Two months ago, ISL's ERP Consultant visited a customer for the review of ERP implementation project. During the meeting, we talked about the difficulties of adopting the “Shop Floor Production Plan” into the ERP System. The reasons are mainly due to frequent re-scheduling of customer orders and changing of order quantity; late delivery of materials from suppliers causing non-fully usage of man-power at the shop floor. On the other hand, steady and sufficient material supply causing overloaded at shop floor. Thus, customer complaints about late delivery are frequently heard. As a result, they have allocated more labor force as well as dividing the staff of the Production Requirement Planning (PRP) and the Material Requirement Planning (MRP) into two groups in order to strengthen respective working efficiency and improve customer services.

According to former experience of ERP implementation and the understanding about ERP workflow, this action taken by this customer may not be correct. Being as a manufacturing company with “sufficient sales orders, various product categories, low stock level and tight delivery schedule”, the shop floor production efficiency should act as the leading role while the material supply should act as an assistant but not the opposite. Besides, enterprise should not excessively maintain a zero inventory level as the only goal. It is not recommended to put equal effort on both because nowadays, the relationship between labor and capital has become more harmonic while the shop floor production is limited whereas the material supply under most situations is actually infinite.

After listening to our advice, the customer decided to go for our system. During the implementation period, we have been keeping close contact with the customer, solving problem by providing suggestions including:

1. Assign at least 2 or more suppliers to each raw item;

2. Base on the periodic usage records and purchasing schedule of raw materials, different levels of inventory alerts have been set;

3. Advance purchasing or independent handling on particular items which are expensive and require long delivery period;

4. Shop floor production efficiency needs to be boosted and product assembly skill needs to be improved in order to increase productivity and minimize the production cost;

5. ......

In the previous month, statistic done by the customer states that: $500,000 has been saved on costs of overtime payments and material transportation. If you are still in doubt on computerizing your business with system, the reason should not be superficial but just lacking of confidence. It is time for you to think seriously and ask yourself why your business competitors are able to do it but not yours?