TASKS TO BE COMPLETED IN MONTH 3
Complete
Task Yes No
3-1. Series of business meetings conducted for
steering committee.
______ ______
3-2. Series of business meetings conducted by
project team people for all other persons
involved with the slice.
______ ______
3-3. Enthusiasm, teamwork, and a sense of
ownership becoming visible throughout
all groups involved in the slice.
______ ______
3-4. Inventory record accuracy, including
scheduled receipts and allocations, at 95
percent or better for all slice items.
______ ______
3-5. All slice bills of material at least 98 per-
cent accurate, properly structured, and
sufficiently complete for ERP.
______ ______
3-6. All item data for slice products and com-
ponents, plus any necessary work center
data, complete and verified for reason-
ableness.
______ ______
TASKS TO BE COMPLETED IN MONTH 4
Complete
Task Yes No
4-1. Executive steering committee authoriza-

Quick Slice or other improvement initia-
tive now underway.
______ ______
Quick-Slice ERP—Implementation 301
class="bi x0 y33 w3 h6"
PA R T I V
Beyond ERP
Implementation
class="bi x0 y0 w1 h1"
Chapter 15
Operating ERP
Imagine the feelings of the winning Super Bowl team. What a kick
that must be! They’ve reached their goal. They’re number one.
Now, imagine it’s six months later. The team, the coaches, and the
team’s owner have just held a meeting and decided to cancel this
year’s training camp. Their attitude is who needs it? We’re the best in
the business. We don’t have to spend time on fundamentals—things
like blocking, tackling, and catching footballs. We know how to do
that. We’ve also decided not to hold daily practices during the sea-
son. We’ll just go out every Sunday afternoon and do the same things
we did last year.
Does this make any sense? Of course not. But this is exactly the
attitude some companies adopt after they become successful ERP
users. Their approach is: This ERP thing’s a piece of cake. We
don’t need to worry about it anymore. Wrong, of course. No Class
A or B ERP process will maintain itself. It requires continual at-
tention.
There are two major objectives involved in operating ERP:
1. Don’t let it slip.
2. Make it better and better.

SOFTWARE
SUPPORT
ERP PROVEN PATH
PHASE I
BASIC ERP
PHASE II
SUPPLY CHAIN
INTEGRATION
PHASE III
CORPORATE
INTEGRATION
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
+
MONTH:
GO/NO-GO
DECISION
COST/
BENEFIT
VISION
STATE-
MENT
FIRST-CUT
EDUCATION
AUDIT/
ASSESSMENT I
DATA INTEGRITY
AUDIT/
ASSESSMENT II
Figure 15-1
lesson the hard way. They’ve “taken their eye off the ball,” and as-

Operating ERP 307
tion, and operating ERP at a Class A level is one of the best ways to
do that.
O
RGANIZATION
Don’t disband the ERP project team and the executive steering com-
mittee. Keep these groups going. They’re almost as important after
a successful implementation as before. However, some changes in the
way they operate should be made.
The ERP Operating Committee
After implementation is complete, the ERP project team should re-
main in place, with the following changes:
1. The group now has no full-time members; therefore, it’s prob-
ably a bit smaller than it was. Its membership is now at or near
100 percent department heads.
2. Because ERP is no longer a project but is now operational, the
name of the group might be changed to ERP operating com-
mittee or something along those lines.
3. Group meetings are held about once a quarter rather than
once a week.
4. The chairmanship of the group rotates among its members,
perhaps once or twice a year. First, a marketing manager
might be the chairperson, next a manager from accounting,
then perhaps someone from engineering or purchasing. This
approach enhances the collective sense of ownership of ERP.
It states strongly that ERP is a company-wide set of processes.
The group’s job is to focus formally on the performance of the
ERP processes, report results to top management, and develop and
implement improvements.
Spin-off Task Forces

Team-Fly
®


3. How quickly can it be fixed? (Set a date—don’t let it drift.)
Operating ERP 309
1
This can happen in a separate meeting or as a part of a regularly scheduled ex-
ecutive staff meeting.
2
The entire list of questions with instructions to their use is titled The Oliver
Wight ABCD Checklist for Operational Excellence (New York, NY: John Wiley &
Sons, 1992).
Each time the ABCD Checklist is reviewed, the results are for-
mally 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.
Who does this communication? Who presents these results? The
part time successor to the full-time project leader. In other words, the
chairperson of the ERP operating committee.
Some companies do a formal re-certification once per year. Once
a given business unit hits Class A, their challenge is, first, to stay
there and, second, to get better and better. The Class A certification
is good for only one year, and then it must be “re-earned.” We en-
dorse this approach. It’s so easy to let things slip with so many
things competing for attention. Re-certification helps to really fo-
cus attention once per year, and “get everyone’s heads” back into
ERP.
Operational Measurements—Other
Listed below is a series of detailed technical measurements, not ex-
plicitly covered in the ABCD Checklist, relating to the specific ope-
ration of certain ERP functions. This list will probably not be 100
percent complete for any one company, and, further, it contains

rescheduled in versus
rescheduled out. Here again, these numbers should be close to
equal.
Except for inventory turns, most of these measurements are done
weekly. Typically, they’re broken out by the planner including, of
course, the supplier schedulers.
In Capacity Requirements Planning, some companies track the
past due load. Target: less than one week’s work. Frequency: weekly.
In plant floor control, the following are frequently measured:
1. On-time production order completions, to the operation due
date. A good measurement here is to track late jobs in (arriv-
ing) to a work center compared to late jobs out (completed).
This recognizes that manufacturing departments shouldn’t be
penalized for jobs that arrive behind schedule. Some compa-
nies expand this to track total days of lateness in and out
rather than merely members of jobs. This helps to identify
people who may be making up some of the lost time even when
jobs are completed late.
Operating ERP 311
3
Supplier orders refer to the firm orders (scheduled receipts) in the supplier
schedule and, for those items not yet being supplier scheduled, conventional pur-
chase orders.
2. Capacity performance to plan. Standard hours of actual out-
put compared to planned output. A good target: plus or mi-
nus 5 percent.
The frequency of the above: weekly; the breakout: by manufactur-
ing department. Please keep in mind these are ERP-related meas-
urements only, and are not intended to replace measures of
efficiency, productivity, and others.

ERP as effectively as before.
People tend to forget.
They need refresher education and training. To borrow a concept
from the physical sciences, there’s a half-life to what one learns. If
that half-life is one year, people will remember about half of what
they learned about ERP last year, 25 percent from two years ago.
Business conditions change.
For any given company, its operating environment three years
from now will probably differ substantially from what it is today.
Companies develop new product lines, enter new markets, change
production processes, become subject to new governmental regula-
tions, acquire new subsidiaries, find that they’re operating in a buy-
ers’ market (not a sellers’ market), or vice versa, and on and on and
on.
Operating ERP means running the business with the ERP set of
tools, which tends not to change.
However, business conditions do change. It’s necessary periodi-
cally to match up the tools (ERP) to today’s business environment
and objectives. These may be quite different from what they were a
few years ago when ERP was implemented.
What’s needed is an ongoing process.
That is, one where people can review the tools they’re using to do
their jobs, match that up against today’s requirements, and ask them-
selves, “Are we still doing the right things? How might we use the
tools better? How could we do our jobs differently to meet today’s
challenges?” We’re back to behavior change. (See Chapter 7.) It’s
necessary after implementation, as well as before. And the way to fa-
cilitate behavior change is via education.
Operating ERP 313
Ongoing ERP education should be woven tightly into the opera-

Manufacturing, done properly, will not allow you to neglect your
ERP processes.
Let’s take the case of a company that first implements ERP suc-
cessfully, and then attacks Lean Manufacturing.
4
Let’s say the com-
pany allows ERP to slip, to deteriorate—perhaps by not keeping the
inventory data accurate, or by not managing demand properly, or by
314 ERP: M I H
4
This sequence isn’t mandatory. Frequently, companies will go after Lean Manu-
facturing first. Some companies implement them simultaneously.
allowing the bills of material to get messed up, or by violating time
fences in the master schedule, or all of the above. What will happen?
Well, before long, the problems created by not having excellent
plans and schedules will begin to affect (infect?) the Lean Manufac-
turing processes. Poor plans and schedules will inhibit Lean Manu-
facturing from working nearly as well as it can and should. The
reason: No longer will there be inventories, queues, and safety stocks
to cover up the bad schedules. Stockouts are much more painful in
this environment. Lean Manufacturing, in that case, will “send up a
rocket” that there are major problems here. It will scream to get ERP
back to Class A. And that’s great.
But that’s not all. Lean Manufacturing does more than keep ERP
from slipping. It also helps it to get better and better. How so? By
simplifying and streamlining the real world.
• As setup times drop, so do order quantities and, hence, inven-
tories.
• As quality improves, safety stock can be decreased and scrap
factors minimized.

ness and not at the mercy of the informal system, levels of customer
service and productivity previously thought unattainable—to many
companies today this sounds like nirvana. However, it’s not good
enough.
Are all Class A companies perfect? Nope. Are there things these
companies could do better? Certainly.
The message is clear. Companies should not rest on their laurels
after reaching Class A with ERP. Don’t be content with the status
quo. It’s more important than ever to go after those additional pro-
ductivity tools, those “better mousetraps,” those better and more hu-
mane ways of working with people. Many of these projects can be
funded with the cash freed up by the ERP-generated inventory re-
ductions alone. Look upon your excellent ERP processes as an en-
gine, a vehicle, a launch pad for continued and increasing excellence.
And we’ll talk more about that in the next chapter.
316 ERP: M I H
IMPLEMENTERS’ CHECKLIST
Function: Operating ERP
Complete
Task Yes No
1. ERP project team reorganized for ongoing
operation, with no full-time members and
rotating chairmanship.
______ ______
2. Executive steering committee still in place.
______ ______
3. ABCD Checklist and financial measure-
ments generated by project team at least
twice per year and formally reported to ex-
ecutive steering committee.

6. Discontent with the status quo and dedica-
tion to continuing improvement adopted as
a way of life within the company.
______ ______
318 ERP: M I H
TEAMFLY

®

Chapter 16
The Strategic Future
(Phase III)
S
EE THE
F
UTURE
The fortune teller sings the familiar refrain—
“
Come and see the fu-
ture.” Are you tempted? Do you think that anyone can see the future
or do you want to really know? Well, relax. We are not going to tell
your fortune or your future. However, we are going to tell you that,
with the tools provided by Enterprise Resource Planning, particu-
larly in combination with Enterprise Software, you can now create a
dramatically changed future for your company.
This is phase III on the Proven Path (Figure 16-1) and represents
the brave new world of the future. Although ERP phases I and II are
distinct and have endpoints, phase III is the ongoing effort to not
only keep ERP alive but to capitalize on the full potential that now
exists in the company.
The capabilities that you can create with ERP, particularly when
coupled with Enterprise Software, are so dramatic that failure to
move to a new corporate strategy may be failure indeed. For the first
time, the supply chain can now be a key factor in creating corporate
strategy instead of a limiting factor. This new, dynamic supply chain
can deliver benefits that should prompt a complete revision of how
the company does its business. In this chapter, we are going to give

SUPPORT
ERP PROVEN PATH
PHASE I
BASIC ERP
PHASE II
SUPPLY CHAIN
INTEGRATION
PHASE III
CORPORATE
INTEGRATION
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
+
MONTH:
GO/NO- GO
DECISION
COST/
BENEFIT
VISION
STATE-
MENT
FIRST-CUT
EDUCATION
AUDIT/
ASSESSMENT I
DATA INTEGRITY
AUDIT/
ASSESSMENT II
Figure 16-1
you some examples of how corporate strategy might change and
some ideas on how to sell the concept. Certainly, there are hundreds

tremely important but excess assets are simply balance sheet
baggage. Even a real estate developer can have too many assets if the
market does not support the need for more offices or more houses.
We submit to you that no business ever has enough time or knowl-
edge. If there were a way to bank these two elusive concepts, every
company would be bragging in its annual report about the accumu-
lation of time and knowledge. Time and knowledge are the untar-
nished currencies of the past, present, and future. Finding ways to
The Strategic Future (Phase III) 321
move faster with more knowledge will always be in style and will pro-
vide the ability to generate more money, more assets, or any other im-
portant corporate measure. The million (billion?) dollar question is
how to use time and knowledge to enable major business change.
We emphasize this topic because the new corporate strategy avail-
able with ERP is based on how you choose to use time and knowl-
edge. You now have the knowledge of demand, capacity, and costs of
decisions that make the supply chain transparent. This knowledge
comes to you when you need it for long and short range planning and
execution. The addition of ES makes this capability even more dra-
matic. Data flows instantaneously into the total system in a way that
is now directly usable to shape and control the supply chain. No
longer is the company limited by the supply chain. Now, the supply
chain can be recreated to reshape the company.
How many times has each of us said: “If we only knew ,” or “If
we only had a little more time ?” ERP won’t solve every such
question in the company but the supply chain questions that are at
the heart of costs, quality, and customer service should now be an-
swered in a very different fashion.
Z
ERO

DC may plan for plus or minus 15 percent. That prompts the central
DC to plan on plus or minus 20 percent and the plant to plan for plus
or minus 25 percent. By the time the suppliers see the impact, the
plus or minus 10 percent variation looks like a cross-section of the
Rocky Mountains. Without proper knowledge of demand through-
out the supply chain, what looks like logical protection becomes a
huge pile of useless assets that protect against variation that never ex-
isted.
For those who have been schooled in total quality thinking, you
know that inventory also will hide product problems from quick cor-
rection. By the time that customers report a problem with a product,
there may be weeks of inventory of the same product sitting in a
warehouse waiting to be scrapped. With lower inventories, product
quality problems will become visible—and fixable—sooner.
The same thing is true for new products. If your product line has
periodic additions, improvements, or changes, then you’re no doubt
familiar with dumping obsolete inventory. The more product or raw
material that sits in the supply chain—the greater the risk of obso-
lescence.
The answer for inventory is the responsive supply chain supported
by the knowledge and time provided by ERP. The only way to even
approach the concept of zero inventory is through greater knowledge
of demand and supply. Just-in-Time production is certainly the
ideal, but true JIT is normally not possible without the tools pro-
vided by ERP. Trying to run a Just-in-Time system is like playing
Russian roulette if there is no communication and consensus of de-
mand and capacity.
With zero inventory, distribution centers (DCs) become true dis-
tribution centers and not warehouses. A company may need to con-
The Strategic Future (Phase III) 323

that last one may be an exaggeration, but at least you’ll feel younger!)
I
NTERNET
With the supply chain in control via ERP, new ways to access the var-
ious parts of the supply chain using the Internet become a real strat-
egy option. We receive lots of questions about the Internet as the
answer to connecting your customers and suppliers. Typically, we are
supportive since the Internet offers such great capability to link dis-
324 ERP: M I H