In challenging times only those who are ready to adapt to a changing business environment can hope to succeed. In a business world that has known the impact of globalization and the use of technology to lower production costs it has become imperative to reduce waste, increase efficiency and to produce high-quality goods and services to satisfy the customers and ensure the survival and success of the firm. It is also time to consider the use of computer-based technologies and even proven management strategies that will help the company achieve greater revenues and even unprecedented success. As a consultant to this company the proponent of this paper is suggesting the use of Manufacturing Resource Planning (MRP2), Enterprise Resource Planning (ERP) and Just-In-Time management principles.
MRP2
Manufacturing resources planning is a computer-based system that calculates, analyze and make recommendations using data given by managers, supervisors and employees. This made possible by the use of programme modules that makes sense of the information supplied by the employees and managers and then provide the following: 1) master scheduling; 2) capacity planning; 3) purchasing; 4) finished goods delivery schedules; 5) cash flow forecasting; and 6) personnel requirements (Rowbotham, Galloway, & Azhashemi, 2007). In the past, these things are done manually and therefore prone to human error.
The MRP2 does not only significantly reduce human error in making plans, recommendations and adjustments to the overall business operation, it can also help speed up these processes eliminating the wastage of time, money, and effort. This will not only increase efficiency but also profitability not to mention it will help boost the morale of the workers and even the corporate leaders who will finally achieve cost-efficiency while at the same time expanding the business.
But this does not mean that the implementation of MR2 will be without problems and even resistance from employees and even those tasked to operate the new system. Just like everything else that is new, there are staff members and workers who may feel that it is an added burden to them. It is therefore important to make them understand that the MRP2 will even lighten their workload because there is now a much better system that can see problems such as inventor and human resources needs even before a problem does occur. Instead of reacting to problems and change the MRP2 can even help predict the flaws and potential threats to the system – whether it be the lack of spare parts or the need for more workers.
The first major challenge that the company will face is the need for the workers and the staff to accept a new way of doing things. The implementation of the MRP2 system requires planning, commitment, and the foresight to know why people will sometimes feel insecure regarding the idea that someday a computer system will replace them. According to an expert in the implementation of MRP2 the company will have to consider spending at least 20 percent of the total cost for education and training the employees regarding the new system (Wright, 1984). He warns that neglecting this crucial step is no laughing matter and he asserted that, “Yet, all the rest of the investment in MRP will be wasted if the education job is not done properly. It is the most highly-leveraged part of the MRP investment” (Wright, 1984). Without a doubt this must be the first step in the implementation process.
ERP
Enterprise resource planning is simply an improvement of MRP2 (Rowbotham, Galloway, & Azhashemi, 2007). This means that ERP takes the integration of different system even further, whereas MRP2 deals with the integration of system related to manufacturing and human resources, ERP aims to provide “…one integrated information system for the whole organization using one set of common data” (Rowbotham, Galloway, & Azhashemi, 2007).
Therefore the module components that can be included into ERP are: a) customer relationship management; b) human resources; c) operations; d) supply chain management; and e) finance and accounting. However, the same challenges apply to ERP as it did to MRP2, this time around the level of education is much greater because this will involve everyone not only those in the manufacturing aspect of the business operation. With ERP even those in marketing and customer relations department had to share their information and concerns.
The use of ERP will give the organization ample time to prepare for increase in demand and at the same time scale down if the demand of a particular product is low. The unavailability of materials and human resources can be called constraints in the production cycle. Constraints can easily stall production. Business leaders must learn to anticipate market demands and plan ahead so that there will be no disruption in the production cycle. According to Shinkle et al. (2004) business leaders must provide clear strategic direction for their companies; document their management systems; and create structured and disciplined process for approval, communication, and control of the flow of people, money, material projects, and activities
JIT
Another system that needs to be implemented in this company is the one called Just-In-Time management. In a nutshell JIT is also another system that ensures that the right quantities are purchased or produced at the right time, and that there is waste in the form of duplication or overproduction (Oakland, 2003). This has nothing to do with finishing jobs at the last minute but instead, it is a system that will ensure that jobs will be completed without the necessary wastage that usually accompanies a regular business operation.
In order to clarify the definition even further JIT is a system that will help this company meet the requirements of the customer immediately on demand (Oakland, 2003). It is a system first developed by the Japanese and was exported to Europe and America when Japanese manufacturing firms such as Toyota was outperforming its rivals (Toyota, 2009). It is time to expect the same results in this company.
One of the most important aspects of JIT is cycle time reduction (Bell, 2006). This organization can dramatically improve business operation where raw materials are delivered on time and made available for workers in the factory floor. This will certainly increase productivity and efficiency. Work can be completed quickly and products can be delivered to customers ahead of schedule while at the same time work can be started on other projects (Shinkle, Gooding, & Smith, 2004). This can be achieved by looking at every feature and component of the production process.
This organization can therefore expect value enhancement because it requires less money and effort to produce the product. This means that the company will earn more because money that is saved is also money that is earned. On top of that customer satisfaction – due to responsiveness in enhancement and cycle time reduction – will increase demand for their product. The only challenge is to educate the people to understand the need to share information.
Recommendations
Based on information given regarding the difference and similarities between MRP2 and ERP, it is strongly advised that the company immediately upgrades to ERP because it is an integrated system that covers every aspect of the organization from marketing to manufacturing and supply chain management. The ERP system will be used to collect and analyse one set of information supplied by every employee, supervisor and manager.
This means that the whole organisation will have one mind when it comes to achieving production and delivery requirements. There will be a higher level of efficiency and coordination when it comes to master scheduling, capacity planning, purchasing, finished goods delivery schedule, cash flow forecasting and personnel requirements and even the requirements needed to maintain good customer relations and the management of finances.
When it comes to JIT the organisation must use it in the manufacturing department by eliminating guesswork and help determine the exact number of products that must be produced and delivered every day. This is crucial to a company that has a high variety of product lines but with low volume demand for each product line. There is always the tendency to overstock because of the many types of product lines that has to be made available at any given moment but the JIT system will help determine the exact number needed and therefore no wastage, only efficient use of manpower and raw materials.
Conclusion
In a very competitive business environment an organisation must improve the system that deal with the manufacturing of a product, marketing and delivery. Usually these processes are made using estimates or guesswork. More importantly there are aspect of the business operation that are hidden from the view of business leaders, they need information to know about the problem and the source of the constraints.
By using MRP2/ERP the company will have one set of data that can help the leaders make appropriate decision. By adding a JIT system in place then the company can eliminate guesswork and be able to purchase raw materials, make it available to the workers at the right time in the right amounts and then manufacture a product on time based and deliver just in time and everything done based on the requirements given by the customer. A satisfied customer and an efficient business operation can only mean success for this company.
References
Bell, S. (2006). Lean Enterprise Systems. New Jersey: John Wiley & Sons, Inc.
Grabski, S., S. Leech, A. Sangster. (2009). Managemen Accounting in Enterprise Resource Planning. UK:CIMA Publishing.
Harwood, S. (2003). ERP: The Implementation Cycle. UK: Butterworth-Heinemann.
Jennex, M. (2005). Case Studies inKnowledge Management. UK: IdeaGroup, Inc.
Oakland, J. (2003). Total Quality Management: Text with Cases. UK: Butterworth-Heinemann.
Shinkle, G., L. Gooding, M. Smith. (2004). Transforming Strategy into Success. New York: Productivity Press.
Rowbotham, Galloway, & M. Azhashemi. (2007). Operations Management Context. UK: Butterworth-Heinemann.
Toyota. (2009). Toyota Production System. Web.
Wright, O. (1984). Manufacturing Resource Planning: MRP II. New York: JohnWiley & Sons, Inc.