©1999 Wayne Lundberg, CMfgE - Chula Vista, CA
This may help anybody considering the purchase and implementation of databases and *RP systems. The effort here is to develop a common basis from which a purchasing decision can be made. In fact, an analysis tool to determine the real value of any given system and the cost to buy and implement it
Here is a first-blush approach to the problem. Please review, and if interested, add your comments with the idea of eventually ending up with a decision matrix format to determine best value providers. To be used by anybody going through the laborious process of selecting the right package for them.
Each of the following bullet items could be put into a spreadsheet for comparison with all bidders, along with a simple calculation to determine cost/payback for each element. A total could then be generated from which a decision could be mathematically achieved. In effect, the spreadsheet analysis would show the vendor with the greatest value for each dollar spent in total.
For example, there is a line item asking for cost per Sales Order transaction. This would be determined by estimating the time a team member from customer service needs to pull up a Sales Order screen and perform all the functions necessary to complete the transaction all the way through to customer invoicing, receiving payment and closing the transaction. Employee hours in minutes or seconds are easily converted to cost. (Supposing the process takes a total of 3.2 minutes for a make to order item. At $30/hr fully burdened direct labor rates this would translate to 3.2/60*30 = $1.60)
The following points based on interviews with established customers.
Single most important issue is data input accuracy.
1. Validate data at entry. Data error detection at data entry. Example - system will not accept a non-Items Master part unless created right, or unless system knows it is a non valid part and will guide you through the process.
2. Ease of replicating information such as BOM, routings, and importing previously entered data into new functions such as estimating into sales order without retyping much data.
3. Speed in refreshing any change - from BOM, pricing, customer terms…
4. Speed in refreshing MRP through ALL relevant files.
5. User like/dislike factor - mostly determined by the following criteria:
Ease and speed in accessing process screens
Number of usable reports and methods of retrieval - screen, printer, file, etc.
6. Learning curve time and cost in hours and money.
7. Implementation cost in hours and money - guaranties Vs used car sales hype.
8. Flexibility, overall, by process, by item, by department – multiplicity of tables, systems, constraints.
9. Bottom line cost determined by time and accuracy per PO from A to Z – Sales Order, Routing, Planning transaction, Quote/estimate, Capacity query, inventory query …. All the rest.
10. Ability to provide answers to the boss from your work station.
11. System accuracy when accurate data entry takes place.
12. Ease in handling multiple POs, Invoices, Work order releases, move transactions, pick lists, cash receipts, journal entries, packing slips, responses to RFQs, issue RFQs, convert RFQs to SO and WO.
13. JIT compliant
14. Agile compliant - How well it ‘speaks’ with document control, CAD, CAM systems
15. MRP compliant - How well is ‘obeys’ JIT in a real-world scenario including Kan-Ban.
16. CRP compliant - Suggested it be based on TOC (Theory of Constraints) per Goldratt’s teachings.
17. ERP compliant - Based on how easy it may be for a non-systems type executive reap the benefit of the tons of data within the system at any time, even before closing quarterly books.
18. User recommendations - A wish list from users of the various products on the market.
19. Technical support - response time - response accuracy - solution rate.
20. All data entry terminated with <CR> otherwise bar code data entry can’t be performed.
21. Platform - existing, to be bought, total hardware expense.
22. System reliability, i.e. Unix Vs. NT Vs. Lexus Vs. ??
23. Cost to add outside data acquisition systems such as bar coding, PLC links, RS232 data in from scales, QA equipment, etc.
24. Cost per gigabite for data transfer from existing sources into new system. I.e. - a temp to keyboard data from one file to another. Data-streaming with comma delimited or? Final edit costs.
25. Paperless feature comparisons including EDI features.
26. Potential for JIT II - where vendors are on site or through EDI are able to fulfill demands.
27. Number of crashes per year based on historical data.
28.
When it comes time to transition from paper to paperless:
Keep it simple.
Visualize clearly exactly what each step in the process is required to do
and make sure the system can do it, easily, with barcode input, minimum
human input, error detection. Remember, garbage in garbage out.
Avoid the temptation to input data every time there is a material move.
Bottom line is throughput and even if accounting likes detailed moves they
may be counterproductive in operations. Every move put into the system is
non-value-added cost.
Automate data entry to the nth degree.
Visualize an error-free movement of materials from PO to SO and Invoice to
cash postings. Then drive your whole operation toward this objective.
Initiate RCAs immediately. (Request for corrective action) from all
departments, suppliers, vendors, field reps, etc. Then follow through with
unyielding discipline of the system. This alone may make the difference
between success and failure.
Remember the system's major power is to eliminate physical inventories every
month and allow you to have dozens of turnovers per month rather than per
year so focus on your Pareto analysis continuously and by achieving high
accuracy -- checked by statistical processes -- you will have a real payback
on your system.
Make sure nobody in the implementation team cheats on the action list. Every
item must be executed with 110% accuracy, not just 100%. (I know, this is
pipe dream stuff, but if you don't shoot for the stars you'll never hit a
home run).
Keep you implementation team motivated by recognizing their every effort in
overcoming resistance from others, by solving each problem, by sharing their
failures so others won't repeat them.