, made in house, purchased outside, etc

n         how the cost of the part is rolled up

n         how the part is handled in the inventory

n         how the part is handled by the ERP system.

 

Let’s be a bit more specific: when the demand of a part is greater than its supply, an ERP system will tell us

n         to reschedule existing purchase orders or generate action messages to prompt buyers to place new orders if it’s a BUY part

n         to reschedule existing make orders (work orders) or generate action messages to prompt planners to create new make orders (work orders) if it’s a MAKE part

n         to tell its child parts to take proper actions if it’s a PHANTOM part

……

 

What mentioned above seems simple and straightforward. However, can all of us be 100% sure that the source code of all of our parts is always set up properly in our ERP system (to avoid unnecessary complexity, let’s not discuss the matter from the business perspective, say, if it’s more profitable to buy a part outside or make it in house, etc)?

 

Well, don’t hesitate to give an answer. Please allow me to tell you a small story. A buyer in a company never pays attention to the ERP generated message prompting her to start placing new purchase orders for a buy Part B representing a fluidized chemical. When she is asked by her manager why she doesn’t purchase the fluidized chemical, she claims that it’s absolutely unnecessary because Part B is the result of fluidizing of Part A, a raw chemical and Part B is then in house processed to become Part C, a pellet. On hearing this, the manager comes to realize that Part B should be a phantom part instead of a BUY part. Consequently, he has the source code of Part B changed from “B” to “X” representing a phantom part, even though it doesn’t make a difference from the perspective of operations (no material shortages ever happened to Part B before the change).

 

Why did the manager in the story decide to change the source code of Part B? Just because he wanted to show that he’s an ERP expert? The answer is definitely no. The real reason is that when the basic information in an ERP system is not maintained properly, the ERP system will generate useless and even misleading messages or reports; which will help users form a dangerous habit of ignoring system generated messages no matter they are correct or not.

 

In short, forget about this source code example. Keep a close look at your ERP system. If it generates some useless or even misleading messages or reports, this may be a clear signal that something must be wrong in the ERP system. Don’t hesitate to fix them even if it currently seems that nothing is lost. If you choose to ignore those issues, you and your company may have to take the consequences in the end.

 

l         Lead Time Set up

 

Please allow me to continue the story I just told. Several days later, the manager noticed that the ERP system suggested that the current month’s supply (open POs) of Part A, a raw chemical should be postponed to the beginning of next month. This should be done immediately to help hit the month end inventory. However, to his surprise, the buyer informed him that the current month’s POs of Part A are actually needed because it took one week for Part A to be fluidized before it’s further processed to become Part C, a pellet. As for why the ERP system urges to pull out the current month’s POs of Part, the reason is very simple: the lead time of Part A’s fluidized form Part B is current ZERO in the ERP system. However, according to the buyer, it’s a well known fact in the shop that Part A must be issued one week before it’s to be fluidized. That’s why the buyer is always manually calculating the real due date of Part A. As all of us can predict, the manager asked the buyer to have the lead time of Part B changed to 5 days. Since then, what the buyer needs to do is to simply and timely follow the ERP generated messages / reports and to take actions accordingly without making any of her manual calculation.

 

Perhaps you may say that “this is a silly mistake and my company never makes such silly mistakes”. Well, that’s fine. Let’s go a bit further. Have we periodically conduct any necessary maintenance work to ensure that all the planning parameters of the parts (say, order modifiers) in the ERP system and some fundamental system parameters and system flags are timely modified as required? Always keep in mind that only properly maintained ERP systems can generate the right information. In an ill-maintained ERP system, the result may be “right data in, garbage out”

 

Let’s go a step further. Sometimes people in the company may claim that some operational processes are too complicated or too special to be handled by the ERP system. In some cases, this may be true. But we’d better think twice before we accept this claim. In most cases, almost all of operational processes can be standardized and thus handled by a mainstream ERP system. Thus, our choice may be to establish standard practices (through Business reengineering) so that they can be tackled by any trained individuals with help of the ERP system or to leave those “special operations” in the hands of few “specialists” or experts. You decide.

 

l         Incorrect QPA & BOM Issue

 

When we talk about this matter, the first question I ‘d like to ask is “Do we need to put everything used to make / build a product on the BOM?” In some companies, they tend to use Bills of Materials to cover everything. For example, in a manufacturing company, in order to put an expense part (say, a sort of paste) on the BOM, they intentionally increase the Quantity Per Assembly (QPA) or the quantity of the component used to build the parent product. As a result, their ERP system always prompts their buyers to purchase more than actually needed. As a result, the buyers tend to ignore such system generated messages. This is definitely harmful in the long run because ERP generated useless and even misleading messages or reports help users form a dangerous habit of ignoring system generated messages no matter they are correct or not. To avoid such a problem, the company goes to another extreme; they set the QPA of the expense part on the BOM as ZERO. However, as you may predict, the buyer has to purchase the paste manually.

 

In fact, considering the fact that BOM is not always a good way to tell the structural relations among the child components of a product (many articles have debated on this), I prefer not to put components on the BOM of their parent product if they are not appropriate. However, this doesn’t mean that ERP systems can’t handle things like this. For example, the reorder point mechanism in an ERP system is sufficient enough to help us do the MRP for such supply parts. Actually a mainstream ERP system is a platform that provides a variety of instruments to tackle a variety of issues related to operations, logistics, supply and finance, etc. As I stated earlier, in most all cases, what we need to do is to find the right instruments/ tools provided by an ERP system to solve right issues.

 

To summarize what are stated so far, all of the three minor issues discussed so far underlines this very fact: it’s a just a third success that a company has implemented a right ERP system, the remaining two thirds of success depends on how well the ERP system is periodically maintained to suit the ever changing needs of the company. To be more specific, the ERP system should be periodically maintained to ensure that ERP’s manufacturing / planning/ financial environment still matches with how your company runs its business and the qualify of the data flow will not be twisted systematically by improperly maintained planning parameters (say, order modifiers) and poorly designed processes and bad practices. (Please refer to my article of Managment of Data Flow in an ERP Environment). To try to solve most of our problems via the ERP system (what I call “solving problems systematically”) seems to be the only way to ensure this periodical system maintenance occurs when needed. Though at the beginning it may be more troublesome to try to solve problems with help of an ERP system than to solve them based upon human experiences that seem simpler and more straightforward, the return in the future will be tremendous when it becomes part of the company’s daily routining

 

In short, here comes a conclusion: after the right ERP system has been selected, successfully goes live and is implemented; periodically conduct basic data and system maintenance. This should be a never ending dynamical process. In short, a best run company runs a best maintained ERP, which is ensured by the attempt to solve problems systematically while some “more convenient and reliable practices” that bypass the ERP system only help us quickly erode the effectiveness and efficiency of running the ERP system.

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