Manufacturing ERP and the Work Order “Reveal”

While almost all management teams are wildly in favor of “control” when they are in the comfortable confines of a conference room, there is typically an infinite amount of definitions of what constitutes control in manufacturing. Unfortunately, your manufacturing ERP package only comes with one definition, and failure to abide by that definition means failure to control. This truism – and the resistance to it – is easily observed by examining the design, and subsequent execution, for fulfilling and completing internal work orders.

The process of handling internal work orders is one of those focal point issues that can cause people to have an “Aha!” experience –good or bad - with what it really means to have integrated software. In legacy, if manufacturing did not execute the production schedule exactly as written, supply chain and manufacturing were the only areas that knew about it, and they adjusted accordingly. Production scheduling in ERP manufacturing software is an arranged sequence of internal work orders, and if the production schedule is not executed exactly as written, supply chain knows about it, finance knows about it, customer service knows about it, purchasing knows about it, and warehousing knows about it. If your manufacturing culture is such that the production schedule is more of a guideline than the law, you will likely have problems managing internal work orders, and ERP will make life harder for you because of your lack of “control”.

Again, this is because ERP is premised on the notion that if you create a good plan, then you should execute that plan. Whenever the plan is not being executed, a manufacturing ERP system turns a spotlight on the problems that result. Manufacturing probably doesn’t understand that work order transactions generate very real financial transactions, and lack of work order discipline can generate an ever-increasing pool of manufacturing variances that blurs the entire manufacturing performance picture. In addition, when an internal work order does not get reported as complete then customer service is notified, since an expected completion date has been missed. Planning suddenly has too much of the wrong inventory and too little in process inventory of the proper type. The list of problems created goes on.

Seeing the Cogs in the Machine

It is incredibly easy – and fairly typical – to blame these apparently new problems on the new ERP system. The truth is that the identical chaos existed before; it was just so well hidden no one knew where to look. Inventory variances were hugely variable with no effective way to investigate them and orders went late without anyone really knowing why. Reality is that everybody’s performance impacts everybody else’s performance, and a manufacturing ERP system simply reveals those interactions in gruesome detail.

So the moral of the story is, if you do not currently have good discipline around work order management, start trying to improve it. If you do have good discipline around work order management, you will find that ERP is a huge help in spotting problems earlier, and investigating problems more efficiently.