Production planning definition
ERP production planning can mean many things to many people; so, let me start out by explaining what it means to me; and therefore, what I’ll be writing about. ERP production planning is the coordination of people, machine capacity, and raw materials all coming together, so you can make what you make when you need to. “…when you need to” is based on a customer demand or an internal demand (sub-assembly, forecast, etc.). The need for better production planning is usually a major driver for the search and purchase of an ERP system.
ERP and production planning
I work with companies who are looking for ERP, and with our hundreds of customers who already own ERP. I get a unique view because I see what companies who don’t have ERP want, and I see what companies who have ERP want. Here are my observations:
- Without exception, companies we work with who are looking for an ERP system want to use ERP to improve their production planning. If that is not one of their goals, we don’t work with them; because we just aren’t a good fit. Our solution set does not match their problems; so it’s best for everyone if they work with a different solution set.
- We work with many customers who want… wait for it… to do a better job of production planning. Did they buy the wrong ERP? Nope, they have the right ERP. For the record, we have a lot of customers who are thrilled with the production planning results they get from the ERP we sold them and implemented.
Why then, do we have customers who still have production planning problems? The answer is deceptively easy. The current people in charge haven’t been trained to know what ERP can do for them (“I didn’t know it could do that!”), or they aren’t doing a good job of describing to the ERP how they make what they make. Maybe it’s a bit of both.
Let’s fix this: Training
The training part is easy to solve. Get training from a consultant who knows the software. The sooner the training takes place, the sooner the problem goes away. Putting off addressing the training need delays the issue being solved. I know it costs money to do this, but as the old saying goes, if you think education is expensive, try ignorance.
Let’s fix this: Accurate work orders
Telling your ERP how you make what you make is critical to using ERP to assist in production planning. How does your ERP know how you make what you make? It has a few names: production order, job, and work order – to name a few. I’m going to use the term work order going forward.
Why does the work order need to be accurate? Because it’s what your ERP plans. If the work orders aren’t accurate, the plan won’t be accurate. Can you imagine what would happen to an automobile assembly line if parts were missing from the bill of materials (BOM)? Production would stop, or defective product would be built (missing parts). Neither one is a good option.
I have been to more than a few companies who openly admit their BOMs are incorrect; their routings are incorrect; or both. These companies do not have the tools to plan their production in their ERP system, so they don’t. They use spreadsheets. There are meetings to check on the status of open work orders in the attempt to find issues as early as possible. Perhaps there is an employee, family member, or friend that knows how to use Access and they wrote something for the company. All of this is taking place in an environment which contains an ERP that would do a better job, achieve better results, and do it more efficiently.
Whether you own ERP, or are looking for ERP, make sure you are trained on how to use it. The insight it can offer for your production planning is invaluable – but only if you are using the ERP.