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How do you choose the right MRP system

Enterprise Resource Planning/Material Resource Planning (ERP/MRP) systems are viewed by many companies as a strategic weapon to streamline and automate business processes in order to improve efficiencies. It is a marriage of technology solutions to real business problems and the drive to implement an ERP system can come from a number of different sources depending upon the size of the business and the nature of the markets it operates within. These drivers include organic and acquisition-based business growth, increased customer service and response demands, as well as a need to reduce costs. Paul Holmes, Jobshops general manager, provides answers to the key questions any company should ask before making this important investment decision.

What size of business would benefit from the implementation of software such as Jobshop?

Other than fluid-based flow process industries, such as chemical or beer production, almost any business in just about any sector will benefit from an ERP/MRP system. Benefits start when a company has around 15 employees but there is no upper limit on numbers because systems like Jobshop are fully scalable. For this reason there is no restriction on manufacturing equipment, such as the number of machine tools, that can included. The types of manufacturing methods suitable for monitoring and control using Jobshop include make-to-order or stock production, as repeat work or in batch volumes. Jobshop excels with companies that make-to-order from expensive raw materials, and require a high degree of traceability such as the aerospace industry.

A typical Jobshop business has 20-plus employees and a sub 10 million turnover.

What should the customer look for in the software package?

Installing an ERP system is a partnership between the supplier and the customer. The company behind the software is as important as the software itself. The software needs to be comprehensive not complicated, and easy to use.
The software must be scalable to suit future business growth plans and must have the ability to interface with other (legacy) software packages and data sources. For example links to Sage, Opera2 and Exchequer accounts software suites are vital for accurate quotation, costing and invoicing functions, and also avoids rekeying any data.

Material Requirements Planning (MRP) and scheduling engines are key to manufacturing efficiency, while integrated Shop Floor Data Collection (SFDC) and Trend & Analysis functions ensure that the manufacturing operation is running to plan and not drifting off course.

Other system considerations include easy access to information across the system through hotkeys, a single database not a modular system, comprehensive reporting options with Crystal Reports and a structured future system development plan. Linking to Customer Relationship Management (CRM) programs such as ACT may also be a necessity.

What should the customer look for in the software supplier?

Once the decision has been made to invest in an ERP system you need an established, stable supplier with vision, a future development plan and experienced implementation engineers and support staff. Jobshop provides expert consultancy and training, including structured Crystal Reports, direct dial-in to customers from the helpdesk and tailored bespoke programming capability.

Contacts with an established customer base will help you evaluate the real benefits and discuss ongoing product development and support.

What other points should be considered and/or acted upon prior to installing the software?

The project must be driven from the top and buy-in from the management team should be encouraged as this will make the implementation smooth. Interruptions to current business activities during implementation should also be factored in, which will focus the decision of how the system is going to be introduced - in one big bang or drip fed using a phased approach.

Hardware such as the server, network, and PCs should be up to date prior to implementing. As the lifespan of IT software and hardware is relatively short compared to manufacturing machines, upgrades to servers and software should be budgeted for every few years. A modest budget should also be allocated every year for the training of new starters or expanding function knowledge.

Jobshop is designed to be an inclusive system, empowering the shopfloor users. Customers should approach the project with a view to working with the ERP system rather than trying to adapt it to existing historic procedures. It is also imperative that the data used is clean and structured.

What resources should the customer commit to the project?

Two project leaders should drive the implementation, one from the ERP supplier and one from the customer. Each should have a small team to ensure that milestones are achievable and met.

The customer project leaders provide a single point of contact and should have a reasonable understanding of the companys business processes and be able to speak for the directors. As full implementation can take six month it is valuable to have a Jobshop team in place with one representative from each key department, such as production, engineering, sales, accounts, purchasing and so on. These team members are able to receive training together and pass this knowledge on by training others in their departments. A typical implementation of Jobshop requires 10 days of consultancy, with the first five days taken up with the core areas of the system. A new installation of Jobshop is always done as a demo system while initial training takes place, and a go live date is agreed with the project leaders at an appropriate point during or after completing training.

What additional benefits does the software provide?

If correctly managed businesses should see considerable reductions in work in progress and decreased inventory levels. Other, often overlooked, benefits include administrative and communications efficiencies and quality of data. This is achieved because all the data is in one system which provides visibility and accountability.

Jobshop provides an easy flow-through of material transactions from goods receipt to material issue and production, using multi-line transaction screens. Purchase order authorisation functions are included along with the ability to email customer and supplier facing documents in PDF format. The use of work-to lists as part of SFDC system also provides improved communication links.

What key indicators should be used to calculate the ROI?

According to the white paper The 2007 ERP in Manufacturing Benchmark Report, ERP is frequently thought of as a necessary infrastructure. So, many companies ignore the specific goals for implementation and ROI is not estimated prior to, or calculated after, project completion. However, the sensible starting point for these goals should be inventory and cost reductions, inventory accuracy, schedule and delivery compliance, as well as efficient month end invoicing.

Establish a base level to gauge improvements from and remember that performance improvements can be monetary (actual cost savings) or softer savings (such as the redeployment of labour within the business).
Jobshop achieves greater shopfloor efficiency by using structured work-to lists. Any increased machine efficiency from analysis of planned versus actual costing, and utilisation reports. Reduced setup times can be achieved by scheduling similar operations to run consecutively.

Accurate, on-time material purchasing using MRP prevents delays in starting production while keeping the cost of raw material under control. And finally, the key measure witnessed by those outside your business On Time, In Full (OTIF) analysis on suppliers and customers to drive improved delivery performances.

Typical ROI for figures for Jobshop users include a 2 to 5% increase in sales thanks to improved customer service, a 3 to 5% decrease in raw material costs with better visibility and less panic-buying. Inventory should be reduced by a staggering 30% which will help companies achieve world-class stock turns 18 per annum for an engineering company. Overhead costs should be reduced by around 5% through improved productivity and further cost savings can be achieved by implementing best practices as opposed to computerising current work methods.

What are the key project milestones?

Every customer will have their own issues prior to implementation and as such each project is unique. Investigate the market and talk to other users. Consider what is required to make the investment successful and commit the internal resources required. Use the suppliers expertise it may be your first step down this road, it should not be theirs.

Once a system has been purchased the next key milestone is project management and installation. For Jobshop, each new customer project is tailored to suit the customers timescales and requirements. Training follows with the software going live at an agreed date. After this there will inevitably be a degree of hand-holding until all of the capabilities of the ERP system are familiar to the various departments that will benefit from it.

Of course, it is important that these milestones are reasonable and achievable.

What are the benefits of choosing Jobshop?

Jobshop is a practical and affordable ERP/MRP system which causes minimum impact on the continual running of the business during implementation. Each of the Planit family of products are leaders in their respective markets and that shows in the reputation each has for support and ease of implementation.