March 10, 2021
Scheduling in your ERP is a great goal
I have been in the ERP world for close to 25 years, both as a consultant and salesperson. I have seen companies buy ERP for many reasons, but usually the driving factor has something to do with being able to use the system to schedule their shop floor. This is a fantastic goal. Not because shop floor scheduling with ERP sounds cool, but because to do it, you need to be good. Really good. The reason being that if you are going to have an algorithm in the software help you make valid decisions; you must give it valid input. And that valid input must come from almost every functional area in your organization. Everyone needs to be on board!
What does scheduling in ERP require?
ERP shop floor scheduling functionality typically schedules work orders. (The term “work orders” and “job orders” are interchangeable. For consistency, “work order” is the term that will be used.) Work orders tell you what to make and how to make it, which requires a valid bill of materials and valid routing. And that bill of materials and routing must reflect how you make the product.
You may be saying “of course we include how you make the product,” but I can tell you from experience that a lot of companies have trouble with shop floor scheduling because their work orders do not accurately reflect how their product is made. The bill of material information must be valid—if I purchase a certain part, the lead times must be accurate. The routing must also be valid—if I manufacture this internally, I need to accurately define machines, shifts, etc. If I outsource items and bring them back into my internal processes, that must be valid as well.
Many times, we see work orders with missing steps or materials. Workarounds are created to account for inaccurate work order data; and as you can guess, the software tells them things that do not make sense, all because the data is flawed. Before you get concerned about creating a mountain of work to keep the work orders accurate, remember this: It takes just as long to create an inaccurate work order as it does to create an accurate one. The main reason work orders are inaccurate is not because of the time it take to create an accurate one, it is a lack of training and/or understanding of how the software works. Hence, mistakes are made.
In addition to an accurate work order, your labor reporting needs to be payroll accurate. Meaning, it needs to be close to perfect. Labor reporting is what drives the schedule. It tells you what has been done, when those tasks were done, what is left to do, and if you are on schedule to meet the promised date. Labor reporting also gives labor costs. Along with material costs, labor costs help you understand your profitability on the work order.
Accurate scheduling is a sign of a well-run company
Shop floor scheduling is the gold standard in ERP implementations. If I ask a company if they use their ERP to schedule the shop floor, and they say yes, that tells me they have their house in order! Even if the company is not using all the functionality yet, I know they are driving improvement, since the goal of using ERP for shop floor scheduling requires them to have solid data and solid processes. That same data can be used to highlight trends – good or bad. If the trend is good, the company figures out how to do more of that. If the trend is bad, how is it resolved? After time, the data will show if the problem has been solved.
Good data opens the door to good or great improvements. It is worth the effort.
About the author
President, Visual South
Jack spent over 13 years in manufacturing; his last role was a Plant Manager. He has been involved with using ERP to address manufacturing issues for over 20 years.