ERP Systems

1
ERP Systems

• Dr. David Wilson

2
Lecture topic SSCM Systems

• The topic of this lecture is supply chain
  management systems.
• However, I have used the term ERP as the subject
  of the lecture and it is important by the end of
  these 2 hours for you to understand the difference

3
To understand the chaos in the IT landscape I
will turn to the history of the development of IT

• IT information technology a new and fast
  growing subject.
• New? Relative to 1950s.

IBM

• Transaction processing systems
• Payroll - Accounts
• Manufacturing planning systems - MRP

1950's
Information management Systems beginnings of
Integration and MIS
1960's
IMAS inventory manufacturing Accounting System
1970's
MAPICS manufacturing Accounting production
Inventory control system
1980's
4
A model of how it (does or doesnt) fit together ?
HR Accounts Finance Marketing Purchasing
Production Warehousing Distribution
ERP System
management control

• Supply Chain
• Management
• CAPS SAILS
• CAST GAINS
• Volcano

Warehouse Management Systems
Inventory Systems
paperless rfid
5
Management Control
Dashboards traffic lights score cards
6
Making things
7
In the beginning - Orlicky

• How do you make some thing? How do you make a
  NASA space shuttle or a submarine or a cake?
• They all have four fundamental questions that
  need to be answered before you can make anything.

8
4 questions

• What do we need to make?
• How do we make it?
• What have got that we will need?
• What do we have to buy?
• Answers these questions and you can make
  something miss one and you cannot.

9
MRP
Master Production Schedule
inventory
MRP Calculation Table
BOM
Shop floor
10
MRP Tableau
11
MRP

• Joseph Orlicky
• Oliver Wight

12
Manufacturing Resources Planning

• MRP is a planning tool geared specifically to
  assembly operations. The aim is to allow each
  manufacturing unit to tell its supplier what
  parts it requires and when it requires them. The
  supplier may be the upstream process within the
  plant or an outside supplier. Together with MRP
  II it is probably the most widely used planning
  and scheduling tool in the world. MRP was created
  to tackle the problem of 'dependent demand'
  determining how many of a particular component is
  required knowing the number of finished products.
  Advances in computer hardware made the
  calculation possible.

13
Master Production Schedule

• The process starts at the top level with a Master
  Production Schedule (MPS). This is an amalgam of
  known demand, forecasts and product to be made
  for finished stock. The phasing of the demand may
  reflect the availability of the plant to respond.
  The remainder of the schedule is derived from the
  MPS. Two key considerations in setting up the MPS
  are the size of time buckets' and the planning
  horizons'. A time bucket' is the unit of time on
  which the schedule is constructed and is
  typically daily or weekly. The planning horizon'
  is how far to plan forward, and is determined by
  how far ahead demand is known and by the lead
  times through the operation. There are three
  distinct steps in preparing an MRP schedule

14
The three steps in MRP calculations

• exploding
• netting
• offsetting.

15
Exploding

• Explosion uses the Bill of Materials (BOM). This
  lists how many, of what components, are needed
  for each item (part, sub assembly, final
  assembly, finished product) of manufacture. Thus
  a car requires five wheels including the spare.
  BOM's are characterised by the number of levels
  involved, following the structure of assemblies
  and sub assemblies. The first level is
  represented by the MPS and is 'exploded' down to
  final assembly. Thus a given number of finished
  products is exploded to see how many items are
  required at the final assembly stage.

16
Netting

• The next step is 'netting', in which any stock on
  hand is subtracted from the gross requirement
  determined through explosion, giving the quantity
  of each item needed to manufacture the required
  finished products.

17
Offsetting

• The final step is 'offsetting'. This determines
  when manufacturing should start so that the
  finished items are available when required. To do
  so a 'lead time' has to be assumed for the
  operation. This is the anticipated time for
  manufacturing.
• The whole process is repeated for the next level
  in the BOM and so on until the bottom is reached.
  These will give the requirements and timings to
  outside suppliers.

18
3 Major assumptions

• There are three major assumptions made when
  constructing an MRP schedule
• The first, and possibly the most important, is
  that there is sufficient capacity available. For
  this reason MRP is sometimes called infinite
  capacity scheduling.
• The second is that the lead times are known, or
  can be estimated, in advance.
• The third is that the date the order is required
  can be used as the starting date from which to
  develop the schedule.

19
BOM
20
BOM
21
Google bill of material

• http//www.ciras.iastate.edu/publications/CIRASNew
  s/fall97/bom.html

22
Wiki MRP / MRP2 / ERP

• http//en.wikipedia.org/wiki/Manufacturing_resourc
  e_planning
• http//en.wikipedia.org/wiki/Enterprise_resource_p
  lanning

23
MRP2

• Manufacturing Resource Planning (MRP II) is
  defined by APICS as a method for the effective
  planning of all resources of a manufacturing
  company. Ideally, it addresses operational
  planning in units, financial planning in dollars,
  and has a simulation capability to answer
  "what-if" questions and extension of closed-loop
  MRP.

24
(No Transcript)
25
MRP2 components - modules

• Master Production Scheduling (MPS)
• Item Master Data (Technical Data)
• Bill of Materials (BOM) (Technical Data)
• Production Resources Data (Manufacturing
  Technical Data)
• Inventories Orders (Inventory Control)
• Purchasing Management
• Material Requirements Planning (MRP)
• Shop Floor Control (SFC)
• Capacity Requirements Planning (CRP)
• Standard Costing (Cost Control)
• Cost Reporting / Management (Cost Control)
• Distribution Resource Planning (DRP)

26
ERP

• SAP, Peoplesoft, Oracle
• Integrating every business system onto one
  platform that has total connectivity
• The myth being that the CEO can drill into part
  of the company to see what is happening

27
ERP
purchasing
planning and forecasting
production
orders and sales
marketing
human resources
payroll
accounting and finance
supply chain
28
The Reality

• Data integrity
• Legacy Systems
• System failures due to a myriad of causes
  hardware, software, capacity issues
• System congestion and complexity
• Hard to understand and use to the optimum the
  systems are just too complex

29
Supply Chain Management Software

• http//www.cio.com/article/40940/ABC_An_Introducti
  on_to_Supply_Chain_Management

Google supply chain management software
Who is the CIO? well who is the CFO --- hmmm
the CEO ???
30
Some of the players
http//www.lionhrtpub.com/orms/surveys/scm/scm-sur
vey.html
http//www.manh.com/solutions/
31
CAST Centre of Gravity Modelling network
structure
32
CAST network planning
33
CAST by Radical

• C computer
• A aided
• S strategy
• And
• Tactics

34
http//www.radical.co.uk/cast/level1.php?id135p_
id135id3139level2