Manufacturing ERP Failure: Inventory Issues

Unless your SKU is in stock, you can miss an order. Miss enough orders because your manufacturing ERP isn’t connected to your warehouse, and ERP failure will ensue. Manufacturing of all disciplines depends on accurate inventories. An MRP module can compare demand to on-hand inventory. Scheduling of production jobs is based on when the inventory is available. Where is the inventory? In the warehouse. You must integrate ERP with your warehouse for a successful implementation.

Just about every manufacturing ERP today includes inventory and warehouse management tools. Manufacturers with special requirements can also integrate warehouse and yard management tools from other providers. So where do failures in ERP inventory management arise? People.

Inventory Transaction Inaccuracy

A small manufacturer will create hundreds of ERP inventory transactions every day. A transaction volume of tens of thousands daily is common. The people who issue parts and put those parts away must stay up-to-date with all those transaction processes. If the people in the warehouse don’t know how many parts are on hand or where they are, neither will the people in production or sales. The discipline of recording every inventory transaction quickly and accurately is important. Give the warehouse staff scanners and barcode devices, linked to the ERP, to help ensure speed and accuracy.

Recommended Reading: Manufacturing ERP - 10 Steps to Success

Buyers depend on inventory accuracy to manage purchasing. Most learn to trust the ERP system and the people recording transactions. There are some, though, who might have been burned years ago who still insist on a manual stock check before placing a purchase order. There isn’t time in a busy shop to check inventory several times a day.

Production Schedule Deviation

Production staff who decide which jobs to start and don’t follow the schedule can also lead you on the path towards a failed manufacturing ERP project. The planners have usually devoted much time to building a schedule within your ERP system that best fits the availability of time and materials and meets the demands of customer orders. Alternatively, you have invested in a scheduling automation module that computes this “best” schedule for you. When production people pick their own jobs, your existing schedule will have been a waste of resources and, often, they will steal the time and materials planned for another job.

Manufacturers can have more than 10,000 items on hand and an error on any one will lead to a failed ERP transaction. Accrue enough of these failed transactions and your whole manufacturing ERP system will be on shaky ground.

Once inventory discipline is well established in all departments, there is one more discipline that is important for manufacturing ERP success. Establish an ERP cycle counting process that selects items for sample counts regularly based on transaction and dollar volumes. Follow that process – never let any excuse keep you from that job. Make the counts, correct the inventory levels, understand what caused the difference and correct the root cause. Manufacturers can have more than 10,000 items on hand and an error on any one will lead to a failed ERP transaction. Accrue enough of these failed transactions and your whole manufacturing ERP system will be on shaky ground.

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Tom Miller

About the author…

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 customerteam@erpfocus.com.

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Tom Miller

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