Chapter 15

Operating ERP
Binuya, Sundai C.
BSAIS 3
GROUP 5

CHAPTER 15: Operating ERP

Winning to a competition is a biggest flex. Reaching your goal is the best feeling.
Despite of this success, the team and the coach decided to cancel their yearly training.
They’re no longer doing their routine like training, learning more skills, and getting
better. They believe that they are the best among the rest. These attitudes are one of
the main reasons why there’s a company that after being successful they end up losing
their spot. Using ERP doesn’t mean you should not put an effort on it. Yes, ERP make
our work so much easier, but this needs to have a continual attention.

There are two major objectives involved in operating ERP:

1. Don’t let it slip.
2. Make it better and better.

Having this attitude can replace you by someone else who can do the work much better.
If you are doing the same mistake, it can replace you quickly.

These are the elements on how company can address their issue.
Five important elements are involved:
• Understanding.
• Organization.
• Measurements.
• Education.
• Lean Manufacturing/Just-in-Time.

Let’s look at each one.

UNDERSTANDING
They should understand that being on the top doesn’t mean you can always have
the same spot. A company needs to understand that:

 Today’s success is no guarantee of tomorrows.

 People are the key.
 The name of the game is to win, to be better than the competition, and operating
ERP at a Class A level is one of the best ways to do that.

ORGANIZATION
The company should keep both ERP project team and the executive steering
committee.

The ERP Operating Committee is a group responsible for overseeing and managing the
operation and implementation of an ERP system within an organization. Its role
includes making decisions, providing guidance, and ensuring alignment with
organizational goals throughout the ERP implementation process and beyond.

Spin-off Task Forces

Just as during implementation, these temporary groups can be used to solve specific
problems, capitalize on opportunities, and so forth.
The Executive Steering Committee should meet about once every six months. It
receives updates on performance from the ERP operating committee. Typically
composed of senior executives or leaders from various departments or divisions, the
committee ensures alignment with the organization's goals and objectives, manages
risks, allocates resources, and resolves escalated issues.

MEASUREMENTS
Measuring the effectiveness of ERP performance. It also requires both operational and
financial measurements.

Let’s look at operational measurements first.

Operational Measurements—The ABCD Checklist

for Operational Excellence

This part of the ABCD Checklist should be reviewed by the ERP.

operating committee formally, as a group, at least twice a year.

This group should focus on:

1. What’s causing the no answer? What’s going wrong? Use the
checklist’s detailed audit questions for diagnosis.
2. What’s the best way to fix the problem? Does the problem exist only within one
department? If so, that department manager should be charged with correcting the
problem. On the
other hand, if the problem crosses departmental boundaries,
should the company activate a spin-off task force?
3. How quickly can it be fixed? (Set a date—don’t let it drift.)

The results are formally communicated to the executive steering committee: the score
achieved, the class rating (A, B, C, etc.), what the no answers are, what’s being done
about them, and what help, if any, is needed from top management.

Operational Measurements—Other

Listed below is a series of detailed technical measurements, not explicitly covered in the
ABCD Checklist.

In master scheduling, some companies measure:

1. Number of master schedule changes in the emergency zone.
This should be a small number.
2. Master schedule orders rescheduled in compared to those
rescheduled out. These numbers should be close to equal.
3. Finished goods inventory turnover for make-to-stock operations.

Typically, the first two of these measurements are done weekly, and
the third monthly.

Financial Measurements

At least once a year, the ERP operating committee should take a

check on “how we’re doing” financially with the ERP. Is the company getting at least the
benefits expected. If not, why not? Start fixing what’s wrong, so the company can start
to get the bang for the buck. Results are reported to the executive steering committee.
EDUCATION
Failure to establish an airtight ongoing education program is a major threat to the long-
term successful operation of ERP.

New people enter the company.

Failure to educate these new job incumbents spells trouble.

People tend to forget.

They need refresher education and training.

Business conditions change.

Developing new product lines, enter new markets, change production processes,
become subject to new governmental regulations.

LEAN MANUFACTURING
Formerly called Just-in-Time is arguably the best thing that ever happened to ERP.
Because Lean Manufacturing, done properly, will not allow you to neglect your
ERP processes.