Business Management Skills

All ERP Software is structured with a central core and has various modules for related activities. These modules may include purchasing, manufacturing, supply chain management, finance and accounting, and human resources. In the past, departments within the company had to use stand alone applications for their specific tasks and had to communicate their progress to others on a people to people level. This is something that goes away on many levels with implementation of an ERP system. In an ERP system all of the modules are physically or virtually connected to the ERP core, giving access to common data. All access from one end to the other, is now directly to the core and back. There is no live feedback, no active interchange.

The supply chain management function was once a cooperative effort of purchasing and quality. Logically driven by purchasing, but with input and assistance from quality and engineering. The goal of this function was to manage the resources and logistics required to meet the needs of an enterprise through meeting and interaction.

As globalization increases, companies must understand the importance of rating suppliers to maintain the desired level of the organizations quality. Linking a supplier module to the ERP Software core does this. Built into this same database will be a quality scoring system, which besides providing management with statistical data can “kick out” (actually inactivate) a vendor from the ERP system. This will not only flag a particular rejected product, but also raises flags system wide.

The down side to this is that the data becomes just statistics. The vendor is evaluated to a predetermined set of conditions. There is no preparing reports or running numbers. As data from material receipts or real time line usage is entered in, the system immediately “runs the numbers” in the background. The output is usually expressed in Parts per million (PPM).

With no person watching the system, there is no subjective review or interpretation of data. With no live contact, the vendor may create several material spills before enough of a flag is raised for live intervention. By then the problem may be quite sizable. The companies most at risk for this would be companies that receive large amounts of material in closely consecutive lots.

Software can be helpful in solving these problems, though. To take corrective actions, a vendor with a problem such as excessive PPM or even on a shipment-by-shipment basis, the vendor (supplier) will be given a login, giving access control for a corrective action module. The manufacturing software can populate the corrective action request from the central core with information such as what day the PO the materials was received on as well as other pertinent core data, and send it to the supplier.

The supplier then fills in appropriate responses, and the system moves on. In this case the vendor and the quality person are communicating third party. They never actually talk, and the system and responses can become cookie cutter and worthless.

The ERP software provides many benefits with interconnecting elements from the entire organization, care must be taken to not lose touch with the insulating abilities of a machine.