Uncommon Sense: I'm Here to Help
"I'm from corporate and I'm here to help." How often has the "help" been in the form of a "new system that will improve your performance?" And how often has "the new system" blocked every attempt to really improve manufacturing operations?
Two recent examples from our consulting practice illustrate what can go wrong when the shop floor runs up against an impenetrable barrier in the form of a very expensive ERP system mandated by corporate.
One example involved a company making very high-volume, very low-cost parts for the medical industry. The company made millions of one small rubber part per year, in a few different colors. Some ended up on the floor and were swept away, but nobody really cared because they cost about a tenth of a cent each.
We immediately saw this as a "no-brainer" in how to manage scheduling logistics. The plan was straightforward. Each color would be produced to a specified inventory level. When an operator saw the inventory below the specified level, he would make another batch to bring it back up. Batch sizes by color would remain constant unless demand changed dramatically. You can't do it more simply than that, right?
Wrong! We were told by the systems folks from corporate that the best way was to have the ERP system look at the demand for a piece, look at the inventory level for that piece, calculate a lot size, generate a work order and a schedule, send it to the shop, have the parts made and maintain all the transactions in the system. But the system failed to account for the pieces that fell on the floor and were swept away. For some "mysterious reason" the inventory records were always wrong and the shop always seemed to be making one color when the assembly area was expediting a different color.
Another example came from the other end of the cost-volume spectrum. This company made high-value subassemblies in low volume for the aerospace industry. The variety was low, with fewer than 100 part numbers. Demand for the subassemblies was known and constant because they were destined for aircraft being built at a fixed rate.
Corporate bought the latest and greatest multimillion dollar ERP system and sent its systems people to implement it in the plants. Unfortunately, it made planning worse. The factory always seemed to be making components that weren't needed in assembly, while those that were needed weren't even on the schedule. The situation was similar for purchased components.
This was the easiest of planning applications. Components made in the shop did not change from period to period. Components purchased from suppliers were the same every period. It was textbook simplicity, and capacity planning was a breeze. Similarly, suppliers could easily reserve their capacity to meet delivery requirements. With demand not only known but unchanging, it's amazing that the complicated, expensive solution that the smart folks at corporate bought didn't work. In the end, a pull system implemented behind the scenes eliminated most of the problems.
What's the solution? Somehow the corporate folks-the ones with all the money-need to get the word that when it comes to ERP systems trying to manage the work on the shop floor, they often create more problems than they solve. Doing the right thing to fit a particular situation is often the least expensive route. But then, what would become of all those people from corporate who are there to help?