Most of what is written about ERP decision making centers on selecting the right ERP and how to best implement these systems in our organizations. There is also a lot of advertising lately on using business intelligence to aid executives, and BI is a key part of modern-day ERP decision making.
However, there is another domain that gets less attention, and yet may be more critical in the day-to-day effective operations of our organizations. In a way, it has been a part of ERP since the day we first looked at an MRP system. Rule-based ERP decision making.
Rules Are There to Be Followed
The first systems produced an exception list of suggested material transactions. We saw that a purchase order should be pushed out or pulled in. We saw that a production work order was no longer needed at all. We got an alert that a material item should be deactivated and that any inventory was surplus. These suggestions came from our MRP by the system applying heuristics or simple rules that we could control. We adjusted various parameters such as lead times, safety stock, and time fences and could control the resulting suggestions. Ideally, the buyer or production planner could safely make the suggested change and they would have made the best decision for our organization.
ERP Decision making requires that we recognize a need, analyze appropriate ERP data, select the best alternative, and take the right action. There is psychology in action here. The right action for one business will be the wrong action elsewhere. The people who will need to take action must be comfortable taking suggestions from what is effectively lines of code. They also must be confidant that the rules we set up within this system are almost always the right action to take. This is not to say that their decision making process should follow the slow directed stagger of a zombie, they should understand where the suggestion might not be best.
We can take a good ERP system of today and establish rules for other disciplines beyond material planning. Do we have all the information necessary to determine if a purchase order from our customer is sufficient to enter a sales order. ERP decision making can help. We just finished some operation in the factory on a work order. What order and task should we pick up next? ERP decision making can help.
Most of the guidance can still be set up through the use of parameters in various ERP master data areas. These will work together to allow certain transactions and not others throughout the ERP. If master data setup proves to be insufficient, we can use business intelligence tools already in our ERP to create pop-up warnings and suggestions in any screen.
Look carefully at how your users are using ERP. Make their day easier by guiding the system and them to consistently make the best decisions. They will be more satisfied in their work and the organization will be more efficient when you come to those forks in the road.
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About The Author - Tom Miller
Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at firstname.lastname@example.org.
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