Erp Optimization Marino

1,250 views

Published on

Many companies install an ERP System and they don't realize the ROI expected. Learn how you can improve your system turning it into a tool for PROFIT IMPROVEMENT

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,250
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
44
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Erp Optimization Marino

  1. 1. ERP OPTIMIZATION
  2. 2. LEAN/AGILE BUSINESS processes to reduce waste and to achieve dramatic improvements in critical measures of performance, such as speed, cost, quality, and service. Lean/Agile is the fundamental rethinking and radical redesign of business & supply chain
  3. 3. FIVE LEAN PRINCIPLES <ul><li>Specify what creates value from the customer’s perspective </li></ul><ul><li>Identify all steps across the whole value stream </li></ul><ul><li>Make those actions that create value, flow </li></ul><ul><li>Only make what is pulled by the customer, Just­In­Time </li></ul><ul><li>Strive for perfection , by continually removing successive layers of waste </li></ul>
  4. 4. The Seven Wastes <ul><li>T ransportation Material movement </li></ul><ul><li>I nventory Raw, WIP, and Finished goods </li></ul><ul><li>M ovement Human (hands, feet, or body) </li></ul><ul><li>W aiting Human, Material, or Machine </li></ul><ul><li>O ver Processing Inefficiencies and rework </li></ul><ul><li>O verproduction Production > demand </li></ul><ul><li>D efects Scrap, rework, warrantee </li></ul>“ Mr. Waste”! “ Tim Wood” Copyright Robert Abair Associates, Inc., 2006 -
  5. 5. YOUR MISSION To radically change your manufacturing, distribution, and supply chain processes … both internally and at your suppliers         Balanced Lean Establish Seamless Business Processes! Reduce Lead time! Reduce Cost! Reduce Inventory!
  6. 6. ERP SUCCESSES? <ul><li>Seventy percent of all companies, that have installed an ERP system, failed to achieve any significant return on investment. </li></ul><ul><li>Seventy five percent of all ERP implementations fail to optimize the benefits and promises associated with successful ERP. </li></ul>
  7. 7. ERP SYSTEMS HAVE BEEN PLAGUED BY A LONG LIST OF PROBLEMS <ul><li>ERP software was installed to mirror a set of existing, often inadequate, business processes. </li></ul><ul><li>Organizations were ill-prepared to conform to “Best in Industry” practices. </li></ul><ul><li>Management did not take the time to answer the question, “How do we want to run the business?” </li></ul><ul><li>Pre-implementation activities were not well understood and often not done. </li></ul>
  8. 8. ERP SYSTEMS HAVE BEEN PLAGUES BY A LONG LIST OF PROBLEMS <ul><li>IT concentration may have been on technical wizardry and not focused on business excellence issues. </li></ul><ul><li>Education and training was rushed and did not bridge the gap from software, to the day-to-day requirements of the operation. </li></ul><ul><li>7. Mapping of the old legacy systems to the new system was done based on technology requirements, not users’ current and future needs. </li></ul>
  9. 9. RETURN ON INVESTMENT ERP MID-MARKET
  10. 10. GLOBAL ISSUES/TRENDS DRIVING N EXT G ENERATION M ANUFACTURING (NGM) <ul><li>Increasing customer expectations </li></ul><ul><li>SKU's proliferating </li></ul><ul><ul><li>Broader product ranges </li></ul></ul><ul><ul><li>Small lot sizes </li></ul></ul><ul><ul><li>Short model life cycle </li></ul></ul><ul><li>Ease of access to global production networks (the dramatic rise of Chinese juggernaut) </li></ul><ul><li>Outsourcing </li></ul><ul><li>Everything is a commodity </li></ul><ul><li>Massive disinflation in the marketplace </li></ul><ul><li>Environmental and recycling issues becoming more complex </li></ul>
  11. 11. GLOBAL ISSUES/TRENDS DRIVING N EXT G ENERATION M ANUFACTURING (cont.) <ul><li>Ability to process information to treat masses of customers as individuals </li></ul><ul><li>Serious increases in energy costs and basic commodity items, such as steel, paper, resin, etc. </li></ul><ul><li>10. Constant training and retraining caused by complex technology, complex business practices or downsizing </li></ul><ul><li>11. Computer networking, telecommunications, and internet accelerating pace of change in technology </li></ul><ul><li>12. The rise and power of the Euro, foreign trade agreements, etc. </li></ul><ul><li>13. Regulatory and compliance issues, such as RFID </li></ul>
  12. 12. CRITICAL ATTENTION MUST BE PAID TO RETHINKING BUSINESS PROCESSES “Order to Cash” <ul><li>Front end </li></ul><ul><ul><ul><li>Quotations </li></ul></ul></ul><ul><ul><ul><li>Order entry </li></ul></ul></ul><ul><ul><ul><li>Customer Relationship Management </li></ul></ul></ul><ul><ul><ul><li>Demand Planning </li></ul></ul></ul><ul><ul><ul><li>Sales force automation </li></ul></ul></ul><ul><li>Execution (Lean ERP) </li></ul><ul><ul><ul><li>Planning/Inventory </li></ul></ul></ul><ul><ul><ul><li>Purchasing </li></ul></ul></ul><ul><ul><ul><li>Shop Floor </li></ul></ul></ul><ul><ul><ul><li>Receiving, Warehousing, Shipping </li></ul></ul></ul>
  13. 13. CRITICAL ATTENTION MUST BE PAID TO RETHINKING BUSINESS PROCESSES “Order to Cash” <ul><li>Support </li></ul><ul><ul><ul><li>Rapid database build </li></ul></ul></ul><ul><ul><ul><ul><li>Part numbers, BOM’s, Routings </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Compliance </li></ul></ul></ul></ul><ul><ul><ul><li>New Product Introduction (NPI) </li></ul></ul></ul><ul><ul><ul><li>Rapid customization of product </li></ul></ul></ul><ul><ul><ul><li>Product rationalization </li></ul></ul></ul><ul><li>Financials </li></ul>
  14. 14. DO YOU NEED TO OPTIMIZE YOUR ERP SYSTEM? <ul><li>Is ERP helping you to improve customer satisfaction? </li></ul><ul><li>Is ERP contributing to increased market share? </li></ul><ul><li>Did ERP help decrease your operational expenses? </li></ul><ul><li>Is ERP managing and lowering your inventory? </li></ul><ul><li>Has ERP shortened your order-to-delivery cycle time? </li></ul><ul><li>Has ERP shortened your time-to-market? </li></ul><ul><li>Has ERP helped you achieve a competitive advantage? </li></ul><ul><li>Is ERP giving you the information & metrics you need? </li></ul><ul><li>If your answer to some of these questions is “no”, then ERP optimization should be on your critical path </li></ul>
  15. 15. OPTIMIZING ERP BEGINS WITH A DETAILED ERP BUSINESS PROCESS ASSESSMENT <ul><li>Conduct in-depth interviews with all key users </li></ul><ul><li>2. Review all business processes from “order to cash” </li></ul><ul><li>3. Review business processes in relationship to software and best business practices </li></ul><ul><li>4. Review level of basic ERP knowledge in all key areas </li></ul><ul><li>5. Conduct detailed review of all systems “order modifiers” </li></ul><ul><li>6. Prepare detailed value maps of all key business processes </li></ul><ul><li>7. Prepare a departmental review of systems functionality </li></ul><ul><li>8. Assess systems parameters and their ability to meet business and departmental goals </li></ul>
  16. 16. HOW CAN YOU ORGANIZE YOUR ERP OPTIMIZATION ASSESSMENT PROCESS? <ul><li>Define your “order to cash” process </li></ul><ul><li>Establish 90 day “FAST TRACK” team </li></ul><ul><li>Conduct “basic training” training </li></ul><ul><li>Define “We will be Lean and Agile When… company statement </li></ul><ul><li>Define “We will be Lean and Agile When… key department statements </li></ul><ul><li>Prepare detailed plan for team tasks </li></ul><ul><li>Prepare an ABC analysis </li></ul>
  17. 17. ABC ANALYSIS OF ADVANCED MANUFACTURING STRATEGIES <ul><li>Primary Purpose: </li></ul><ul><li>Inventory philosophy </li></ul><ul><li>Customer service philosophy </li></ul><ul><li>Manufacturing strategy (mixed-model matrix) </li></ul><ul><li>Expediting or priority planning strategy </li></ul><ul><li>Purchasing and supply chain strategy </li></ul><ul><li>Distribution strategy </li></ul><ul><li>Sales and Marketing strategy </li></ul>
  18. 18. HOW CAN YOU ORGANIZE YOUR ERP OPTIMIZATION ASSESSMENT PROCESS? (cont.) <ul><li>8 . Document “as is“ baselines </li></ul><ul><li>Establish user interview schedule </li></ul><ul><li>Prepare value stream maps (flow charts of product and information flow) </li></ul><ul><li>Brainstorm policies, procedures, and business rules to support “today's” business needs, as well as, “tomorrow’s” vision </li></ul><ul><li>Conduct new education and training </li></ul><ul><li>Populate ERP order modifiers </li></ul><ul><li>Document sustaining processes </li></ul>
  19. 19. AT ABC COMPANY, PURCHASING WILL BE LEAN AND AGILE WHEN… <ul><li>All “A” suppliers have been value stream mapped and non-value added activities eliminated </li></ul><ul><li>No buyer involvement for “A” supplier releasing </li></ul><ul><li>All “A” suppliers have service agreements </li></ul><ul><li> VMI  Consignment  Productivity </li></ul><ul><li> Evergreen  Schedule Agreements </li></ul><ul><li>All “A” suppliers – short-term demand is “work center 1 consumption schedule” or “Kanban supermarket” </li></ul><ul><li>Same day or next day delivery for “A” supplier demand </li></ul>
  20. 20. AT ABC COMPANY, PURCHASING WILL BE LEAN AND AGILE WHEN… <ul><li>Key suppliers feed “supermarket” or point-of-consumption buffer areas </li></ul><ul><li>All pallets are pre labeled </li></ul><ul><li>All key “A” suppliers are all certified </li></ul><ul><li>  No inspection  No counting </li></ul><ul><li>All “A” suppliers have qualified specifications </li></ul><ul><li>All key “A” suppliers have standard delivery schedule </li></ul><ul><li>“ B” suppliers will use “auto” MRP </li></ul><ul><li>“ C” suppliers will use “bread man” deliveries </li></ul>
  21. 21. SOURCING FROM DISTRIBUTORS <ul><li>Cost Reduction </li></ul><ul><li>Inventory Reduction </li></ul><ul><li>Warehouse Stocking </li></ul><ul><li>Complex Systems </li></ul><ul><li>Quotes </li></ul><ul><li>Lead Times </li></ul><ul><li>Supplier Reduction </li></ul><ul><li>Inventory Elimination </li></ul><ul><li>Bin Servicing </li></ul><ul><li>Seamless/paperless </li></ul><ul><li>Evergreen contracts </li></ul><ul><li>Transparent </li></ul>Non-Traditional Traditional
  22. 22. COMMON MATERIAL FLOW PROCESS: Cycle Counted Requisitioned Sourced Ordered Received Transacted to stock Kit line stocked Work Order Prints Parts collected Parts Kitted Inventory Transacted to kit Kit Moved to assembly $20 item is handled the same as a $0.02 item
  23. 23. NEW MATERIAL FLOW OPTIMIZATION Cycle Counted Requisitioned Sourced Ordered Received Transacted to stock Kit line stocked Work Order Prints Parts collected Parts Kitted Inventory Transacted to kit Kit Moved to assembly You now add real value!
  24. 24. WORLD CLASS DISTRIBUTION REQUIRES NONTRADITIONAL THINKING <ul><li>Your customer’s focus must shift… from what they will buy from you…to what they want you to manage for them… </li></ul><ul><li>Your focus then, must shift… from what you can sell to your customer…to what you can remove from your customers process… </li></ul><ul><li>Your systems must become a key enabler! </li></ul>
  25. 25. <ul><li>CASE STUDY </li></ul><ul><li>OPTIMIZING THE BOARD REPAIR PROCESS </li></ul>
  26. 26. Board Repair Team: “AS IS” VALUE STREAM MAP Total Cycle Time: 17.4 Days Total Process Time: 23.54 Hrs COPYRIGHT ROBERT ABAIR ASSOCIATES, INC., 2006 ABC INC. Value Stream Mapping -
  27. 27. Total Cycle Time: 3.52 Days Total Process Time: 18.05 Hrs Board Repair Team: “TO BE” VALUE STREAM MAP COPYRIGHT ROBERT ABAIR ASSOCIATES, INC., 2006 ABC INC. Value Stream Mapping -
  28. 28. Board Repair Team: Benefits Realized COPYRIGHT ROBERT ABAIR ASSOCIATES, INC., 2006 ABC INC. Value Stream Mapping -
  29. 29. <ul><li>EXAMPLE OF </li></ul><ul><li>ERP – LEAN SUPPLY CHAIN OPTIMIZATION </li></ul>
  30. 30. Company 2 (OLP) Lean Supply Chain $0 Liability $37.1K 6 weeks 3 items 4.6 days 2 weeks 14 $144.2K Future State Lean ERP Process - Cost Savings - Block Assy Liability Eliminated 13 wk L/T @ $.5K per unit 42% Value of Power Controller Reduction $64.9K 57% Power Controller L/T Reduction 14 weeks 40% Reduced unique parts over 55 days L/T 5 items 29% Manufacturing Lead Time 6.5 days 86% Lead Time 14 weeks Same Number of Systems in Pipeline 14 47% Liability $270.2K Percent Improvement Performance Metric Current State MRP Push Process

×