Dale,
Glad to see you sticking with us!
Roy,
You are not the only one to have the issues you raised in your reply.
One of the most difficult issues related to inventory is getting management
to understand that it has nothing to do with accounting. Unfortunately,
many companies started using ERP (MAPICS in particular) as a bookkeeping
system instead of as a mfg. management system. So accounting/finance took
ownership. In addition, inventory is usually one of the largest assets on
the books and therefore has a lot of focused attention from
accounting/finance and the supporting audit firms.
I won't bore everyone with the theory and mathematics behind this statement,
just understand that there is no such thing as 100% accurate inventory. It
would mean that after every transaction you would require a complete recount
of the inventory. Too expensive.
By using true cycle counting (remembering that cycle counting is NOT about
generating inventory adjustments) achieving accuracy exceeding 95% is
relatively easy and much less expensive and more accurate than full physical
counts.
Also, the concept of A items, B items and C items (etc.) is an accounting
concept and has nothing to do with manufacturing. I can't deliver one of
our Boeing 787's if I'm missing one 50 cent fuse from the fuse panel! If
inventory is accurate within the tolerances stated for the overall
inventory, management and accounting firms will be thrilled. However, as I
stated originally, items like Intel chips which cost more than their weight
in gold must be more accurate. Probably close to 100% (99.98+) in order to
be accepted. This is possible because they generally have fewer
transactions than say nuts, screws and rivets.
I agree somewhat with your premise that more effort should be made in
keeping inventory more accurate than a checkbook. After all, isn't
inventory just a poor substitution for cash.
It is never easy to change a culture or a mind set. Especially when large
balance sheet items are included. But if you get the organization focused
on the "magic of ERP" (i.e. better customer service at lower cost) and what
that means and what it really takes to execute, then the inventory issues
that you raised change to more of a systemic approach to business
management.
Hope this helps. Keep up the good fight.
Kevin Fox
-----Original Message-----
From: mapics-l-bounces@xxxxxxxxxxxx [mailto:mapics-l-bounces@xxxxxxxxxxxx]
On Behalf Of lwl
Sent: Thursday, April 10, 2008 1:06 PM
To: 'MAPICS ERP System Discussion'
Subject: Re: [MAPICS-L] MRP
My 2 cents regarding Inventory accuracy:
Which inaccuracy number (0 to 5%) you pick as acceptable will be challenged
by everyone who has to put in the effort to maintain inventory. Try this:
Inventory accuracy will be whatever management accepts. But when was the
last time they'd accept a checkbook out of balance by even 1%?
Considering the cash value of inventory materials these days the urgency to
maintain inventory should be even greater that that to maintain the
checkbook.
Roy Luce
Systems Plus - Midwest
Direct: 847-540-9635
800-913-PLUS (7587)
Cell: 847-910-0884
Email: rluce@xxxxxxxxxxxxxxxxxxx
-----Original Message-----
From: mapics-l-bounces@xxxxxxxxxxxx [mailto:mapics-l-bounces@xxxxxxxxxxxx]
On Behalf Of Gindlesperger, Dale
Sent: Thursday, April 10, 2008 1:58 PM
To: MAPICS ERP System Discussion
Subject: Re: [MAPICS-L] MRP
Yep! And Kevin, that was a great response! Where do you teach? :)
And you can't overemphasize the need for a fixed schedule/'frozen-zone".....
Sent via BlackBerry by AT&T
-----Original Message-----
From: Charley Simpson <csimpson@xxxxxxxxxxxxxxxxxx>
Date: Thu, 10 Apr 2008 13:49:04
To:MAPICS ERP System Discussion <mapics-l@xxxxxxxxxxxx>
Subject: Re: [MAPICS-L] MRP
What Kevin said.
At the risk of speaking for everyone on this list who uses MRP: I am sure
we'd LOVE to hear how this turns out!
Charley Simpson
Turbonetics Inc.
Phone:805-581-0333
Direct:805-426-3410
Fax: 805-581-2640
www.TurboneticsInc.com
www.eTurbochargers.com
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-----Original Message-----
From: mapics-l-bounces@xxxxxxxxxxxx [mailto:mapics-l-bounces@xxxxxxxxxxxx]
On Behalf Of Kevin Fox
Sent: Thursday, April 10, 2008 10:44 AM
To: 'MAPICS ERP System Discussion'
Subject: Re: [MAPICS-L] MRP
Teresa
I would make certain that everyone that has input into the MRP data is fully
trained on the impact of their data. I'd also especially educate the
executive management on the potential impact of turning on MRP.
When you begin to use MRP inventory ALWAYS increases (assuming that the
reason for using MRP is to improve the availability of parts to meet demand)
as the improvements will first require purchase or manufacturing of material
that is below demand levels and simultaneously the current on hand balance
for material that exceeds demand will not be utilized as fast. If
management does not understand this fact of MRP "life", they will be in for
a rude shock and will immediately begin to question why MRP.
All of the data means ALL of the data must be accurate and under control.
Inventory On hand Balances should be 95%+.
Note that there is no such thing as 100% accurate for all parts all the
time. The small error of +/- 5% is generally acceptable as an overall
number. Obviously if you have extremely expensive parts the accuracy should
be higher. For example, if your manufacturing PC motherboards the INTEL or
AMD Chips are so valuable that a small error in accuracy and very quickly
result in a very large inventory problem.
Demand must be 100% accurate.
Demand is the open orders backlog. Demand is the forecast. Demand is the
Open manufacturing orders that supply sub-assemblies and components.
Keeping the open orders backlog and the open manufacturing orders accurate
is work. By accurate I mean quantities and dates. MRP does not know what
to do with past due demand. After all, how can I produce something
yesterday? If your companies habit is to always be "somewhat late", there
will be hell to pay when MRP is turned on.
When I talk about forecast being accurate, it is a bit of an oxymoron.
After all, we all know that all forecasts are wrong. The most common
mistake as a result of this is to NOT forecast at all. There is NO such
thing as an un-forecastable market. Don't every let anyone tell you
different.
But the forecast I'm talking about is not the sales goals are targets. It
is a systematic method of using systems to generate demand and using that
demand as input into the MRP plan. The most important thing about a
production forecast is not that it is 100% accurate, but that it is 100%
accurate to the PLANNED INACURACIES in the forecast. If your company uses a
systemic approach to forecasting for production then you will have a range
of deviation from the forecasts that can be used. For example, if your
forecast method is to ask each sales rep to submit their next quarters
pipeline, and each sales rep does more than to stick their thump in the air
and guess, then you will get a consistent range of forecast error. Your
forecast can be 10% over one month, 5% under the next, 10% under the next
and 25% over the next.etc. etc. What you want to know is the standard
deviation from forecast. And you plan for the overages. This is used as
the formula to calculate safety stoc
k. It is knowing this deviation that needs to be accurate, and the safety
stock levels needed to meet the "error rate of the forecast when the
forecast is exceeded".
Planned Lead Times must be 100% accurate.
This means all lead time for purchased goods and also for manufacturing
orders. XA provides excellent feedback on actual to planned so that these
can be adjusted as needed.
Bills of Material must be 100% accurate.
If you don't have good engineering change control in place, don't start MRP.
It should be unacceptable, as a general practice, to be making changes to
components after orders are released to production.
Finally, here is the real test question as to whether you are "ready" for
MRP.
Do you trust the system enough to allow it to automatically, electronically
order material from your vendors DURING the MRP run? If not, find out why
and fix it.
Hope this helps.
Good Luck
Kevin Fox
-----Original Message-----
From: mapics-l-bounces@xxxxxxxxxxxx [mailto:mapics-l-bounces@xxxxxxxxxxxx]
On Behalf Of Teresa Biby
Sent: Thursday, April 10, 2008 5:44 AM
To: MAPICS ERP System Discussion
Subject: [MAPICS-L] MRP
Hello Group,
We are about to turn on the MRP module in Mapics. I was hoping you experts
could give some advice on what you would do differently if you could start
from scratch, any pointers on how to set up items, work centers, buyers,
planners, etc.
We are currently at Release 6 but will be turning this on with a Release
7 upgrade within the next 6 weeks (plan). Essentials w/EPDM-we are using
Mapics Browser-soon to be PowerLink.
I realize this is a really broad question, any ideas are appreciated.
About us:
Our company (one company), one uncontrolled warehouse. We have 3 distinct
departments for production and buying. GL is set up with the departments as
1000, 2000 and 3000. We have less than 30 workcenters, one buyer-one
planner for each dept.
We are about 50% make to stock and 50% engineer to order.
Thanks in advance!
Teresa
tbiby@xxxxxxx
Teresa Biby
Virginia Panel Corporation
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