How to use Operations Management to implement a successful Enterprise Resource Planning (ERP) system
MRP led to the development of enterprise resource planning (ERP). As the name implies, ERP integrates an entire enterprise into an information system that operates on real-time data it receives from across the organization. The shared database ensures that each location and department can access the most reliable and up-to-date information.
An ERP system incorporates many operations management topics, including design and process management, aggregate planning, capacity and inventory management, scheduling, quality control, and project management.
An ERP system has many advantages, but beware of the perception of the silver bullet. ERP systems require significant investments, including buying the system and then implementing it and maintaining it. Many companies underestimate the amount of time and money involved with implementing and maintaining an ERP system.
We recommend the following steps to implement a successful ERP system:
1. Evaluate your needs.
Do you really need such a sophisticated system? The system itself will not solve all the problems of an organization. Often, some reengineering and communication process throughout the organization can do the trick, and you can handle data management in a much simpler and cheaper way. Many world-class manufacturing and service operations use relatively simple and unsophisticated systems to manage your ERP needs.
2. Corrects your processes.
Implementing an ERP system will not fix broken and inefficient processes. Before investing in an ERP system, evaluate and, if necessary, redesign your processes.
3. Acquire and verify consistent data.
When you start to fill an ERP system with data, remember that the outputs are as good as the data in progress. If different departments are operating on different datasets - say, sales data in one department are different from sales data in another - then the software system will not produce accurate data for the company.
4. Customize your software.
ERP vendors offer highly standardized software, usually with modules optimized for specific industries. One of the biggest concerns of companies about implementing an ERP system is that it blocks the company in standardized processes.
This inhibits process innovation within a company because ERP process drift ends up requiring a lot of software work. When setting up an ERP, make sure that the system can accommodate process improvements from Step 2 and not force it to the standard processes that have been incorporated into your software.
By customizing software to accommodate an improved process, make sure your competitors do not get the same programs and eliminate any competitive advantage you've gained.
5. Train your employees.
Employees should understand the purpose of the system and how to enter data and interpret the reports that the system generates.
6. Continuously improve your processes.
Continuous improvement is the heart rate of all successful companies, and process change almost certainly involves modifications to ERP software. Many companies find themselves locked in their current processes to avoid the time and money required to upgrade their software. Avoid stagnation by developing a good relationship with your software provider.
An ERP system incorporates many operations management topics, including design and process management, aggregate planning, capacity and inventory management, scheduling, quality control, and project management.
An ERP system has many advantages, but beware of the perception of the silver bullet. ERP systems require significant investments, including buying the system and then implementing it and maintaining it. Many companies underestimate the amount of time and money involved with implementing and maintaining an ERP system.
We recommend the following steps to implement a successful ERP system:
1. Evaluate your needs.
Do you really need such a sophisticated system? The system itself will not solve all the problems of an organization. Often, some reengineering and communication process throughout the organization can do the trick, and you can handle data management in a much simpler and cheaper way. Many world-class manufacturing and service operations use relatively simple and unsophisticated systems to manage your ERP needs.
2. Corrects your processes.
Implementing an ERP system will not fix broken and inefficient processes. Before investing in an ERP system, evaluate and, if necessary, redesign your processes.
3. Acquire and verify consistent data.
When you start to fill an ERP system with data, remember that the outputs are as good as the data in progress. If different departments are operating on different datasets - say, sales data in one department are different from sales data in another - then the software system will not produce accurate data for the company.
4. Customize your software.
ERP vendors offer highly standardized software, usually with modules optimized for specific industries. One of the biggest concerns of companies about implementing an ERP system is that it blocks the company in standardized processes.
This inhibits process innovation within a company because ERP process drift ends up requiring a lot of software work. When setting up an ERP, make sure that the system can accommodate process improvements from Step 2 and not force it to the standard processes that have been incorporated into your software.
By customizing software to accommodate an improved process, make sure your competitors do not get the same programs and eliminate any competitive advantage you've gained.
5. Train your employees.
Employees should understand the purpose of the system and how to enter data and interpret the reports that the system generates.
6. Continuously improve your processes.
Continuous improvement is the heart rate of all successful companies, and process change almost certainly involves modifications to ERP software. Many companies find themselves locked in their current processes to avoid the time and money required to upgrade their software. Avoid stagnation by developing a good relationship with your software provider.