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"25 questions to ask your IT specialist"
Relevant Further Reading:
The following further articles were mentioned in this paper:
a. Permanently Maintained Website Articles:
"Implementing
ERP Systems (After the Millennium bug has been
exterminated)"
MRP2
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Conference Room Pilot
The following ERP conference room pilot was designed for an
aerospace component manufacturer running an MRP2
system. You can adapt this scenario to create a
test plan to suit your company's operations and proposed implementation
path, and run it prior to "going live". It does not include some e-commerce
characteristics. A conference room pilot is designed to suit your
circumstances however and as such this is provided as a guide only. You will
need to adapt this one, to reduce your risks. This article should be read in
conjunction with "Implementing ERP Systems (After the Millennium bug has
been exterminated)" and "25 questions to ask your IT specialist"
Links to
related training and further reading on left
Purpose of Conference room Pilot:
- To see that the computer software can support all the things
we need to do. (And many of the things that can go wrong in the business.)
- To identify operational responsibilities.
- To identify new procedures needed, and to test draft procedures and policies.
- To identify training needs.
- To identify implementation method and issues to be resolved.
- To test problem management procedures.
- To confirm data definitions (will the system interpret the
data codes devised and be able to use them)
- To confirm data conversion rules (will the new system use
the data converted from the old system properly)
- To confirm the system testing already carried out, for batch
processes and job streams and interfaces, will work in a repetitive
production environment.
Who needs to participate?
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Mode of operation
- The routine business processes associated with the complete
production planning, execution and financial cycle will be simulated in
a room running on compressed time. This will entail resetting the
calendar at the end of each simulated days processing.
- As far as possible people will play their normal roles, or a person
from the function will represent a number of roles from that function.
- The IT department will perform the role of system support and paper
outputs will be requested from them and distributed by them.
- In the event of computer or program problems which cannot be
immediately resolved, the session will be abandoned for that half day
and resumed when the system problem is resolved.
- Problems will be documented at the time, using the problem
management system.
- Each participant will make notes of all significant problems and
issues for discussion at the end of each half-day.
- A key requirement is that the data to be processed is as realistic
as possible and represents the range of possible data values. I.e.
Typical products, order types, typical routes etc. It should also test
that data converted from the old system will work in the new
environment.
- Detailed business scenarios need to be produced in advance, and will
form the basis of the detailed proposed detailed procedures.
- A key requirement is that the system is operated during the
conference room pilot in the same way that it will be operated routinely
in operational use. An example would be that Customer names and
addresses are held once only and are used by the manufacturing and
financial systems by an interface. This interface method must be used in
the conference room pilot.
- The software supplier or an in-house application expert will be in
attendance for the duration of the conference room pilot.
- Housekeeping at the end of each half-day will include running a
backup representing close of play. (In the event of a problem the
pilot can then be replayed). A backup should also be taken at the
end of the initial data load, so that the pilot can be replayed from
the start if necessary. This will also provide a convenient point to
run batch interfaces, and reset the calendar if necessary.
- At each stage of the pilot it should be assumed that the actions
you have taken were incorrect and later information has now
arrived which means that that session's work must be undone.
This is to be achieved through transactions in the system and
not by recovering the data to the last backup. Notes must therefore
be taken of any deviations from the provided scripts.
- Disaster recovery is to be tested by assuming a simulated
disaster at three critical stages: Immediately before the overnight
housekeeping Immediately after the overnight housekeeping Assuming a
mid session failure (during the on-line day)
- Enquiries should be made on the live data to simulate requesting of
current data. At any stage the person acting the role of sales,
accounts, planning, purchasing, quality, or General Manager, may ask any
question of any other function. E.g.
- When can I have my parts?
- What is the effect of that latest change?
- How much?
- System wide parameters should be set as agreed at the outset of the
pilot.
- Daily, weekly, period end, and annual processing routines can be
scheduled at any time but should be scheduled to include part complete,
work order purchase orders, receipts and despatches not paid, invoices
not processed etc. to represent the real world as far as possible.
Implementation
You may choose to implement the system in a particular way for example to
load the static data before the dynamic data using interfaces or migration
programmes. Before doing this please read "Implementing ERP systems". In
particular you need to test the migration path as follows:
- Load the static data
- Check to see that all aspects of the system are operable using that
data (loading dynamic data next is a non-trivial exercise)
- Load the dynamic data
- Check to see that all aspects of the system are operable using that
data
- Start the scenario below
Preparation for the conference room pilot
1. Prepare in advance a scenario for a representative (small) range of
products:
- Existing customers (UK£,$,Euro), with at least one low credit limit
and different ship and billing address
- Existing product / BOM / Batch sizes / safety stocks / lead-times /
current stocks and WIP, material costs
- Existing suppliers (£, $, Euro), with cheque, BACS, Swift, Proforma
payment methods.
- Existing work centres, and cost rates (std, current actual, future)
- Stock locations for: Goods Inwards Inspection, Raw materials Stores,
Finished parts, stores, despatch, sub contractor, Quarantine
- Existing route(s) / Times / Outwork costs / planned yields
And load above to database in advance. Note if this data is being
converted from the existing system, it should be loaded at this
time. Initial interfaces must be run to ensure a valid start
position with all databases synchronised. (Including finance, tools
etc.)
2. All scenario scripts must be completed and individually tested by
the appointed team members.
3. Prepare routine management reports, in job streams and ad-hoc
reports to be run at suitable points of significance in the process.
Start
Consider both new & existing products in each case:
A. Raise Quotation
(This part of the pilot is different for new products or repeat orders
possibly from different customers.)
- Qualify
- Tech Edit/ Contract review/ reconfiguration / credit limit
- Raise new product codes / BOM (run CAD interface)
- Raise new routes (run CAPP interface)
- Allocate route to product (include alternative method)
- Check
- Complete cost details
- Materials / weights / costs check?
- Yields check?
- Subcontract costs check?
- Cost rates (std, actual, budget)
- Calculate ex-works cost
- Packaging costs check?
- Transport costs check?
- Commissions check? Etc.
- Calculate total cost (roll up)
- Change costs/work centre rates/route/time/yield and repeat
- Set selling price
- Delivery / Capacity check
via MPS/RCCP
- Issue quote
B. Raise sales order / schedule
- Forecast spares requirements. Convert to sales order
- For new order, change Tech edit / Contract review / credit check
- Check for existing valid quote
- If not valid raise new quote
- Check delivery feasibility (MPS, RCCP)
- Create load profile
- Update capacity & create new resource
- Run MPS
- Raise sales order (consume forecast)
- Within cumulative lead-time
- Outside cumulative lead-time
- Beyond MPS horizon
- Within MPS horizon
- Raise acknowledgement to customer
- Value order book
C. Take Action on MRP/CRP reports at:
- Change batch size, lead time, safety stock
- B6,D3,D4,D5,E3,F1,G,H1,H2,H3,
I1,I2,J1,J5,J8,J9,J14,J15,J16,J17,J18,J19,K1,K2,K3
D. Raise production / purchase orders/schedules
- Raise end product order using MRP
- Raise lower level orders using MRP
- Create / release shop orders
- Repeat through BOM
- Raise new supplier (address, terms, item price, special packaging,
specs, single /dual source, sourcing rules)
- Issue request for quotes
- Raise raw material order using MRP
- Amend / Cancel PO
- EDI
- Run purchasing reports
E. Capacity Planning
- Check capacity needed on all resources
- Assume capacity overloaded
- Reschedule order to smooth capacity
- Produce work-to lists for all work centres
F. Change sales order due date / quantity (pull forward /push
back/cancel orders)
- Act on MRP / CRP reports (manufacturing and purchasing)
- Re-EDI
G. Change BOM / Route under engineering change
- Using CAD/CAPP interface
H. Goods Inwards
- Receive purchased parts (partial / full / early / late)
- To goods inwards inspection
- Sample / full inspection
- Direct to stores
- To WIP
- Reject / return to supplier / debit note / inspection report
- Concession / accept locate in stores
- Missing C of C
- Track-side ("back-flushed") parts
Run accounts payable interface
I. At issuing time prepare kit / prepare tools and issue
- Issue with shortages / without shortages
- With standard or alternative parts
- Issue / Back flush parts to WIP
- Shortage clearance (made in, bought out)
J. Booking Process
(This process will follow through from piece-part manufacture to
sub-assembly to final assembly)
- Book 1st order to first milestone (include back flush op) (Report:
yield & actual progress, time, etc.)
- Book 1st operation on second order
- Produce updated work-to list for 2nd operation
- Book 2nd operation out of sequence
- Report excessive scrap / loss / find
- Re-plan to overcome shortage, expedite, and then clear shortage
early
- Change supplier with different costs
- Change route / work centre/ route part (for this order only /
permanent route change but include existing orders)
- Reject work
- Schedule and book rework operation
- Extra operation
- Rework order
- Whole route sub-contract
- One operation rework
- Add extra material
- Send to subcontractor (routed sub-contract and un-routed (abnormal)
- Receive back from subcontractor (sample / full inspection)
- Reject to subcontractor from WIP and Goods in
- Receive back again (good material and concession)
- Split batch and send ahead
- Partial receive to stores
- Receive / lose / find / despatch free issue material / line feed
material
- Mismatched assembly part
- Complete orders / raise release note / C of C
- Check for credit hold
- Despatch both orders (full and partial ship, normal address,
alternative address. Drop ship, Bill of lading / export documents)
- Customer return / credit / strip down / replacement of faulty part /
repair. Supply of free issue material
- Run accounts receivable interface
- Intrastats (To / from EEC)
- Invoice Euro / £ / $
- Review:
- Costs verses estimate / std
- Delivery performance
- Utilisation
- Sales forecast
- Purchase commitments
K. Stock Adjustments
- Unplanned receipt / issue
- Adjustment
- Stock take / perpetual auditing
L. Product recall
- The concession we made earlier has caused an aircraft crash!
- What other batches are affected and which products must we recall,
(include at least one other raw material batch.)
M. Consumables
- Raise / authorise purchase requisitions
- Run reorder report based on consumables stock status
- Buy / receive consumable items
- Run accounts payable interface
N. Accounts Payable
- Reconcile manufacturing view and ledger view
- Suspense accounts
- Match & Pass
- Post
- Price variance
- Invoice and GI reserves
- Pay (Cheque, BACS, Swift, pro forma), (normal, abnormal)
- Debits / credits
- Currency requirements
- Aged creditors / balances
- Bank reconciliation
- Pay the electric bill (no purchase order or goods receipts)
O. Cost of Sales
- Std
- Actual / margin
P. Accounts Receivable
- Reconcile manufacturing view and ledger view
- Suspense accounts
- Post invoices
- Post payments (Cheque, BACS, Swift, pro forma), (normal, abnormal)
- Debits / credits
- Currency conversion
- Aged debtors / balances (credit control)
- Bank reconciliation
- Forecast sales income
Q. General Ledger / inventory accounting
- Reconcile manufacturing view and ledger view ( stock, bookings)
- Suspense accounts
- Utilisation (std hours)
- Stock / WIP valuation (std, actual, movements, variances, scrap
analysis
- Overhead analysis
R. Period end + Year end
- Can we despatch / receive on 1st of month?
- What goods-out are invoiced?
- What goods-in are not invoiced by supplier, or paid by us?
- Calculate reserves
- Run ledger interfaces
- Run P & L, Balance sheet
- VAT return
S. Year-end std cost changes
- Period end plus
- Roll work centre cost rates and recalculate (cost roll up)
T. Archive
Archive
- Old parts
- Old routes
- Old stock movements
- Old bookings
U. Retrieve from archive, product recall data etc.
- Old system data
- New system data
- Mixture of old and new system data
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