Planning is the essential ingredient
Over the last several decades, there have been continuous strident voices in the marketplace declaring that material requirements planning (MRP) and enterprise resources planning (ERP) pursuits are worthless, antiquated, and obsolete. Mostly, these self-styled authorities are promoting something else that purports to replace traditional methodologies. Ironically, many of the “latest and greatest” offerings are in truth information systems built around an MRP core (in other words, ERP as we know it) with some kind of twist that “fixes” traditional ERP’s shortcomings.
There’s no denying that MRP and ERP were developed to meet the needs of a manufacturing environment that differs vastly from today’s world. Product life cycles are shorter now, there is more variety in the marketplace (lower volume for individual products), customer expectations are ever increasing, global markets have replaced local competition, lean manufacturing is common, and technology provides unprecedented visibility and connectivity—to name just a few significant shifts in the world of manufacturing since the 1960s.
Given all of these changes, how is it possible that software functionality first designed over a half-century ago remains in widespread use and offers real benefits? Because manufacturers still have to acquire materials and components, add value through the application of employee and equipment time, and sell and distribute the fruits of their labors. MRP with its associated supporting applications (inventory control, planning and scheduling, customer service, purchasing, and the like) models the plant and its operations. And those fundamental activities and concerns remain, despite the changes in environment and demands.
Truth be told, MRP and ERP are not perfect, and many of the new ideas and applications add value to today’s ERP and make it a better tool for managing challenges. Most modern ERP systems support kanban replenishment, for example, and have planning algorithms for level (flow production) scheduling that were absent in earlier incarnations of the methodology.
Technological evolution
I suppose, from a marketing perspective, it is much more effective to tout something new and different rather than just an evolutionary extension of an existing product. But it’s confusing and misleading to promote something as a replacement for existing solution when it is inherently that same technology, evolved.
If I put on my curmudgeon hat, I could take exception to the term ERP itself. MRP is clear—planning material requirements is precisely what it does. The broader application set we first knew as manufacturing resources planning (MRP II) is a less-definitive term. MRP II and its successor, ERP, (really the same animal, but with a new name) emphasize planning and only planning. And this is, indeed, at the core of MRP II and ERP, but there’s so much more. Perhaps the newer term “manufacturing operations management” (MOM) is better, although some might object to the absence of the word “planning.” Besides, it seems that MOM is being defined and used more as a replacement for manufacturing execution systems than for ERP or a combination of both.
The message here is that we cannot be distracted by the labels and acronyms being introduced and replaced as systems and software vendors continually search to distinguish individual products from the competition and gain the attention of buyers. The planning tools manufacturers need are evolving and advancing, but the basics remain the same.
Enterprise Insights by Dave Turbide, reprinted with permission from APICS magazine | Jan / Feb 2015