Improved Resource Utility:
Manufacturers are increasingly focussing on planning and controlling capacity and waste management. If a company has a huge stock of raw materials, it is of no use unless there is sufficient capacity and proper planning to convert them into finished goods. Wastage of raw material raises production costs, affects prices, quality of customer service, and the goodwill of the organization.
ERP systems offer a capacity planning feature which helps the management to develop a quick rough initial plan as well as a detailed capacity plan. The production requirements for each resource (from the master production schedule, materials requirement plan and shop floor plan) are noted. These schedules are generally based on orders received in the year and the records of previous years. The capacity of work centers and machines is noted. A work center that is crucial in the production process may be designated as the critical work center. This is considered as a bottleneck operation. The other system constraints are also identified. Based on this information, a rough draft is prepared for capacity planning for each work center. Then, at each work center, the speed factors of labor and machine, average efficiency, input/output tolerance factors and maximum desired load percentage are considered, and a detailed capacity plan is prepared.
ERP systems enable organizations to simulate various capacity and resource utilization scenarios and choose the best option. The various modules in ERP, such as manufacturing, materials management, sales and distribution, ensure that no excess inventory levels are maintained, machine time is not wasted, goods are produced on order and delivered on time at the lowest possible cost. ERP systems thus help organizations optimize the utilization of their capacity and resources.
The management should obtain the right information at the right time so that it can take appropriate decisions. In the absence of an efficient mechanism to provide the desired information to the concerned officials, the quality of decision-making will be poor. In traditional systems, all the departments were isolated and functioned as information islands. If the purchasing department required production planning data before placing purchasing orders, or if the finance department required purchasing department details to plan for the cash flow, the data could be obtained only from the concerned department and had to be manually analyzed before proceeding further. Sometimes, the top management needs information from several departments in a format that is suitable for ready comparison and analysis. In isolated systems, the information from the various departments maintained in different formats was collected, and then keyed in manually in the desired format.
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