Manufacturing Planning Scheduling
Before computer was created, managing factories was required a lot of manual calculation and paper work in order to offer a product with a good quality, on time and in low price. This leaded to increase the competitiveness in the market, therefore, businessmen were trying to put their firm in a best position by minimizing the time and costs of production with save the quality. However, managing workers and inventory were a significant influences that had a big impact on production cost at that time. Maintaining a safety stock for everything was a strategy to make sure that it would not run out of the store. Labor cost was playing as an important factor on industrial sector. Hence, after the implementation of computer system in factories there were revelation in industrialization, and labour cost was lowered after they were replaced by automation systems which had reduced the production cost significantly. Inventory management was still a big challenge for managers to control, because facing unexpected customer order was one of the major problems which were how to find the best way to keep a good range of safety stock. This assignment will be traced and discussed the evolution of the software packages in a cretin period, and then it will be focused on the must important application which is Enterprise Resource Planning (ERP).
1. The evolution of software packages
Discussing the evolution of software packages for managing factories and enterprises over the last ten years, it is required firstly to give an over view of the history of the packages in order to know what are the type of software packages which had been implemented before the referring period. However, the most significant things that each new software has been created as the development of the previous one. This will be traced through out the chronological evolution of the software packages.
1.1 Inventory Management and control system
In the 1960s Inventory Management and control is the system which was implemented during the beginning of this period to control the inventory, and by integrating business processes and information technology in order to keep the right level of stock in a store. The main objectives of inventory management were classifying the requirement of inventory, supplying reload techniques and opportunities, setting goals, balancing the inventory, control the usages of items, and recording inventory status ( No name , 2005 ).
Before the advert of the computer, the old system was depending on the manual calculation or rudimentary adding machine or slide rule for controlling the inventory. The planer was impelled to recalculate the whole plane when there any a small change (Ptak, 2004). As a result of that and with the significant development in the technology during that time, these led to create Material requirement planning (MRP) system as a software package which was a big step for material planning process.
1.2 Material Requirement Planning MRP
Pinto (2004) stated that MRP was established in the 1960s in the USA. He
defined MRP as ‘‘A periodic push-based system designed for complex production planning environment. MRP can provide significant benefit such as improved costumer service better production scheduling and reduced manufacturing costs'' (Pinto, 2004, P: 17).
According to Patk (2004), early of 1970s MRP system was widespread use...and showed a great development in the planning process. It was new event that by using the information on schedule of what was need for outcome and supported by bill of materials for the finished product, the computer could count the total of requirements then compare it with the finished products or what expected to come. This contrast could offer the flexibility to cope with a new order or withdraw orders that had placed before or easily shifting the timing of the offered orders. One of the father of MRP George Plossl, cited in Patk (2004 P:5), said, ‘‘MRP calculated what do I need, compares it to what do I have and calculates what do I need to go get and when.''
Also Wallace (1990) stated, that inventory includes two main aspects which are material and parts, and there was a strong desire for finding the best way to control arrange them. MRP was founded at the technique for that, and logically asks the following questions:
‘‘· What are we going to make?
- What does it take to make it?
- What do we have and what do we have to get?'' (Wallace,1990 P:5)
In other words MRP managed to answer these equations and was able to calculate the gross materials requirements which needed to make a final product.
MRP created to control and make calculation for the process more efficiency by using the new application of computer's technology. The main objective that MRP was willing to do are a fast calculation for Bills of Material (BOM) and reduce the paper work, control the inventory by reducing the raw material level in the stock, manage the work order, ideal shop floor scheduling, control the production activity, and good manage for material shortage.
With all the benefit that had been provided by implementing of MRP system, there were some problems and improvement was needed to cope with the lack in some parts in the system. A major problem was the lack for the information from some department especially on the shop floor. These factors had leaded to develop the system in order to improve its efficiency.
Pinto in (2004) stated that MRP dose not always offer achievable plane and this can lead to high WIP (work in process) and long life cycle times. Some people argued that management problems are one of the main reasons for causing filer of implementation any systems through the wrong information was provided to.
- Manufacturing Resource Planning MRPII
MRPII was evolved from MRP. This was as a result of the desire for improving the old system in order to solve the problems which had been faced when MRP system was been implemented. Continuing improvement in technology allowed companies to have a good control of the inventory movement with the combination of the financial activity. This was by using the new system MRPII which includes most of the manufacturing recourses that was not offered in MRP system. American Production and Inventory Control Society (APICS) cited in Ptak (2004) defines MRPII as ‘‘a method for the effective planning of all recourses of manufacturing company.''Ptak (2004, P: 8)
Wight (1981) indicates, that MRPII is a system includes, marketing, purchasing, engineering, manufacturing, distribution, finance, and adjusts a lot of things for information that need to process people. Also as he states, ‘‘If someone were to say, ‘‘what, then, is MRPII?'', the answer would be,‘‘technically, it's not much different from close loop MRP. It dose include the financial numbers and a simulation capability.'' (Wight, 1981, p: 54)
MRPII does not mean that MRP was not been implemented correctly or that is another version of the system. It means that a second important planning tool had been significantly developed, and MRPII did not only close the loop with the financial accounting system but also with the financial management system which allowed companies to have the visibility of all their resources then it could be planned, and controlled as well. (Ptak, 2004)
However, MRP was not able to answer the basic equation, ‘‘what do we really need when?''. According to Wight in (1981) even there were many different systems for managing companies, it is highly likely that none of them were working very well. The development in MRP to MRP close loop system was able to solve the problem which was appearing in redundant scheduling system. Meanwhile, managing the master scheduling particularly in the way, then it could be offered a system which can answer the equation ‘‘what do we really need when?''. (Wight, 1981)
Despite the fact that MRP II did a lot of things, it has many things did not do. In other words, the development in manufacturing process and increasing market's competitiveness required to involve many functions in the system which was poor in such as supply chain.
MRPII systems have not done well as when it was started to implement, this can be found in the following reasons:
1. Developing and changing in manufacturing strategy from a "make to stock"
to, a "make to order" , where standardization is changed by customization.
This has created more than before complex planning process.
2. In order to survive throughout the market's competitiveness, companies
Required to but only quality and cost as a minimum requirements in their
consideration. Nowadays, there are a different circumstances which have
been added as a tool for measuring the emulation which are quick delivery,
flexibility, the rapid decrease in lead times, and incorporation the relation
between suppliers and customers with the verity of production levels types.
( Frederic, ( 2004) cited in (Seo, 1999; Kalakota & Robinson,2001)
As a result of that, MRPII evolved and Known as Enterprise Resource Planning (ERP).
1.4 Enterprise Resource Planning (ERP)
According to Sema Group's ( cited in Little, 2007), ERP is defined as ‘‘an integrated information system that supports the entire set of strategic activities (as depicted in Porter's Value Chain) that a manufacturing business conducted.''.( Little, 2007 P: non)
Also ERP system defined by Harwood ( 2003 ) ‘‘the ERP system can simply be described as an integrated information system servicing all aspects of all the business. It handles transactions, maintains records, providing real time information and facilitates planning and control''(Harwood, 2003.p: 1).
The rapid development in computer technology in the last two decades, has been one of the most significant influences that have made a tremendous forward steps in management tools by using computer software.
According to Umble (2003), in early 1990s, improving in technology gave MRPII more flexibility to expand and integrate all of resource planning for the whole of enterprise. Product design, materials planning, information storage, capacity planning, human resources, communication system, finance and project management, these areas can be now taking in consideration for the plan.
The new face of software package Enterprise Resources Planning (ERP) was evolved as a result of the development in the previous software in order to cope with the lacking in some of functionality of MRPII and the desire for expanding software's implementation to manage the multi site organizations which was not offered in MRPII. In another words MRPII was poor in multifunction . As patk (2004) states ‘‘MRPII was reality a close loop communication system within the four walls of the company.''(patk,2004 P:9 )
So companies under the pressure of market's competitiveness, were forced to improve their management system which was found potentially in ERP system as a full package that covers essentially all of the enterprise management tools. However, ERP was expanded MRPII system and managed to do what MRPII failed to do particularly in supply chain management, managing multi stock and factory requirement planning which was required a good control and information flows from the shop floor.
Not only manufacturing sector using ERP as a SAP system , but Universities, Banks, and gas companies are using it as well. This a good example for declaring the development in the implementation of the system which is mean that MRPII was been not only developed in the function, which had been included in the system, but in the consumers who are using it as well. That's mean the implementation of the new system ERP has been applicated not just in the industrial sector, but it takes over other enterprises. ( Little, 2007)
During the 1990s. ERP was evolved by adding more functions and modules as “add-ons” to the traditional ERP which led to give more wide application by what is called “extended ERPs”. The extensions in ERP contain advanced planning and scheduling (APS), e-business style like ‘supply chain management' (SCM) and ‘customer relationship management' (CRM).(Fui, 2002).
In 1994 , ERP became more popular when the German company (SAP) issued their next generation of software which Known as R/3. Year later companies started to spend billions into ERP system which mainly offered by SAP and its competitors. (Chen, 2001)
In the 2000s ERP systems evolved into Extended ERP systems by taking the advantages of the new technology which include the internet and electronic business, therefore, this is forcing companies to think many times for developing their business processes. However, making extend networks for suppliers and distributors more effective for organizations is an important issue which can be achieved by improving the communication system and the relation between companies. (Gupta, 2006)
1.4.1 Impact the internet on ERP
Internet one of the main factors which have played a great rolls in the development of a modern ERP. The easy way for communication which have offered by internet, allowed to create another type of competitiveness between companies.
Today's customers asks for a software that include internet application, after recognizing the powerful impact of the internet on all over business as a now tools for competing and surviving in the wide market. It is almost certain that all users of ERP system competed to make web front end onto their system. (Patk, 2004)
1.4.2 The similarities and differences between MRPII and ERP
MRPII defined as the nucleus of enterprise resource planning (ERP) system (Harrison, 2002). This mean in general, ERP is taking over all tasks of MRPII. On the other hand, there are differences in the way that how the software could be implemented. According to Frederic (2004, citing in Russell &Taylor, 1998; Seo, 1999; Watson & Schneider, 1999) ERP system is different from the MRPII system, not just in system requirements, but as well in technical requirements, as it undertakes technology aspects, like database relation, graphical user interface, apply the fourth generation language, client server style, the development by using software engineering tools with computer support, and portable opening-systems.
Also, Chen (2001, cited in Frederic 2004) states, while “MRPII has traditionally focused on the planning and scheduling of internal resources, ERP strives to plan and schedule supplier resources as well, based on the dynamic customer demands and schedules” (Frederic2004, P.3).
MRPII was only implanted in manufacturing sector, whereas the traditional ERP was stared to be applicated in manufacturing businesses, but it has been developed dramatically to fit and implemented in a wide range of businesses, such as Banks, university, gas company, oil sector and more and more. looking at the website of software vendors such as SAP, it would be a surprise that how many and different customers that have used and implemented SAP's systems which have been developed to fit even some small enterprises. This facility was not offered in MRPII.
MRPII similar as ERP in which both of them request to be provided by an accurate and updating information all the time. Meanwhile, they are need hard work and greater effort from all levels of the management of the factory or enterprise in order to gain a good result in term of a high cost investment for both of them. Little (2007) says, that all the software packages; MRP, MRPII and ERP have something in common, at the end, they are all basically transaction processing systems. That means they deal with a massive amount of information all the time as a data for collection which required lots of work and millions of calculations happen in a month.
In general, ERP is more integrated for enterprises tools. Thus, it become a complex and expensive system that not easy to be implemented, whereas MRPII is less complicated according to the fact that the functions which were included in less than that in ERP.
MRPII is poor in supply chin management, multi function, and multi stock whereas ERP has surmounted all these problems.
3. Typical ERP packages
Developers of ERP system make claims like: ‘‘provides end-to-end enterprise recourse planning functionality for business analytics, financials, human capital management, operations, and corporate services.''
How well do typical ERP packages live up to this claim?
It is not easy to answer this equation which has been requested without analyzing and evaluating ERP program while it being implemented. However, many companies have had a great result from the implementation of the software. At the same time, it is not provide immediately result, in fact such as programs ERP needs a years to obtain its benefits.
There are many Vendors of ERP software packages, and the most competing in the software market are SAP, JD Edward, Baan, Oracle, and Pepolesoft. However, generally, it is common in the history when any new program is improved, it is widely believe that most of vendors always claim that their products or services are the best and it cover all the customer demands. In addition, looking back for the history for evaluating of the software packages and their implementation in deferent businesses aspects, it would be clear for everyone that there are always new problems when the system implement, this can be found for instance in the a lack for a function needed to be addressed very well in order to complete the system efficiency. These issues have appeared during the implementation of the systems in different factories or enterprises.
It can not be denied that many companies are happy from the result that have obtained when ERP runs their business. On the other hand, some businesses claim that this system has been one of the main reasons which have caused the failure of their companies as it has been stated before. According to the claim that ERP provided end-to-end system, it widely believe that some times ERP systems are not fit with enterprise which may be would belonging to the misunderstanding in the system's implementation or regarding to the lack of information that are provided to the system.
However, A typical ERP system incorporates all enterprise functions by making a central database between all modules which allow to transfer and share information unreservedly. Vendors of ERP systems may give a different names and numbers of modules.
Integration between modules by sharing their information clearly, this will lead to understand and avoid any problems which may cause a battle neck for the production or services. For this issue SAP as one of the tope competitiveness for purchasing ERP software packages in the market, they claim that their system SAP NetWeaver make ‘‘End-to-End process integration'' for whole the organization. However, SAP originally is German company, and nowadays it is leading software market.
Regarding to the mySAP ERP solution map in figure 5 which is provided to make an overview of the package and what it is include in. However, according to Stooker (no date ) it is not possible for SAP programmers to make software that includes the requirements of every single large business. All businesses are not the same which means they produce and serve different things, basically their inventory management is quite different.
It is not possible for any company to implement the same software of other company. ERP system should be designed to fit the enterprise in order to cover all the requirement to achieve better result and save the business.
3. The main weaknesses of ERP
According to the competitive between the vendors in the worldwide market, ERP system has been improved every time when any problems come across its implementation or the desire for gaining better features of the system. In another word, software's vendors are supported by the numerous developments in communication and computer systems, they can produce and improve their goods and services faster and efficiently.
It is very important for managers to know what they need for organizing their companies before deciding to implement any software packages such as ERP system. That because many companies have faced a failure during the implementation of the system. The failure is not mean that the software is not good, but it is high likely that the lack for understanding the way how its work has been the most reason for the bad result they have obtained. However, there are many circumstances as a weaknesses point that should be taken in consideration before deciding to go with ERP system, in order to avoid any problem might appear before or during the implementation of the system.
It can be stated that ERP is a complex system for complex company, if it is not necessary to use, is better to run your business without it. It is the best thing for a simple product's factory to obtain a simple system (Little, 2007). Many companies have faced this fact unfortunately after they start implementing the system which led to company's failure. In many cases close the business.
Enterprise resource planning (ERP) systems are highly complex information systems. Implementing such as system is not easy and very expensive that requires huge efforts to integrate the time and resources. Many companies have been recorded as failures, because of the fell for achieving their determined corporate targets (Umble, 2003). In other words, the system some times become unreliable or is not working efficiently as expected to be which cause problems when decision makers rely on taking a serious decisions which might be a main reason in losing or improving their businesses. For instance, Chen (2001, cited in Bicknell, 1998; Boudette, 1999) stated:
While companies such as Cisco Systems, Eastman Kodak, and Tektronix
have reaped the expected benefits of ERP systems, many businesses are discovering that their ERP implementation is a nightmare. For example, FoxMeyer Drug, a $5 billion pharmaceutical company, recently filed for bankruptcy. FoxMeyer argued that major problems were generated by a failed ERP system, which created excess shipments resulting from incorrect orders and costing FoxMeyer millions of dollars.
This highly likely a clear view point that may shows a problem from running the system. However, this is can be argued by many experts in this field. According to Little (2007), ERP was evolved from MRPII with the promise that would be a complete system for a company. That because it include all of the modules. As a mater of fact some of the modules did not work efficiently, unfortunately others did not work at all.
According to the experience for some companies, the success in ERP's implementation at any firm is not mean that it can be gained the same result from ERP when it is applicated at another firm which might be are similar in the business or functions. This is a weak point for ERP that makes effective influencing on the software customers before thinking to buy such as systems.
Another major problem from some people view in ERS system, that the fact is beside the direct costs of the system there are many costs are not appear ‘‘hidden costs'' before the implementation which may make the company spend more money for the package than the estimated. The ‘'hidden costs'' has been addressed by Kimberling (2006), there are many obvious costs connected with the implementation of any IT or ERP systems. For instance, software licenses, applications services, and data transformation all of these are direct costs. On the other hand, there are many costs which are not so obvious, for example, internal resource required to help the project team, costs to improve the process, changing management organization, hardware upgrade, and costs to full the gap which relating to project team members when they work in the project. These costs must be taken in consideration to give a clear and accurate total cost of the implementation of the software.
As a mater of fact, regarding for some people view, ERP systems as a product is very expensive and complicated, and the problem is not stop here but the big challenge is that facing the hug cost of implementing ERP which almost certain that cost would be more than doubled it's purchasing price.
All in all, it can be argue that some companies have improved their business efficiently during the implementation of ERP system, but as it has been stated, it can not be denied that there are some weaknesses in the software that make businessmen think thousands time before making decision for purchasing and implementing the ERP system.
4. Expectation for future of ERP
It is almost certain that in the future ERP will be expanded in the implementation more by using the wide and advanced technology of communication system such as the internet and satellite technology. However, the competitiveness in software market have forced vendors to develop and improve the software packages systems, therefore their services in order to survive in the time that the tremendous change and development in computer. In other words, vendors can provide a customer by software which will be designed to fit their firm. For instance, customers may be want to purchase a management system which include one or two or more functions.
These days, ERP systems have been offered to cover all the function of business. However, many companies usually don't run the whole system which means they are only using some of its function to run their business. This has forced ERP venders to find a solution which would lead to satisfy their customers. For this aspect component-based product is processed in order to give the opportunity to customers to buy what they exactly need and this will save them a lot of money, for example customer can buy finance component and sales. Moreover, it would be easily to add another function for the system such as production and materials. The new model Return in investment (ROI) will become more interested in which will allow business to validate the investment effectively. Prashant (no date, cited by Gaonkar, 2003)
It is widely believed that there are many concepts regarding of the future of ERP and how it going to be changed or improved as the following:
- It will be changed to internet-based application instead of client/server application.
- Project implementation for internet economy
- Electronic trading, sales depend on customers and customer relationship management programs.
- Self-service implementation; web base request entry. ( Savis, no date)
The new approach of management tool, Advanced Schedule Planning (ASP) has become more interested for many organizations. Meanwhile the high cost and some problems of the implementation of ERP systems have encouraged many enterprises especially manufacturing companies to look for another management tool in order to obtain better result form their investment.
ASP has been founded to offer services to companies who want to avoid the risk of the high cost of the internal implementations of ERP. Despite the fact that ASP means has risks as well, many organizations have found it extremely attractive, if it would be compared with the expensive and complex ERP system when is run in firm (Trimi, 2005).
Finally, many people believe that the implementations and competitiveness in the software world market will be increased supported by the incredible development in the communication technology which allowed everyone from any where can be in the market as a vendor or customer. On the other hand, it is highly likely that the prices of ERP software will be reduced in order to make new customer by encourage enterprises that have a limited budget for buying a software packages. Moreover, some people are arguing that vendors have failed many times in giving their customer a right and full support to implement the system, this has led in many cases to fell the enterprise in the bankrupt. What will be expected to solve this problem is that would be a good analyses for the enterprises functions before deciding to go with any systems with the promising from vendors to give their best services and support for the implementation.
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