ERP! ERP! How do I love thee? Let me Count the Ways: A Robust Materials Resource Planning ( MRP ) Engine
One of my favorite movies growing up was The Wizard of Oz. One of my favorite scenes was when the “Wizard” was exposed as the “man behind the curtain,” pulling levers and revealing the secrets of the kingdom. In the business world, this phrase has morphed into meaning a person who elusively controls the intricacies of a large enterprise—and no one really knows the who, what, when, or how of the magic behind the success. MRP (Materials Resource Planning) is like this “man behind the curtain.” Incredibly powerful, MRP manages the forces of supply and demand, keeping everything under control.
There are basically three questions that a manufacturer has, and MRP answers:
What does the customer want?
How many do they want?
When do they want it?
While those three questions seem relatively simple in nature, executing them in an efficient and profitable manner can become an extremely daunting, or even impossible task if you don’t have the correct tools. Fortunately, the Epicor MRP Engine is a highly sophisticated but user-friendly process that can help companies increase on-time performance, lower inventory and improve efficiency. MRP takes all three of these questions and looks at them holistically, to manage all variables that can occur on a shop floor.
What product does the customer want?
To answer this, MRP first looks to see if the part is purchased or manufactured. At the core of the system is the type-attribute of the part. Epicor defines a part in three ways: purchased, manufactured or sales kit. Purchased Parts can have a defined lead-time and are used in determining when product can be available if stock is not available. Manufactured Parts are built-up with routings and bills of materials. MRP will take into account the time it takes for each operation, dependent on the quantity and material availability, to determine when the product will be available to ship, based on capacity on the shop floor. Sales kits can be a combination of purchased and manufactured Parts and will use either or both types of logic to determine availability.
What quantity does the customer need?
Based on demand from forecasts or actual Sales Orders, the system looks at the current inventory level. If there is insufficient inventory, it will suggest to the Purchasing Department to buy some if it’s purchased or will suggest to the Planning Department to create a job to make some, if it’s manufactured.
What is the customer’s timeline?
This is where the Epicor MRP logic will take the first two questions and analyze two things: If we don’t have it in stock, can we buy it in time to deliver it, or do we have enough material and resources available to build how many they want? And it does this by taking into account not just one particular Sales Order, but all of the Sales Orders, and all of the inventory stocking levels and Job demands within a plant. Obviously, this is a very tall order, and in a dynamic manufacturing environment, things are often changing on a daily, if not hourly, basis. Because the MRP process can be such an intensive hardware resource demand, Epicor can be configured to run on a schedule (often times at night), either by looking at net change (to only work on those things that have changed since MRP was last run) or by being regenerative (to recalculate all demand).
Epicor also has the ability to run MRP for a specific part. Have a customer that needs a part ASAP? Now instead of having to wait for MRP to run, management has the ability to see the potential status of a job in a matter of minutes, and not hours, as MRP only has a single part to analyze. The MRP process can also be limited to a plant, product family, or commodity class—reducing the time and resources required to generate the needed supply records. Epicor MRP also supports multi-level pegging, which gives users the ability to trace the supply to each discrete source of demand. This process also drives the projected Sales Order shortages and is an incredibly powerful tool to manage customer satisfaction.
The Epicor ERP system, in conjunction with its versatile and powerful MRP process, allows your organization to “see behind the curtain” at an organizational level, revealing what the current demands for your products are and if you have the necessary supply to meet demand in a timely and profitable fashion.
There are lots of things to love about Epicor’s E10 ERP application.
Inventory. That word can hold a lot of different meanings for manufacturing companies. Production Personnel see it as the ingredients for making their products. Supply Chain Professionals base much of their career on it. Accountants see it a major corporate cost. Executives see it as both an expense and potential sales.
All of these views are correct and each hold merit. Without inventory, parts can’t be built. Without parts to sell, companies can’t grow. As Inventory can represent a significant expense, managing these costs efficiently can increase the bottom line and offer significant competitive advantages.
The key to an optimized inventory is only buying what you need, when you need it. While simple in concept, the execution can be very, very difficult. For those manufacturing companies that manufacture products with a deep Bill of Material, managing the what and when of raw materials can become a monumental undertaking.
It is that very example that Epicor can provide a powerful tool with their Multi-Level Pegging Process. Going beyond just looking at the material demands of the top-level assembly, the multi-level pegging process will calculate the material needs of all of the indented bill-of-materials on a job. Have a part that takes a manufactured sub-assembly, and that sub-assembly takes another sub-assembly to make it? The Multi-level pegging process will capture all of those materials demands. And Epicor displays all the pertinent information regarding those materials on their built-in Multi-level Pegging Dashboard.
Strategic information such as the quantities needed, and material status is provided in an easy-to-read format. Additional details such as is the material currently available, is it on order, or has it been generated are also displayed.
For those companies wishing to optimize their inventory, having the materials at the right quantities at the right time, the Epicor Multi-Level Pegging process provides a powerful tool for manufacturing and material professionals to achieve that lofty goal.
This functionality is only part of what the Multi-Level Pegging process can do for your company.
Do you have questions about Multi-Level Pegging and Supply Chain Management? Let us know, Contact Us Today.
Epicor ERP is a complex software and at the heart of the application is Part Setup.
Is your Epicor ERP designed with Part Setup Methods and Manufacturing Best Practices in mind?
Find out by downloading the Parts Setup Best Practices PDF today.
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Have you ever told a customer that you had product in stock – only to find that you couldn’t fulfill the order because the inventory was sold or used in production before you got to it? Or have you ever expedited-in material for an important customer or job only to have that material used to fulfill a different order or produce a different job? Or maybe you resorted to hiding parts in your desk so that it doesn’t get used to “Rob Peter to Pay Paul”. Frustrating, isn’t it? That’s why Epicor ERP’s Fulfillment Workbench is a critical application for many of my clients.
It’s a common occurrence, in both the retail and manufacturing world: having too much demand for a limited supply and seemingly no way to manage the available inventory. Wouldn’t it be nice to “set-aside” material so that it’s available when it comes time to ship or produce the product?
Fortunately, Epicor’s Fulfillment Workbench has a great way to manage those times when demand exceeds supply. Using the concept of Reserve, Allocation, and Cross-Docking, the Fulfillment Workbench allows management to decide how to best utilize limited supplies in the face of current and future demand. The Fulfillment Workbench has the option to do “soft” and “hard” allocation. In Epicor Parlance, Reserve equates to “Soft Reserve”, and Allocate is equivalent to “Hard Reserve”. Cross-Docking is, in essence, “Hard Reserves” material that is not yet received into inventory and keeps it from being used to satisfy demand other than what it is specifically allocated to.
The “Reserve” function places a “soft-hold” on available material and keeps it from being used to satisfy other demand. However, this “reserve” status is easily removed if that material is needed to satisfy other demand. Whereas material that is “Hard Allocated” needs management permission to be remove that status so it can satisfy a different demand.
Using the Fulfillment Workbench, you can manage inventory for all three sources of demand: Sales Orders, Jobs, and Transfer Orders (inventory coming from another inter-company location). The Fulfillment Workbench provides additional functionality, like Cross-Docking, sorting by priorities, allocation templates, and many more. By utilizing this incredibly useful tool, managing your inventory supply becomes a much less complicated task, and helps make for satisfied customers and efficient manufacturing personnel.
Do you have more questions on Epicor’s Fulfillment Workbench or want to learn more about the product? Contact us. For more tips from our Epicor consulting team, download one of our white papers on Part Setup:
It’s a curse of those that are technologically inclined to focus on the technical needs of clients. Makes sense. After all, isn’t that why we consultants are hired? To take these technical skills, that we’ve worked hard to acquire, and find technical solutions to complex problems that are typically beyond the scope of a client’s internal employees?
Most certainly. But only focusing on the software solutions ignores an important element. Identifying and working with the corporate culture can elevate a somewhat successful implementation to one that has a major impact on helping the business run better, which is The Estes Groups prime directive and guiding principle.
So how do we define a corporate culture? It’s not a tangible thing that can be defined in quantifiable terms. It’s not a product line or the location of corporate headquarters. Speaking of it in Human Terms, it’s the company’s personality and characteristics. But it’s unique in that it’s not a single person defining this personality, but the manifestation of everyone’s personality in the organization all rolled-up into a corporate culture. These attributes are then reflected in a corporation’s values, its relationships with stakeholders, investors, employees, communities, and most importantly: customers.
There’s a plethora of material written about corporate culture – written by everyone from psychiatrists to college professors. Most of these articles center around the corporate culture and how to increase the bottom line, attract and retain employees, all those things that corporate culture entails. And these are all great, but the vast majority are focused on full-time employees’ roles within corporate culture. But what about the role of a consultant and their interplay with the client and company culture? As consultants, by definition, we are short-term employees. So why should a consultant be concerned with the benefits of ERP for corporate culture? And just as important, can we consultants help to develop traits that will translate into a better corporate culture?
Every company has a culture, and it develops either organically or by design. Corporate culture is not a single process or element, but rather the cumulative effect of all parts of how a company does business. This is a good thing. But along with the good, some bad habits can develop too. And it is in these areas that a consultant can have a positive impact. Here are three areas that are often cited as negative corporate cultures but opportunity for the benefits of ERP exist:
“We work in silos”
This is a common theme in many companies. One of the benefits of ERP implementation is that it provides a new and unique opportunity to show how one department’s daily activities can have a profound impact on other departments.From Quote-To-Cash Demonstrations to Conference Room Pilots can provide a perfect environment in which to show how those individual activities can affect the entire performance of the organization. By increasing corporate awareness, along with immediate feedback of all departments activities, it provides opportunities to increase cross-departmental communication.
“I don’t feel trusted to do my job”
With a new ERP implementation, employees are provided the chance to re-establish a relationship with management by becoming an integral part in learning and utilizing the software. If our work as consultants can help an employee or an entire department become more proficient and efficient in their position, their value to the corporation is naturally increased. By becoming proficient in the software, an employee provides vital skill-sets to create or influence new business processes and procedures that then are embedded within the new software and company culture.
“I don’t see how my work contributes to the overall goals of the company”
An ERP software implementation provides a person the ability to see and understand the “10,000 ft view” of the organization, and how a department’s and individual’s goals can work in tandem to drive the company forward. By re-enforcing the company’s goals during “teachable moments”, for example during a conference room pilot or daily activities, it will show employees how their daily activities do in fact contribute to the goals of the organization.
Contact the EstesGroup today for more information on the benefits of ERP for your company culture.