Clever Geek Handbook

ERP does not work ... What is the alternative? or right on time. For Russia?

Colleagues, I present to your attention the second article from the series "Classical Management Methods". All articles that will be included in this collection specially prepared for Habr were written at different times, but have not lost their relevance until now.

Sergey Peterkin, Reitstep.



ERP does not work ... What is the alternative? or right on time. For Russia?





If the ERP system limits the capabilities of your enterprise - it's time to press the switch



Introduction



The article earlier published in DISA examined the features of planning algorithms (MRP and APS algorithms) embedded in most ERP systems available today. Also, not a little attention was paid to the practical possibilities of using these algorithms. A brief summary can be made of the following: MRP algorithm is applicable in a very limited number of cases, in simple and stable production, APS algorithm is applicable almost everywhere. Naturally, these algorithms themselves cannot be applied on their own. As a rule, they are embedded in ERP systems. However, even with the “correct” methodological planning system, an ERP system may not work for planning tasks. Let’s try not to blame all the problems on typical problems of the Russian enterprise, which were described in the introduction to the first part of the article, and look at the root. Maybe something is wrong with ERP itself?

Denying, as you know, is the easiest, therefore, in the second part of the article an alternative is also proposed.



ERP vs TVB



Consider two alternative methodological enterprise management systems ERP and TVB, which can be briefly described as follows:





The last remark is not accidental. Oddly enough, it is the computer (more precisely, the control system) that is the bridge between these two concepts, with the help of which TVV, alien to Russia, can be made to work for the benefit.



What do enterprises implementing ERP systems or enterprises using them say?

If 




... the system would work like a clock. This is a typical technocratic western approach.



On the other hand, even at an enterprise that has been successfully working on TVV for a long time, there is a question about the status of a customer’s order or the possibility of urgently producing 1000 pieces of a product for a beloved customer - and this information can not be obtained from a computer.



Advantages and disadvantages of two different approaches ... The concept of TVV was born in Japan, and is now quite popular in the West. Is this method applicable for our enterprises? The author is sure yes. But only in symbiosis with our favorite computer programs. Russia is located between Europe and Asia, and always Asian has mixed with European. Why not take the best from two approaches (technocratic and philosophical) from two sides?



When ERP is Good





The basic scheme of the ERP system is quite simple. There are several plans - from global (aggregated planning for a relatively large period of time) to detailed operational planning.

In general, the system provides two types of activity: planning and monitoring the implementation of the plan (collection of actual indicators). The basic principle of planning is to compare the necessary resources with the available ones. A plan of needs for necessary resources is formed for the entire time horizon for which there are needs. Further, depending on the algorithm used, the system either generates recommendations on changing the timing or increasing the capacity of resources (the MRP-MRP-II algorithm that does not work), or reschedules taking into account the limitations (APS algorithm). And in order to adjust plans, adjusting to changing reality, the system provides the ability to collect the fact.

In general, an ERP system is rich in management tools, and, in general, you can get a good result from using the system if ... If the company is willing to pay the price in terms of resources for the implementation and collection of data necessary for the correct operation of the system. And the price is not small.

  1. For real-world planning at all levels, all enterprise structures must be involved in the planning process: top management and owners, managers and employees of the sales, supply, planning, production and accounting departments.
  2. Accurate and realistic planning for an ERP system requires “tons” of detailed information. It is necessary to quickly register actions with all objects that affect the accuracy of planning.
  3. In order for the system to work properly, information about the main control objects (specifications and routes, production / delivery time of parts and components, production facilities) should be close to ideal.




But where, in a real enterprise, take the time to confirm the correctness of the entered information? And who will do this all the time? We are too busy trying to determine in which working area the scarce parts are stuck or trying to “shove” a burning task through the “bottleneck” of the workshop, and then reassemble the entire workshop plan. Yes, of course, if the detailed information were and would be accurate, if the production plan was exactly implemented, there would be no shortages and the work of the bottlenecks No. would be planned accordingly.

As a consultant who devoted a lot of time to the implementation and subsequent improvement of the use of ERP systems, the author is sincerely convinced that for many Russian enterprises, especially those producing complex products, the advantages in the level of detail and accuracy of the information of the control system outweigh the time and effort required to maintain information in the system. But not all companies are ready for such investments.

Not because these companies are bad, but because this accuracy of information depends on almost all employees of the enterprise. Accurate information about the details produced during a particular operation, error-free, up to the minute technical process, prompt input of information immediately after the action is taken - for many, these are simply not very important tasks against the background of priority No. 1, i.e. direct work. At the same time, many managers quite rightly believe that the working hands of the enterprise are designed primarily to produce, and not to maintain the integrity of the data of the information system.

In addition, enterprise personnel directly entering information into the system rarely see the result of their work. ERP systems are complex, information connections between different modules and, especially, screens, are generally known to very few in the enterprise. And another argument is not in favor of ERP systems ... Implementation of ERP systems, especially planning functions, requires significant financial investments; therefore, few companies implement them to the extent that it is finally possible to get the described benefits.



The most difficult module to implement ERP systems - planning and accounting of production progress. The information in this module is the final result of all calculations. It also introduces the most detailed information that affects both subsequent planning and the formation of actual financial indicators. The principle of operation of this module of the system is the same as all the others: based on the calculated production plan, production tasks are created, planned operationally, a set of documents is created (weekly plan, shift-daily task, personal accounts or similar documents for collecting a fact).



It is obvious that in order to formulate a real plan that when and in what order each of the enterprise's work centers should produce, the information in the database should be almost 100% accurate and relevant. Is it possible to provide such accuracy and speed of input in real conditions? Often complicate the process of collecting information requirements of other non-production divisions of the company. For example, accounting, the department of labor and wages (with piecework). Or, the level of details, even more or less correctly entered, can so overwhelm the system that planning and analyzing information will become simply physically impossible.

What else? How many companies do not just form but also follow the strategic production plan or sales plan approved once a year? Very often, after approval, this plan is gathering dust on the shelf until the next strategic committee.



What is the result: implemented expensive ERP systems used as simple computer programs for stock accounting, receiving customer orders and printing invoices. Or such use of the ERP system when everyone at the enterprise just “moans” under its weight, but is forced to maintain an expensive and complex “toy”



When is TVV good



Some of the above problems of implementing and using ERP systems are issues of discipline and organization of the enterprise, but some are fundamental issues related to the very essence of ERP systems. Perhaps in connection with this, an increasing number of industrial enterprises (in the West) are starting to use the TVV management system together with its corresponding system for planning and managing procurement and production of kanban

TVB enterprise management ( Exactly On Time - TVB , Just-In-Time, JIT ) is an extremely fashionable topic at present, both in the West and in Russia. Very often, trying to introduce an element of novelty into this rather old (at least 50 years old) management concept, many authors call it by other names, for example, flexible or thin production (Lean Manufacturing), production-without-warehouses, Kanban , etc. . Moreover, this method is not always interpreted by equally different authors. In our country there is an almost complete misunderstanding of this method. As an answer to the question “what is TVV, in your opinion?”, One can often hear the answers: “operation of an enterprise without warehouses and without stocks” (by the way, is this possible at all?), “Procurement and production accurately and on time "(This is already better!)," Kanban "(and what is it?)," Work "on wheels" (our enterprises very often work "on wheels" due to confusion in planning, but this is not TVV).



So, what is TVV, and what is the essence of this method? The TVB enterprise management method can be described very simply. If you want to work on TVB, you need to:

Constantly deal with all losses (all useless ) at your enterprise.

So, everything is very simple. And no formulas, calculations or computer programs! This rule applies - and AvtoVAZ begins to produce the same cars as Toyota ... In real life, however, everything is much more complicated.



So, what is loss , or useless, and how to deal with them? From the point of view of TVV, useless is all those actions and objects of the enterprise that do not increase the use value of the products, while increasing its cost and, consequently, the price. This is a very important definition that reflects the orientation of the TVB. The definition of “what increases value”, in our opinion, extends to any aspects of activity that may lead to possible improvements. Thus, it is possible to determine all objects and actions that increase the cost of production at an industrial enterprise, as well as methods for their elimination:

  1. Inventories (materials, work in progress and finished products): increase the cost of production, due to the cost of storage, losses, etc. In addition, stocks mask problems. The way out is delivery and production exactly on time, reducing the size of procured and produced batches.
  2. Production time: a long production time leads to a possible loss of market share. The way out is to reduce equipment setup time, reduce production batches, organize lines and reduce travel distances between work centers and warehouses.
  3. Production defect - requires no explanation. The way out is preventive maintenance of equipment, finding out the causes of defects (rather than increasing the points of control and controllers that are often practiced at our enterprises), etc.
  4. And some more not so obvious examples:






What is a TVV system in relation to production planning? First of all, it is a system of visual control of the flow of materials and resources of Kanban .

The system is simple: as a rule, two containers containing the planned consumption of parts for a given period, multiplied by the cyclic time, plus a small safety stock, are constantly in production, the third one is at the supplier or in the supplier's shop waiting for a replenishment signal. This visual signal gives the command to move the third container or its equivalent quantity from the supplier to the consumer. An empty container or a label received by it is a signal to the supplier to resume production and fill it.



The main feature of the system is its self-regulation (there is a need for details - the enterprise works, no - it costs) and ease of management and use. The signal to start / end is a visual signal to replenish the container. As a rule, these are shortcuts (in Japanese - kanban, hence the name of the system), and they are created for each type of parts and materials. These labels, detached from containers, when they are transported to the consumer, are visual signals that give a command to replenish the quantity specified in the label.



As can be seen from the description, the system is really simple. However, most industrial enterprises both in the West and in Russia do not use it. Why?

The answer is paradoxical: it is very simple! It does not require a “heavy” ERP system, hard work procedures, complex projects for their implementation and a large number of staff. However, it requires significant internal staff discipline. For many, it’s easier to do something that is easier, and that somehow corrects the consequence, not the cause. But working with a reason - many people cannot afford to completely change the system of managing the enterprise and personnel.

So is it possible to use a simple planning system, created on the basis of moving around the production of labels or empty containers, instead of the system, which is too heavy for many ERP? Let's try to figure it out.



Where can it work



The best use of the production and supply management system according to the kanban algorithm in enterprises with the type of meeting the demand is production for a warehouse or custom assembly . In the latter case, the buffer store of standard parts / components is controlled by kanban, and the assembly is managed by the APS algorithm using the ERP system. As a rule, these are enterprises in the following industries: instrumentation (manufacturers of liquid and gas flow sensors, electricity meters), engineering (manufacturers of compressors, pumps, gearboxes, etc.), furniture and woodworking, toys, plastic packaging, etc. Those. enterprises whose demand for finished products (either for parts / semi-finished products from which the finished products are assembled) is well predicted, fairly stable and not subject to a sharp change.

Like any concept, kanban has limitations. It is practically impossible to use such a system in enterprises working on order and producing products that are configured to order of the client: flexible and corrugated packaging, furniture (with any options for the customer), machine-building enterprises working according to the type of custom development and custom production .



How does it work




The intermediate storage and movement of each part / material controlled by kanban is carried out in standard containers or pallets. For each part, three or more, depending on demand, a container. Two of them are in workshops using these parts. The third is with the supplier. In each container there are two labels on which the code and the name of the parts are indicated, the quantity in the lot (container / pallets volume), the manufacturer or supplier workshop, average lead time, supplier fax, lines for recording the date of use. As soon as the parts from one of the containers are fully used, the labels are removed from the container, the date is indicated on one of them and the label is faxed to the supplier or the workshop. The second label is inserted into a specially prepared shield with cells. Shields are installed in each workshop and is a visual signaling device of stock status at the enterprise. Shields are arranged as follows:



o “forward to the supplier” or “forward to the manufacturer”,

o "pending acceptance for production" or "for the supply of the supplier",

o "expected date of arrival" - the next 31 columns by day of the month,

o “problems”, here are the products whose order cannot be carried out

for problems with suppliers, in production, etc.



After arriving from the supplier (moving from the manufacturer’s workshop) and undergoing quality control, the label that came from the supplier is connected to the label from the signal board and placed in a container with the capitalized lot. Important note: always equal batches are ordered, equal in volume to the container or pallets. Possible problems, for example, deadlines, can be easily identified visually by the signal board: the label will be after today's date.



How to make the system work. Implementing ...





Step 1 Organization of a project team and project planning. The organization of the project group during the implementation of management systems at industrial enterprises has been said more than once, therefore this issue is not considered here. The difference is that the main composition of the group is the dispatcher of the production department and the procurement department.

The project team undergoes a short training on the concept of planning and management of kanban and further, each member of the implementation group is assigned to a group of parts / materials with which he will work. The next steps are organizing the system:

  1. Organization of data collection on the average monthly consumption of each item / material controlled by kanban.
  2. Changing the physical and logical location of storage locations in the warehouse and workshop. Warehouses of materials, warehouses of PDO and warehouses of CSGD as such ceases to exist since received containers / pallets immediately upon receipt are transferred to the consumer.
  3. The volume of containers is determined by the following formula: the average consumption for the replenishment time, multiplied by the insurance factor (10 - 30%).
  4. Purchase / production of containers of appropriate sizes for each part.
  5. Changing the logical and physical location of parts storage areas at work sites.
  6. Designation of containers in accordance with the details stored in it.
  7. Filling containers with parts.
  8. Design and print labels, place them in containers. If at the moment there are more than two materials there are materials - placement of surplus in a specially designated place and their further consumption.




Step 2 Collection of information on the average monthly consumption of each material / part.

If there is seasonality, it is advisable to collect data on material consumption in no less than 12 months. In this case, it is necessary to take into account the entire consumption of materials, i.e. and taking into account marriage, samples for testing, etc.



Step 3 Development and approval of the model of the enterprise, containing a description of the material and information flows in the enterprise. The model should be concise enough, but specific, and therefore it is undesirable to use any “heavy” format for describing business processes like ARIS or IDEF0 for its design.



Step 4 Negotiations with suppliers. This is the longest and most difficult task. Convincing suppliers to make deliveries upon receipt of facsimiles or e-mails with an annual contract concluded and forcing them to constantly keep one completely ready container / pallet for shipment in the warehouse is not an easy task in the stable West, not to mention Russia. However, it is feasible, if not with all, but with most suppliers. They, as well as your company, benefit from stable demand and avoid unnecessary workflow. Vendors unwilling to participate in the program can, however, also be controlled by kanban. For them, the role of kanban will be performed by the reorder point at the consumer enterprise. A good option for electronic interaction is the use of a VMI (Vendor-Management Inventory) system. If there is such a system in your enterprise, suppliers will automatically receive a notification about the need to deliver the material at the moment when the reorder point at your enterprise is reached.

Suppliers must be convinced that they must be delivered in clearly defined container sizes in batches. This will reduce inventory management errors. When negotiating with suppliers, the focus should be primarily on establishing partnerships. In this case, everyone will benefit from a “smoothly” -performing visual planning and replenishment system. Likewise, for the risks caused by the system (for example, a decrease in demand for material at your enterprise will result in frozen stocks of finished products and incompleteness at the supplier), everyone, both the enterprise and the supplier, should bear responsibility.



Step 5 Create shortcuts.

For materials and parts, the consumption of which is small, or whose suppliers refuse to participate in the program, it is necessary to use control by the reorder point.You also need to separately manage the materials ordered by VMI. These materials must be stored in storage areas, separated from the storage areas of materials on the kanban.



Step 6 . Purchasing or manufacturing standard containers and pallets, printing labels and attaching them to each container. The labels indicate information on delivery times obtained during negotiations with suppliers.



Step 7. Container placement. Place containers at prepared storage sites in production. Each pair of containers should be installed in series, so that consumption starts first from one container and only then from another. If the parts are too large for the efficient use of containers, place these parts on pallets or in specially designated places for them, to which labels with information on the code, name and number of parts will be attached. The label should be placed in a plastic bag and placed in a conspicuous place.

Materials and products with very little consumption (less than a few pieces per month) are best stored in small boxes.



Step 8. Signal shield. Make a signal board for the entire enterprise or for each workshop (depending on the size of the enterprise), which includes the following cells for storing labels:



o “forward to the supplier” or “transfer to the manufacturer’s workshop”,

o “pending acceptance for production” or “for delivery of the supplier”,

o “expected date of arrival” - the next 31 columns by day of the month, today's date should be highlighted every day

o “Problems”, here are the products whose order cannot be carried out due to problems with suppliers, in production, etc.



Step 9 . End-user training and approval of the final work procedures include the training of all dispatchers, planners, procurers and foremen who will work in the system.



Step 10. Launch. Start-up can be carried out gradually, according to groups of materials and parts for which containers and labels are prepared. Depending on the structure of the enterprise and the size of the enterprise, manufactured products and production methods, launching in workshops or sections is also possible. Depending on the size of the enterprise, one or more coordinators must be determined to ensure that labels are carefully removed and moved from the container to the signal board and vice versa. Their task is also to increase or decrease the total number of containers and labels in circulation when demand or sales plan changes.

Once you are ready, click on the switch of your ERP system and disable the planning and production management functions. You will no longer need shift-daily assignments, picking lists, transfer invoices and limit-fence cards, as well as “sophisticated” planning algorithms.

However, do not disconnect the entire system. Long-term planning and forecasting functions, customer service functions and some other equally useful (for example, accounting functions) may still be useful to you.



Practical example



The following are the project implementation data for the described system at a small enterprise that produces medical measuring and diagnostic devices, as well as security alarms.

The project of transition to the planning and production management system consisted of ten stages described above, took 10 weeks, and was completed on time and within budget. Two stages of the project: the formation of information on the average consumption of 1300 parts, and the purchase of containers for kanban and their filling took longer than planned: 20 and 60 person-days, respectively. In addition to an external consultant, an enterprise implementation team consisting of four people actively participated in the project: production director (project manager), one representative from each of the planning, supply and production departments.

The results of the project were the following:

  1. the storage space required for storing 1300 kanban-controlled components was halved,
  2. the number of personnel directly or indirectly supporting the planning information system decreased by 30%: instead of 4 dispatchers, two remained, there was no need for a scheduler working in the information system, 6 people responsible for the arrival and movement of materials and parts (storekeepers) remained unchanged,
  3. the number of transactions on the movement of materials and parts in warehouses and work in progress was reduced by 80%,
  4. the total inventory level decreased over the three months of using the system by 15%,
  5. , 90%, .. .




Many apologists for computer systems with “sophisticated” and, as a rule, self-written planning systems, will object that the described kanban-planning system is more suitable for a shoe workshop and that for “... it’s not my most complicated production”. The answer to such arguments is quite simple: such a system was originally developed, used and used at TOYOTA factories, whose product quality is known to many. In TOYOTA, as in other enterprises using kanban, they struggle with causes, not consequences. If the production is complex (many work sites, workshops, conversions, complex multi-level product specifications, etc.), it is quite difficult to manage it on the basis of “historical experience” - there are too many management objects.



Self-help simple development or using MS-Excel will not help either. Really manage such a multitude of objects is possible only with the help of an integrated ERP system. But the ERP system in this case treats the effect - not the cause. The reason is complex production. Some are struggling with the investigation - they are developing or implementing a system, others are struggling with the cause, i.e. simplify production. Yes, historically it happened that in our country there are a lot of large and complex enterprises. I do not urge them to restructure (although this is sometimes the way out), but who prevents (in case you have more or less stable demand) to manage each workshop as a separate enterprise (according to kanban), and the whole enterprise as a chain of client-client enterprises provider"? In general, the choice is yours: to make TOYOTA cars, or to make VAZ cars, whose information systems department,By the way, it contains more than one hundred people whose work is ultimately paid by us, consumers.



Conclusion .



Communicating with consultants who popularize the latest ideas of enterprise management, as well as visiting enterprises trying to independently or with the help of consultants use the concepts of production planning and management, which the author has repeatedly talked about and said on the pages of this journal, she has repeatedly encountered complete or partial misunderstanding and , by virtue of this, by the incorrect application of these fundamental, but essentially simple methods. Not so important as it is called: MRP, MRP II, APS, TVB, Kanban, TO, TQM, WCM, etc.: as in many theories, misunderstanding and partial knowledge are more dangerous than complete ignorance. At one of the enterprises, the author was proudly told that they fully work on the kanban, showing an almost empty warehouse of raw materials. In this case, however,the company recently built a huge automated warehouse of finished products, which was immediately clogged to the roof, since not all of what the company produced was really in demand on the market. At the same time, production in large batches did not make it possible to quickly produce what customers needed. In addition, large start-up parties for several days were linked by critical work centers, due to which the schedule of shipments was repeatedly disrupted. And this, in the understanding of the enterprise, was considered workCritical work centers connected large launch lots for several days, due to which the schedule of shipments was repeatedly disrupted. And this, in the understanding of the enterprise, was considered workCritical work centers connected large launch lots for several days, due to which the schedule of shipments was repeatedly disrupted. And this, in the understanding of the enterprise, was considered workRight on time .



At another enterprise, they tried to introduce the theory of restrictions. Machines identified as restrictions were specially marked as being especially controlled. At the same time, however, they were constantly idle due to a lack of tools, accessories, lunch breaks, smoke breaks, etc. Having identified the limitations and declared them as a particularly valuable resource, the responsible leaders for some reason stopped at this. And the last example. As part of the implementation of MRP-II (with an ERP system) and the parallel struggle against stocks of work in progress at one of the enterprises, they decided to abandon the insurance reserves of intermediate assemblies. This was done without taking into account the fact that the enterprise worked on the principle of assembly on order. As a result, customer lead times increased 3 times!



Do not chase the popular names and fashionable Russian or English abbreviations. There are several basic and proven methods of enterprise management, tested in the face of fierce competition. Take all the best from them, but evaluate from the point of view of common sense: how this can be applied specifically to your enterprise. Remember that today's problems are often caused by yesterday’s (wrong) solutions!



Sidebar



ERP system with MRP-II or APS planning algorithms has one significant drawback - it is very sensitive to the accuracy of the source data. At the same time, the amount of information processed is practically irrelevant: the system will be able to process as much data as necessary. But it is extremely important that all (without exception!) Data is absolutely accurate and entered (changed) on time. For this, it is necessary to organize appropriate management methods at the enterprise, including control procedures. Moreover, the system of these business processes can be very cumbersome, and the costs of its maintenance can be quite significant. In conditions of stable production, when demand, the range of products and production processes themselves do not change so often, other approaches to production management (KANBAN),not so sensitive to data accuracy, often prove to be more effective.



Joint use of

ERP and TVB (kanban). The combination of these two systems is not only quite acceptable, but also quite common. At the same time, the ERP system is used to plan ahead, including the procurement of materials with a long delivery time and load estimation, as well as to manage technological changes in specifications. After all materials and necessary resources are planned according to the APS algorithm, the TVV / Kanban system is used to implement the plan, which allows production to self-adjust depending on demand (if demand does not change significantly) and carry out production operations exactly on time, with minimal the level of stocks and with minimal workflow and interaction with the information system.


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