Intro to ERP - Chapter 9

Explain why the Plant Maintenance module is useful in a manufacturing environment.

-increases availability of plant assets -reduces number of breakdowns -coordinates personnel to complete jobs -reduces costs -improves sustainability

T/F: Unrestricted, restricted, and blocked stock are valued on the balance sheet

False

Customer independent requirements (CIR)

First input in demand, actual customer orders.

Routing

The production order cannot be generated until there is information on how the finished item is created; this information can be found in the routing. A routing is a series of sequential operations that are carried out to produce a final product. In essence, the routing should define how to make the product from the BOM. Has one or more operations, each of which is assigned to a work center.

Serpentine Picking

The system directs warehouse staff up one aisle and down the next in a "snaking" motion, which optimizes the movement through the warehouse.

List three input files to material requirements planning (MRP) and explain why each is important.

- Master Production Schedule: A plan detailing what finished goods to produce, in what quantities, and at what dates. Quantities to be produced are specified in a short-range planning horizon for each week, known as a bucket. The MPS starts with an aggregate sales and operations (S&OP) plan and disaggregates it to arrive at a specific schedule for each finished product. The MPS can be considered an agreement between marketing, finance, purchasing, and manufacturing to support demand. Demand is made up of two inputs, customer independent requirements and planned independent requirements. - Bill of Material: The list of the materials necessary to make a finished produce. Since a BOM rarely changes for a particular end product, it is considered master data in the ERP system. The BOM contains the part number, part name, description, unit of measure and quantity needed of every material that comprises a finished product. In anticipation of a desired quantity of finished products, the necessary raw materials and sub-components needed for production can be calculated to determine the amount that must be on hand when needed—this process is known as "exploding the BOM." MRP will then communicate the purchasing plan to the purchasing staff so they can order the materials. In essence, the MPS and the BOM indicate what goods should be ordered; the MPS, production cycle times, and supplier lead times then jointly determine when POs should be placed. Figure 9-6 shows a screenshot of a BOM for a Deluxe Touring Bike (red) in SAP. -Inventory Status Report: This report contains information about the on-hand balance of inventory including raw materials, subassemblies, and even finished goods. In addition, this report describes inventory on order and the lead time for each item. Knowing what is on order and when it will arrive is important information for production and gives a better picture of net requirements.

List benefits of electronic data interchange (EDI) to both the supplier and the buyer

- Reductions in the amount of data capture and rekeying activities, which allows for quicker processing of business event data and efficiencies such as fewer stock-outs and cancelled orders. -Automating paper-based tasks allow employees to concentrate on more value-added work and supports business-critical data being tracked in real time. -Helps reduce data entry errors, which improves data quality. -Streamlines the ability to enter new territories and markets because it provides a common business language that facilitates trading partner on-boarding anywhere in the world. -Promotes corporate social responsibility by replacing paper-based processes with electronic alternatives. This saves money and reduces carbon dioxide emissions.

Describe basic functionality in an ERP Warehouse Management system

-receiving -putting away -order picking -shipping For example, suppose a warehouse worker is putting away recently received material instructed by a hand-held mobile device. After putaway, the worker is then directed to count additional items at a nearby location, and while at that location, pick an item for delivery to the shipping area. The worker, therefore, is in a continuous loop of activity directed by the WMS module via the mobile device.

Plant Maintenance Workflow

1. Create maintenance work order 2. Create purchase requisition for necessary parts 3. Create purchase order for necessary parts 4. Receive parts 5. Issue parts to work order 6. Plan and approve work order 7. Schedule and release work order 8. Complete work order 9. Settle work order costs.

Supply Chain

1. Plan - Companies should have a strategic plan in place to manage the resources that go into meeting customer demand for their products and services. 2. Source - Companies should streamline processes that procure goods and services to meet planned or actual demand. 3. Make - Manufacturing activities should be properly scheduled and executed and products should be tested, packaged, and prepared for delivery. Production output, quality, and worker productivity should be measured. 4. Deliver - Logistics activities include retrieving inventory from the warehouse per customer orders, choosing the modes of transportation, scheduling deliveries, and transporting the goods to the customer.

Steps in the Purchase-to-Pay Process

1. Purchase Requisition - an internal document generated by a user or department requesting goods or services. 2. Sourcing - A strategy in which a company seeks to find the most cost-efficient location for manufacturing a product or purchasing a product or service. 3. Purchase Order (PO) - Is a binding contract between the buyer and seller setting forth quantities, prices, discounts, payment terms, date of shipment or performance o a service, and other associated terms and conditions. 4. Goods/Services Receipt - Transaction is recorded, depending on the type of receipt, either an asset or an expense is increased in the general ledger (GL) and a liability recorded. 5. Supplier Invoice and 3-Way Match - When the supplier invoice is received, this triggers accounts payable, a liability, to be recorded to offset the liability generated with the inventory receipt. The invoice receipt is also a transaction since it affects the GL. During the inventory/service receipt and the suppler invoice transactions, the ERP system performs a check to compare the three documents, also known as a three-way match. 6. Payment

Vendor Managed Inventory (VMI)

A process for organizing inventory replenishment in which the buyer goods sends its supplier information about sales and inventory levels and allows the supplier to make decisions about restocking.

Inspection Lot

A sample of material chosen according to a sampling plan.

Manufacturing Module

A core module in ERP systems for the manufacturing sector, manages production and procurement planning as well as shop floor control (production execution) activities.

Cash-to-Cash Cycle

A measure of the number days between the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer

Material Requirements Planning (MRP)

A software-based production planning and inventory control system initially developed in the 1970s. An integral component of the Manufacturing module. Assists production managers in scheduling and placing orders for items of dependent demand.

Bin (Coordinate)

A unique address for every storage location in the warehouse.

Material

Any inventory item that the company procures, manufactures, stores, and ships must have a record in the material master table. Because inventory is used in so many different ways in the company and can represent a large dollar amount on the balance sheet, it is important to maintain The integrity of this data. Of course, this point applies to all data in the ERP system, but having incorrect data in the material master table can affect sales, shipping, warehousing, inspecting, valuation, and manufacturing.

Dependent Demand

Are components of finished goods--such as raw materials, component parts, and subassemblies--for which the amount of inventory needed depends on the level of production of the final product.

Supplier Performance Management (SPM)

Buyers can assess supplier performance using a host of metrics, including quality, delivery, cost, and responsiveness, in an effort to cut costs, reduce risks, and drive continuous improvement.

T/F: A bill of material is a list of all the raw materials and components needed to produce a finished product

True

Spend Analysis

Collecting, classifying, and evaluating the expenditures of an organization to identify any wasteful spending and contracts that need to be renegotiated.

Inventory Status Report

Contains information about the on-hand balance of inventory including raw materials sub-assemblies, and even finished goods.

Wave Picking

Customer deliveries are organized into "waves" based upon common characteristics such as route, carrier, or scheduled time of departure. Depending upon the capabilities of the system, this process may be automated, with picking waves "released" throughout the workday for processing and shipment.

Capacity Plan

Details the start and completions dates for planned orders while taking into consideration the availability of production personnel and machines.

Purchasing Plan

Details what needs to be purchased and when POs should be released so that the materials will be received in time to support production.

Passive Tags

Does not need battery power Activates itself and transmits data using power generated by the radio waves from the RFID reader Usually less than 3 meters

Tolerance Limits

ERP systems allow companies to configure these, which allow for slight differences between quantities received and quantities ordered and actual purchase price versus price on the PO, so that an inordinate amount of time is not spent "chasing" immaterial differences.

The technology used to exchange business event data electronically between companies in a standardized format is called_____________________.

Electronic Data Interchange (EDI)

Catalog Management

Functionality in SRM that makes available supplier catalogs to procurement and other staff so they can easily purchase items. Empowers end users to find and purchase policy-compliant products and services across multiple catalogs using familiar shopping cart experience.

Request for Quote (RFQ)

Is a business document that solicits price and delivery quotes for a specific quantity of a type of goods and/or services.

Work Center

Is a location in the plant where value-added operations are carried out. It can represent people or groups of people, machines or groups of machines, or assembly lines. Each one has an available capacity, such as how many labor-hours or machine-hours can be performed in a given amount of time. Formulas are entered into each one so that the costs of operations can be calculated. Is also assigned to a cost center. Information about setup and breakdown time needs to be established for each work center, so the correct time is allocated to the overall estimated duration for a factory order.

Cycle Counting

Is often employed in which a small subset of inventory, in a particular location, is counted on a specified day.

Transportation Management System (TMS)

Manages and optimizes inbound (supplier-to-plant), outbound (plant-to-customer) and internal stock (plant-to-plant) transport.

Contract Management

Managing best-in-class contracts with choice suppliers. Also enable companies to consolidate their total spend across business units in order to negotiate better prices.

The_________________ module of an ERP system makes sure that products bought, made, and sold adhere to company standards and are safe and uniform.

Quality Assurance (QA)

Transceiver

Reads the radio frequency and transfers the data in real time to the ERP system. Allows the reader to identify, categorize, and tack moveable items without requiring line of sight.

Supplier Relationship Management (SRM)

Refers to a company's comprehensive approach to managing interactions with its suppliers, similar to how it may use a CRM system to manage interactions with customers.

Planned Independent Requirements (PIR)

Second input in demand, planned production or sales quantities that are based on some sort of forecast procedure.

Unrestricted Stock

Stock that can be accepted from a supplier, used further in the manufacturing process, or sold.

Blocked Stock

Stock that cannot be used ans is not valued on the balance sheet.

Warehouse Management System (WMS)

Supports the day-to-day operations in a warehouse. includes logic to control the movement of inventory into, out of, and through the warehouse and provides the exact location of inventory in the warehouse.

Radio Frequency Identification (RFID)

Systems that consist of tiny computer chips called tags that are embedded in products and packaging, allowing them to be tracked via wireless networks by a transceiver.

Supply Chain Management (SCM)

The art and science that goes into making sure that the right product or service gets into the right customer's hands in the right quantity and at the right time. Based on two key concepts - Nearly every product that reaches a consumer represents the cumulative work of more than one company, the companies are collectively referred to as the supply chain. -While supply chains have been around for many years, most companies have only focused on what happens within their four walls.

Purchase-to-Pay Process

The main object of which is to order goods and services when needed, receive them in satisfactory condition, and pay only for what is ordered and received.

The outsourcing of inventory replenishment to suppliers is called__________________.

Vendor Managed Inventory (VMI)

Two-Step Picking

Warehouse employees pick the required materials for a group of customer orders. The material is accumulated in a staging area and individual orders are then picked from this area. This strategy minimizes the number of trips through the warehouse and is particularly useful in a small package shipping environment where the same product may be ordered by a large number of customers.

Dynamic Cycle Counting

Which allows normal warehouse operations to continue during bin counts without the requirement for bins to be blocked for placement or removal, resulting in even less business disruption.

Value-Added Network (VAN)

Will act like a "post office" for many different companies conducting EDI

Master Production Schedule (MPS)

a plan detailing what finished goods to produce, in what quantities, and at what dates

Active Tags

have an internal battery that constantly transmits data and permits them to be read from up to a few hundred feet away

Bill of Material (BOM)

list of the materials (including quantities) needed to make a product.

Trading Partners

participants in an EDI exchange of business data

Restricted Stock

stock that cannot be used in production or sold.

Electronic Data Interchange (EDI)

the computer-to-computer exchange of business documents from a retailer to a vendor and back

EDI Translator

used to translate the EDI format so the data can be used by the ERP system