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ERP systems do not exploit the leverage lot-sizing has on competitive
capability simply because these systems are not designed to do that.
The planner is responsible to provide the ERP system with appropriate
planning parameters, including lot-size or order policies and stock
trigger points. The planning modules of the ERP system basically
convert forecasted or booked demand into planned orders using the
planner-supplied lot-sizing parameters.
The planner is thus accountable to keep planning parameters
such as lot sizing policy, capacity information, stocking levels
and safety stocks up to date so that the MPS/MRP can use these to
come up with a good plan (planned orders, etc.).
Unfortunately, these parameters are rarely revised as the context
of the plant and the market changes. They eventually fall out of
touch with reality. In fact, these parameters are often simply
transferred from old system during the implementation of the ERP
system. This leads to sub-optimal planning and execution, and a
lackluster competitive performance.
The optimum manufacturing strategy is one that fulfills customer's
demand within the plant constraints with a minimum of inventory, and the
lowest total variable cost. This implies :
- program lot-sizes according to management objectives, your customer's
needs and your plant's constraints,
- taking advantage of shop-floor improvements
- recognizing which work centers are bottlenecks,
- integrating the concept of the product family mix,
- recognizing the impacts of set-ups on lot-sizing in a capacity
constrained environment.
In a nutshell, this is the concept behind Lance-Lot
as it relates to optimizing the performance and payback of ERP systems.
It is enabling technology for the Best Practices related to appropriate
lot-sizing for competitive advantage. Lance-Lot calculates
precisely the lot-sizes required for each item in the product mix, and then
proceeds to calculate all the other parameters that the ERP system needs
to plan effectively.
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