Business Modeling

One of the most important things to start an implementation with is business modeling. It is even wize to start Business Modeling prior to selecting a new or additional ERP system for your company. If you are able to create a proper model of the flow of goods and the Modules and Function that you need to properly controle and manage the flow of goods your ERP selection process will be quite a bit easier.

You should have a grasp undestanding of your business processes in your manufacturing company. How does the flow of good stream through your production organization and with what modules and functions from your ERP system or future ERP system is that flow controlled and managed.

The 5 Customer Order Decoupling Point (COPD) according to Hoekstra & Romme

At what point in the process do you really start production of sub assemblies and final assemblies.

Do you start production with whatever raw materials, components and sub assemblies you have in stock even if you do not have a demand from a sales order for it? This is called in modeling terms Make and Send to Stock or Make To Stock.

Or do your start production out of sub assemblies only when you receive a customer order for it with specifications what sub assemblies to use to assemble a final product in line with customer’s specifications? This is called in modeling terms Assemble to Order. It means that you make and assemble your sub assemblies on forecast and/or production schedules by which your organization is responsible for that forecast and/or production schedules also towards your vendors from which you buy your components and raw materials based upon forecast too.

An Assemle to Order example of a Business Model with all relevant ERP Modules and Functions in place with their inter relations to each other. The Stockpoint here is at sub assembly level and that is where the COPD is too.

Or do you start production out of materials and components, which are assembled into sub assemblies first and after that use these sub assemblies to assemble the final product according to your customer’s specification only when you have received the customer order for it? This is called Make to Order.

Or do you start production out of materials and components, which are assembled into sub assemblies first and after that to use these sub assemblies to assemble the final product according to the customer’s specification not only for the final assembly but also for the sub assenblies, only when you have received the customer order for it but also the customer’s specification for the whole design of the final product. Where you start buying raw materials and components depending on the customer’s design? This is called Buy and Make to Order or sometimes Engineer, Buy and Make to Order.