Author: David Dehne

The Pros and Cons of Consolidating Manufacturing ERP Systems

Managing operations through multiple manufacturing systems can be challenging, but it’s a daily reality for many manufacturers. In this post, we’ll look at the pros and cons of consolidating ERP systems – and propose an alternative.

When Two Worlds Collide

Whenever two or more organizations merge, they are almost always using different ERP systems. As anyone who’s ever tried to consolidate an ERP systems knows, it’s not easy.

Each organization chose their respective ERP systems for a reason. For instance, one facility might operate in a make-to-stock mode and the other in a make-to-order mode even though they manufacture the same types of products for the same customers. Addressing local regulations and business practices is another common (and good) reason for implementing one manufacturing system over another.

Even if their chosen system isn’t perfect, the users in each facility may have learned it well enough (or customized it enough) to work around many of the application’s shortcomings. I’ve seen people who told me they HATE their ERP system fight tooth and nail to keep it when told the organization was considering replacing their system with the same system used at corporate or at another facility.

The 3 Cons of Consolidation

The first con of consolidation is obvious – consolidating ERP systems is hard on your employees. Even those who are willing to get with the program are going to have to learn an entirely new system. That takes time and money and eats into productivity.

Then there are the real and valid reasons why facilities chose different systems. Even if the ERP system on which the company decides to standardize is flexible enough to handle multiple manufacturing modes and other unique requirements, there will still be challenges. For instance, different setup parameters and customizations may mean that the systems won’t talk to each other the way you had hoped.

Finally, there is the expense of consolidation. ERP systems can cost hundreds of thousands to millions of dollars – just in software costs alone. Though some vendors offer ERP on a more budget friendly subscription basis in a SaaS model, the costs can still be considerable if you have a lot of users. Plus, you still have the upfront costs for things like implementation, training, customization, and so on.

The 3 Pros of Consolidation

If a consolidation project goes as planned – and that’s a big if – the company is probably hoping to gain benefits such as:

Simplified support and maintenance – Theoretically, if everyone is using the same system, user support should be easier. I don’t want to discount this benefit because it’s one that can be achieved, though it can take years to get there and may require functional compromises.

Increased visibility – Management wants to have a clear picture of what is happening across the enterprise. With disparate systems used in each of the facilities, getting accurate KPIs is a challenge. Getting KPIs in real time is next to impossible.

Decreased lead times – If the organization is vertically integrated, with facilities supplying each other, increased visibility into capacity and material availability across facilities should allow production managers to optimize production schedules and resource utilization. In my experience, though many ERP vendors claim to be multi-entity capable, in practice, their ability to handle cross-facility resource management varies widely.

Is it Time to Take Your Lean Initiative to the Next Level?

The Synchrono Demand-Driven Manufacturing Platform can help you achieve the consolidation benefits you’re looking for plus the benefits of Lean for a fraction of the cost and without the loss of productivity and sheer chaos of an ERP consolidation initiative. Here are just a few examples:

One version of the truth – Our Platform sits on top of your ERP systems, so there is no need to rip and replace any of them. We can consolidate information from disparate systems and serve up data and insights in role-specific dashboards.

A sample dashboard from SyncView software

In the video, How Orbital ATK Enabled the IIoT and a Visual Factory, Orbital ATK’s systems architect shows a graphic of all the different systems from which their Synchrono implementation pulls data. The entire video is well worth watching, but if you just want to take a quick peek at their chart, it’s at about 5:15 in the recording.

Management by exception – Trying to keep your eye on everything that is happening across facilities can drive you crazy. Our visual platform allows you to see status across your enterprise and drill down on those that require your attention, to better understand the root cause of the issue.

This bird’s eye view of the entire enterprise was taken from the webinar Visualizing Metrics in the Factory of the Future.

Pull-based replenishment – Demand-driven inventory management is a core principle of Lean, and our eKanban software allows you to send electronic replenishment signals across facilities. You can also bring your suppliers into your Lean initiative – and improve supplier collaboration, visibility and performance – with our supplier eKanban capabilities and supplier communication portal. Watch a demo.

Synchronize resources across facilities – Our exclusive CONLOAD™ scheduling algorithm drives production flow across facilities by controlling the release of work into production based on the availability of people, machines, materials, etc. and managing constraints using principles from the Theory of Constraints. Watch our YouTube demonstration.

Capable to promise – Because we can access and manage data across multiple enterprise systems (and machines, sensors, etc.), our capable to promise functionality provides a true picture of what can be produced and when.

Learn More

Consolidating ERP systems is such a burdensome, disruptive process, it’s worth taking the time to at least consider the alternatives. In addition to the resources I’ve already shared throughout this post, here are a few more I think you’ll find helpful:

Article: What is Demand-Driven Manufacturing?

White paper: E2E Supply Chain Visibility Technology is Here

Video: How to Synchronize Production Planning, Scheduling, and Execution

June 4, 2018
Three Ways Leaders Create Lean
Three Ways Leaders Create Lean

“Relentless” leadership and team empowerment drive lean change

For those of you who have heard this before, it bears repeating. For those of you who have not, this is important – leadership is the single most important component to lean success.

It is exciting to talk about bottom-up change and expect that a ground swell of individuals in virtually every level of the organizational chart can succeed with lean—in spite of those in the C-suite that just don’t get it. But in practice, this has to happen early on or there is little-to-no chance of success.

Who’s driving this thing?

I am not saying that lean changes cannot start from the bottom-up; but the situation needs to flip quickly to leadership driving the bus. That’s because at some point early on in your lean journey, your methods will start to conflict with some long-standing processes and metrics. These formerly sacrosanct topics need to be addressed by leadership (those with the power to change them) before your journey can continue.

Once leadership is on board, the leader(s) can come from anywhere in the company. But to prevent stagnation at a higher level, leaders must carry the torch of continuous improvement tirelessly and relentlessly.

80/20 rule

They can start out leading the kaizen events but they need to mentor and train those doing the work in order to keep continuous improvement alive and well. Mature lean organizations expect 80% of their improvements to come directly from those closest to the work. This is the only way to fully utilize the talents and capabilities of your human assets. Give the people closest to the work the tools and the support necessary to astound you with their creativity and innovation.

Out on the floor

Gone are the days where leaders sit in their offices sending out directives to the rest of the organization and lead mainly by pounding on the rest of us when those directives are not met. Today, leaders are responsible for training and mentoring their people. They equip them with the tools of continuous improvement and empower them to remove the obstacles that block their way. Here are some ways I have seen manufacturing leadership create a more demand-driven culture:
- Of machines and men (or women) – Leaders who think of their production staff as extensions of their equipment are making a fatal error. Empowered people who feel their bosses care about keeping them on staff by growing their skills and offering development opportunities are the people who will drive the changes needed to make your business excel.
- “Scaffolding” support – It is a huge mistake to treat your people like their only role is to follow the standard operating procedures (SOPs) handed down from above and that the only way they drive value is when their direct labor hours are being absorbed into products. You are under-utilizing the most valuable assets in your organization. It doesn’t happen overnight and without any effort, but you must build the scaffolding needed to support your people by giving them the tools, confidence, and authority to make changes. It is the people closest to the work – and who know the most about the process – that can provide the greatest innovation if you build the foundation on which they can innovate.
- Training rolls on- Training should never stop. I hear the complaints and the unending list of obstacles – no time, no budget, where to begin, no senior-level support, and so on. But every moment spent training your people yields ongoing hours saved in fixing mistakes, putting out fires and trying to explain your poor results to the powers that be. Equip them with the tools, confidence, and abilities to speak up when something’s wrong; show them how to look for solutions and take ownership of results, and you are tuning up the “true improvement machine” on your shop floor and beyond.
I have been working with supply chain professionals and manufacturing leaders my entire career. If there is one thing I can say about the successful ones, it’s this: Effective change agents in manufacturing environments invariably spring from a leadership culture that supports the people not just the change — every step of the way.

– John Maher

John’s passion for demand-driven manufacturing is equal to his interest in how this method improves the lives of employees within these environments. “I’m here to help, not to judge” comments John whose posts reflect why demand-driven matters and are based on his experience working in manufacturing environments and expertise in ERP, MRP, APS, supply chain, manufacturing planning and scheduling systems and constraints management.
May 21, 2018
Customer Case Study: Orbital ATK Proves the Merits of SyncKanban®
This case study reviews the strategy and results of a new Lean project at the Aerospace Structures Division (ASD) of Orbital ATK. The goal of the project was to impact two key inventory metrics – improve inventory turns and reduce inventory cost; specifically, waste associated with material scrap.
- 30% WIP Inventory Reduction
- 90% Reduction in Scrap
- Consolidated 16 Replenishment Processes into SyncKanban^® eKanban software
Download the case study to learn why this project was awarded one of the top 100 supply chain projects by Supply & Demand Chain Executive.

Download
May 11, 2018
Case Study: Orbital ATK

Orbital ATK, Aerospace Structures Division (ASD), is a leading supplier of composite structures for the aerospace and defense industries. With a strong foothold in commercial and military aircraft and launch vehicle programs, the company was looking to equip a new facility with demand-driven, factory of the future technology to support its growing commercial aircraft business.

Read the case study to learn how the Synchrono^® Demand-Driven Manufacturing Platform helped Orbital ATK create an award-winning transformation.

Download

May 10, 2018
Are Your Manufacturing Metrics Meaningless?

It seems not a week goes by when I don’t hear from someone in manufacturing: “You can’t manage what you can’t measure”. Of course, there is a lot of truth to that statement, but as someone who spends all day, every day, helping manufacturers gather real-time data for better operational performance, I believe the statement is incomplete. The axiom should be: “You can’t manage what you can’t measure consistently and accurately.”

Take the example of On Time Delivery (OTD). In any manufacturing environment, delivering what you promised when you promised is good business, so measuring this metric makes sense. However, as simple as this metric should be to measure, it can get complicated. Consider this scenario:

The Challenge with Measuring On-Time Delivery

Bob in sales promises a customer that their order will be shipped by the 15^th of the month. The factory comes back and says, given the current production load, there is no way we can get the order out the door until the 25^th. The order isn’t big enough, nor has the customer done enough business with the company, to warrant upending the production schedule to meet the promised delivery date. As a result, the factory’s understanding of the promise date is the 25^th, while Bob’s (and the customer’s) is the 15^th. Who’s right?

Let’s say the customer’s order history does warrant upending the production schedule, but that throws off the delivery date for several other orders. These customers are accommodating, so despite the chaos in the factory, the change doesn’t result in any lasting harm. If the factory then delivers these orders by the new promised delivery date, are they still “on time?” What if the customers whose orders were affected hadn’t been so accommodating?

Later that month, the factory manager is called on the carpet by the CEO because according to his monthly reports, the factory’s OTD rate is less than 50%! (The report IT creates for the CEO compares the original promised date against the actual delivery date.) The factory manager pulls out a spreadsheet showing the production schedule against actual delivery. According to his figures, the factory’s OTD rate is 95%. Not perfect, but darn good. Is the factory manager’s position defensible?

Making Manufacturing Metrics Meaningful Again

Let’s take a look at a few of the challenges presented in the above scenario and how Synchrono can help resolve them.

#1 One version of the truth – The factory manager’s spreadsheet is the type of “red flag” we look for when clients call us in to ask how they can improve operations. Spreadsheets in manufacturing almost always mean that people are working from different versions of reality. Not only is there a question of where the data comes from, but studies also show that a good portion of the spreadsheets used in business contain errors. Creating a common definition for key metrics and then letting a system, such as SyncView from Synchrono, serve that KPI up in a dashboard helps ensure everyone is working from the same version of the truth.

Related Post – It’s Time: Manufacturers Need to Cut Ties With MRP and Spreadsheets

#2 Bridging the Divide Between Production and Sales – In many facilities, the last thing the production scheduler wants to do is take time out of their day to negotiate with sales. Every call could mean a change to their carefully crafted schedule. For their part, sales is more interested in closing business. If they’re promising unrealistic dates, well, they can always ask for forgiveness later.

SyncManufacturing considers all resources when calculating capacity: materials, people, processes and equipment – and delivers a “capable to promise” date (CTPD) that the factory can meet given current supply and workload. Many Synchrono customers give sales access to this information during the sales process, eliminating unrealistic promised delivery dates or the need for sales to call the factory. In the example above, Bob would have been given a CTPD that he could reliably provide to his customer, making the issue of conflicting OTD metrics moot. Just as important, providing Bob with a CTPD prevents Bob – and the organization – from making a local decision that could have enterprise-wide impact. Along with CTPD verification, many SyncManufacturing software customers put a process in place where they talk through the options available when a customer request date cannot be met. This way, the organization can have a systematic discussion of what can be done, rather than making a decision in isolation that could have wide-spread ramifications.

#3 Synchronizing Resources to Demand – Finally, many of our customers have dramatically increased their on-time delivery rate through the synchronization of resources to demand. At Rex Materials Group, on-time shipments went from 50% to 98% in one facility. I should also mention that Synchrono helped RMG lower lead times as well. Many orders that used to take three to four weeks can now be delivered in less than five days. Some products even have a 24-hour turnaround. Orders can be shipped the next day with no extra effort.

If your manufacturing metrics need an overhaul, here are a few additional resources you might appreciate:

White paper: Metrics That Drive Action

Video: Visualizing Metrics in the Factory of the Future

May 7, 2018
Synchrono® Helps Manufacturers Drive Continuous Improvements with eKanban Software

Synchrono^® Helps Manufacturers Drive Continuous Improvements with eKanban Software

The new paper, 4 Ways SyncKanban eKanban Software Supports Continuous Improvement, outlines how unique capabilities and system-generated data from SyncKanban software is being used on an ongoing basis to reduce system waste and promote the continuous improvement process. The 4 strategies outlined in the paper are…MORE

May 3, 2018

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