I have been in the ERP world for close to 25 years, both as a consultant and salesperson. I’ve seen companies buy ERP for many reasons, but usually the driving factor has something to do with being able to use the system to schedule their shop floor. This is a fantastic goal. Not because shop floor scheduling with ERP sounds cool, but because to do it, you have to be good. Really good. The reason being that if you are going to have an algorithm in the software help you make valid decisions; you have to give it valid input. And that valid input has to come from almost every functional area in your organization. Everyone has to be on board!
ERP shop floor scheduling functionality typically schedules work orders. Work orders tell you what to make and how to make it, which requires a valid bill of materials and valid routing. And that bill of materials and routing has to reflect how you make the product.
You may be saying “of course we include how you make the product,” but I can tell you from experience that a lot of companies have trouble with shop floor scheduling because they don’t do this. Instead, they make assumptions, create workarounds, and the like; as you can guess, the software tells them things that don’t make sense, because they haven’t given it valid data. The bill of material information must be valid—if I purchase a certain part, the lead times must be accurate. The routing must also be valid—if I manufacture this internally, I need to accurately define machines, shifts, etc. If I outsource items and bring them back into my internal processes, that has to be valid as well.
And, one of the most critical pieces is that your labor reporting needs to be payroll accurate. Meaning, it needs to be close to perfect. Labor reporting is what drives the schedule. It tells you what has been done, when those tasks were done, what is left to do, and if you are on schedule to meet the promised date. And, labor reporting also gives labor costs. Along with material costs, labor costs help you understand your profitability on the work order.
Related: Thinking About Hiring a Scheduler So You Can Use ERP Scheduling?
Shop floor scheduling is the gold standard in ERP implementations. If I ask a company if they use their ERP to schedule the shop floor, and they say yes, that tells me they have their house in order! Even if the company isn’t using all of the functionality yet, I know they are driving improvement, since the goal of using ERP for shop floor scheduling requires them to have solid data and solid processes.
Are you trying to schedule better? Do you want ERP to help you do it? Most companies don’t evaluate ERP on a regular basis. If you are looking for an ERP system and not sure where to start, why don’t you talk to an expert who is not a salesperson? Click here to learn more about Jack Shannon, President of Visual South, and sign up for a free phone consultation to discuss your situation.