Enterprise Resource Planning (ERP) is a method for effectively planning all resources in a company. It coordinates functions like sales, marketing, operations, and finance. ERP provides real-time integration of data across the entire organization and extended supply chain. It aims to improve customer service, productivity, costs, and inventory levels. ERP determines the optimal amount of resources like materials, workers, and machines needed at different points by developing valid production plans and schedules.

1. Enterprise Resource Planning (ERP)Presented by:Rick BekanichPete BrenkoshAmandeepKaurDee Walski

2. OverviewWhat is ERP?Evolution of ERPComponents of ERPAdvantages/DisadvantagesSuccess/FailuresSummary

3. DefinitionsEnterpriseOrganization designed to provide goods and/or services to consumersResourceAny physical or virtual entity of limited availability, or anything used to help one earn a living (e.g. employees, materials, etc.)PlanningThe organizational process of creating and maintaining a plan.

4. What is ERP?4Enterprise Resource Planning (ERP)Business Planning1Is a method for the effective planning of all resources of a manufacturing and repair facility

5. Predicts and balances demand and supply. It is an enterprise-wide set of forecasting, planning and scheduling tools .

6. Links customers and suppliers into a complete supply chainSales and OperationsPlanning2Master Production Scheduling3Capacity RequirementsPlanning4Material RequirementsPlanning5Production Executionand Control6

7. What is ERP?5Enterprise Resource Planning (ERP)Business Planning1Employs proven processes for decision-making

8. Coordinates sales, marketing, operations, logistics, purchasing, finance, product development, and human resources.Sales and OperationsPlanning2Master Production Scheduling3Capacity RequirementsPlanning4Material RequirementsPlanning5Production Executionand Control6

9. What is ERP?6Enterprise Resource Planning (ERP)Business Planning1It’s goals include high levels of customer service, productivity, cost reduction, and inventory turnover, and it produces the foundation for effective supply chain management and e-business.

10. It does this by developing valid plans and schedules so that the right resources – manpower, materials, machinery, and money – are available in the right amount when needed.Sales and OperationsPlanning2Master Production Scheduling3Capacity RequirementsPlanning4Material RequirementsPlanning5Production Executionand Control6

11. What is ERP?7Enterprise Resource Planning (ERP)Business Planning1Applies a single set of resource planning tools across the entire enterprise

12. Provides a real time integration of sales, operating, and financial data

13. Connects resource planning approaches to the extended supply chain of customers and suppliers.Sales and OperationsPlanning2Master Production Scheduling3Capacity RequirementsPlanning4Material RequirementsPlanning5Production Executionand Control6

14. What is ERP?Enterprise Resource PlanningERP is a real time systemERP is an integrated information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer ordersERP is an extension of MRP. Where MRP focused mainly on manufacturing, ERP includes all of the processes required to operate a business8

15. ERP Common Definition and Evolution Moving from the Informal to the Formal System (Valid Schedules) is the key to ERP Business Benefits Realization9

16. 10ClosedLoopMRP(70’s)MRP(Late 60’s)MRPII(80’s)ERP(90’s)ERP Common Definition and Evolution MRP / ERP EvolutionSource: ERP Making It Happen, Thomas F. Wallace and Michael H. Kremzar

17. 11Closed Loop MRPERP Common Definition and Evolution

18. MRP, MRPII and ERP12Material Requirements PlanningMRP is a process that uses the bill of material, inventory data, and planned receipts to calculate requirements and recommendthe release and/or reschedule of materials (Original concept of scheduling the quantity and timing of production and related purchase orders for raw materials)MRP70’sMRPManufacturing Resource PlanningShop Floor ControlSales &OperationsPlanningDemand ManagementBusiness PlanningMRPSupplier SchedulingMRP II80’sFeedbackMRPIIEnterprise Resource PlanningCustomer &Product InformationCustomerServiceLogistics &MaterialsManagementMRP IIIntegratedFinancial Functions/ProcessesERP90’sERPFeedback/ Real Time Access to InformationThe concept of ERP has evolved over time. The acronyms are used in three different but related contexts.

19. With ERP13The benefits for an organization that is using ERP.Orders, promised to customers on certain dates, are more often fulfilled.

20. Data can now be entered “on-time”.

21. People no longer heavily rely on hot lists, shortage lists or who yells the loudest.

22. There are fewer inaccuracies in inventory causing fewer production problems.

23. Less money gets tied up in unwanted inventoryWith ERP (Cont’d)14Fewer expensive rush orders are placed to replenish inventory the computer did not know was needed, because master data (BOM’s, Routes, etc…) changes were not processed.

24. Net Operating Results (NOR) is positively affected by more accurate data and transaction reporting. 15ERP MANUFACTURING MODELCapacity Requirements Planning4Business Planning1Material Requirements PlanningSales and Operations Planning52Master Production SchedulingProduction Execution & Control63

25. Business Planning16Business Planning1Business Planning1 2Sales and OperationsPlanning3Master Production Scheduling4Capacity RequirementsPlanning5Material RequirementsPlanning6Production Executionand ControlBusiness Planning is:Customer driven and usually done on an annual basis.

26. Five year funding priorities (current plus four)Sales and Operation Planning17Sales and operations Planning2Business Planning1 2Sales and OperationsPlanning3Master Production Scheduling4Capacity RequirementsPlanning5Material RequirementsPlanning6Production Executionand ControlSales and Operations planning:It is an integrated business management process through which the executive continually achieves focus, alignment and synchronization among all functions of the organizationSales and Operation Planning18Sales and operations Planning2Business Planning1 2Sales and OperationsPlanning3Master Production Scheduling4Capacity RequirementsPlanning5Material RequirementsPlanning6Production Executionand ControlSales and Operations Planning (S&OP) Includes: It includes an updated sales plan, inventory plan, customer lead time(backlog) plan, new product development plan, strategic initiative plan and resulting financial plan.

27. Stated in terms of dollarsChange is inevitable

28. Master Production Scheduling19Capacity RequirementsPlanning4Material RequirementsPlanning5Master Production Scheduling3Production Executionand Control6Key Components of ERP

29. Master Production Scheduling (MPS)20The Master Production Schedule (MPS) is:It is the plan for production, staffing, inventory etc. it is linked to manufacturing where the plan indicates when and how much of each product will be demanded.

30. It supports all production strategies including make-to-stock, assemble-to-order, engineer-to-order, and make-to-order

31. A realistic Monthly and Weekly Schedule determined by looking at capacity and resources

32. The schedule that the Master Scheduler maintains, and in turn, it becomes a set of planning numbers that drives Material Requirements PlanningMaster Production Scheduling (MPS)21The Role Of The Master Scheduler: Maintaining a Perfect Balance between Demand & Supply

33. 22Master Production Scheduling3Material RequirementsPlanning5Capacity Requirements Planning4Production Executionand Control6Capacity Requirements Planning (CRP)Key Components of ERP

34. Capacity Requirements Planning (CRP)23Capacity Requirements Planning ProcessIs the function of establishing, measuring and adjusting limits or levels of capacity (workload)

35. Determines, in detail, the amount of labor and machine resources required to accomplish the tasks of production by exploding quantities in the schedule against the hours and work centers identified in the routing.Capacity Requirements Planning (CRP)24Capacity Requirements Planning (CRP) (Cont’d)Capacity – How much work of a given type can a shop do in a given period of time.

36. Required Capacity – How much machine time and labor will be needed from that shop to complete their work relating to an asset or assets.

37. Load – What was Planned and what was released to the shops.

38. Work Center- Is a specific production area, consisting of one or more people and/or machines with similar capabilities, which can be considered as one unit for purposes of capacity requirements planning, detailed scheduling, and costing.Capacity Requirements Planning (CRP)25A Work Center (Cont’d)The following types of information is needed when defining the capacity of a Work Center

39. Shop Calendar

40. Shifts per day

41. Shift durations

42. Breaks / Non-productive time

43. Number of individuals/machines available per shift

44. Utilization

45. EfficiencyCapacity Requirements Planning (CRP)26Capacity Requirements Planning Process (cont’d)Requires valid asset schedules to properly analyze and manage future capacity over/under load conditions

46. Capacity imbalances will be worked by Master Scheduling.Capacity Requirements Planning (CRP)27There are four factors affecting available capacity.Type of Work

47. Plant and Equipment

48. Skill level/Work effort required

49. MaterialCapacity Requirements Planning (CRP)28Priority:What is needed, how much is needed, and when it is needed.In the long and short term…… priority and capacity must be balanced.

50. Capacity Requirements Planning (CRP)29LMS’s and Master Schedulers:Review Projects Received from Item Managers

51. Analyze requested delivery schedules.

52. Review Capacity

53. Accept or re-negotiate dates with Item Managers30Master Production Scheduling3Capacity RequirementsPlanning4Material Requirements Planning5Production Executionand Control6Material Requirements Planning (MRP)Key Components of ERP

54. Material Requirements Planning (MRP)MRP is a process that uses the:Bill Of Material (BOM, components lists) Material MasterRoute data or Production Order after creation (this is used to create the MPS schedule)Inventory data31

55. Material Requirements Planning (MRP)32MRP:Uses Delivery Schedule, Production Order BOM/Route, and Inventory Data to calculate requirements for materials)

56. Creates detailed schedules for material: make, repair, buy33Definitions and TerminologyThe MRP Controller

57. Is the person responsible for a material or group of materials in MRP

58. Material Requirements Planning (MRP)

59. MRP is a calculation method geared toward determining how much of which materials are required and roughly when they should be ordered to fulfill a set of product orders. The results of the calculation are recommended planned orders by time period.Definitions and TerminologyManufacturing (MBOM)All the materials needed for completion of an assemblyRepair (R-BOM) - A1, IO etc.List of of what “MAY” be neededIf we don’t order what we think we “Might” need, we can’t have the material ahead of the asset.34

60. 35BOMBOMA BOM is a comprehensive list of materials necessary for a build or repair of a quantity of one (1)

61. The components list is a list of parts for the total production orderRouteRouteWhere the work is done for a Project Shops/Machines/People/Hours/Project DatesWork CentersCapacityManufacturing RouteRepair Route36

62. BOM Allocation37Materials can be assigned to a specific routing operation, especially when total cycle times are long, to distribute shop floor deliveries and minimize work in process inventories. Without this assignment, ERP systems must assume the material is needed at the start of the first operation of the order.

63. 38MATERIAL DELIVERYPARTS:The Right Parts