Production Planning Developments in ERP

Although newer versions of ERP have been developed and released, the question is, are those ERP’s much better? Or is the innovation and improvement mainly on the side of automation tools; computers, databases, cloud computing and internet connectivity, better designed (touch) screens, more intuitive and user friendly with keystrokes, Barcodes, QR codes, query functions), faster performance, and so on, making it easier for us to operate these tools all day?  But what about the fundamental concept of such ERP systems and how they actually function? Has that been developed and innovated at all? Or has that become a standard that is now no longer questioned?

If you examine the development of ERP systems over the last 30 years, it becomes evident that ERP software suppliers have been responsible for some renewal of the manufacturing process planning functions, and arrangement of the required capacity.

Various ERP suppliers have developed new ways and programs for planning or scheduling the production and manufacturing process, such as the workstations and machines on the production floor, and the deployment of the production employees; the capacity you need to actually be able to undertake production and make the products that are required by the customers of the organization.

These developments and innovations are often based on the findings of Eliyahu Goldratt[1] and Peter Senge[2] (The Fifth Discipline; theory and practice of the learning organization), who’s theories became accepted paradigms in production environments. Goldratt’s Drum-Buffer-Rope concept[3] has now been built into a number of ERP systems for the planning of production, the work orders on the production floor, and the workstations and machines.

Production and capacity planning is but one factor, and it can never be disconnected from the planning of the raw materials, materials, components and semi-finished products that are required to be able to make a subassembly or end product out of ‘loose elements’, materials or parts. Ultimately, making and selling end products is what determines the added value, and hence profitability, that a business organization has in its market.

But what benefits has a production plan, or planning, that functions well and indicates what needs to be made by whom, at what time, in such a way that all customers can be optimally served (on paper), while the material needed to make those products is not well planned or available? The answer is simple: production will come to a standstill and the production plan will therefore not be achieved. On time delivery will not be possible.

The ability to deliver on time, every time, and to fulfill the promises to the customer, in other words, to maintain a high degree of delivery reliability, is of crucial importance for business sustainability and survival.

As an industrial organization you do not want to end up in the situation that  1 screw of 10 cents missing can stagnate the completion of a machine worth 100,000 euro’s, with all the consequences that entails for both the customer and the production organization.

[1] Goldratt, E. M., & Cox, J. (2016). The goal: a process of ongoing improvement. Routledge. (reprint of 4th edition – original version published in 1987)

[2] Senge, P. M. (2006). The fifth discipline: The art and practice of the learning organization. Currency. (2nd edition, original version published in 1990)