Element for a Good Inventory System

The Elements of a Good Inventory System

Every company have inventory problem, every company will require the great system to manage their inventory so it will help you become more productive. But no matter how good you control, you are still fail if you don’t do some very basic things.

You may be able to improve on our recommendations or your enterprise may have to do things differently but if you follow our recommendations you’ll wind up with a pretty good system.

The Critical point of a great Inventory System

• Well Organized Location Names
• Location Labels that are easy to read, and unambiguous
• Unique, Short, and Unmistakable Item Numbers
• Units of Measure
• A Good Starting Count
• Software that tracks all inventory activity
• Good Policies
• Most Important: People who know and follow good policies

I will explain in my next post why these elements are so important.

Vivienne from www.mrp.com.my

Do you have a software to address your manufacturing problem ?

Do you have a software to address your manufacturing problem ? 

ERP software packages address all kinds of functions, including accounting, inventory, purchasing, sales, CRM, service, project management, financial applications, human resources and etc

These functions are important to every company, but if you are running a manufacturing company and you do not have the right software to address the basic requirement of your manufacturing, you will never reach your efficiency potential.


What are the basic features that are essential to any manufacturing industries ?  Here is my list.

1. Routings 
2. Bills of Material 
3. Costing
4. MRP
5. Job Release
6. Job Traveler 
7. Work Center Scheduling
8. Job Tracking 

Who and what do you need for an implementation?

1. Project Manager-This person must create and manage the project schedule, tasks and communication.
2. Implementation/Core Team-The core team should consist of a cross functional group that understands your business, the project goals and knows the history of the organization.
3. Systems-Determine what systems are required to support the new application. What interfaces are required to other applications?
4. Business Processes-Verify that current processes are documented. These will be the baseline to determine how well the new application meets your business requirements and how the new application will impact current processes.

ERP is not just software

ERP ( Enterprise resource planning) is not just software for me. everyone hear a lot about ERP software but do you really understand what is ERP all about ?


ERP project is not as simple as installing a piece of software. So what else is involved ?


ERP Software is
33 % software
33% Implementation/training/ process
33% guidance


The software provides the basic foundation, it is basically the tool to get the information enter into the system. The best software system is the one that does what your company needs it to do.

Keep in mind that even the best system doesn’t work if you don’t set it up and use it properly. That’s why it is only 33% of the equation. Don’t get me wrong the software is important but not everything. it still depend how your company structure setup
Implementation/training/process
This portion is equation very important. How are you going to set-up, use and train on the system. A solid plan is needed here. Whether you use your vendor or your internal people, the person or people you lean on here should 

• 1-Have a deep understanding of your business and the flow of information through it. 
• 2-Understand the group of employees that will be interacting and using the system  
• 3-Deliver training in the method that best suits the individuals users.  
• 4-Understands the way the software works

Guidance


If you have never used or seen an ERP system and don’t have anyone internally who has, you will need to rely on your vendor here. Many organizations think they don’t need this but the reality is the project will cost less and take much less time with the proper guidance. There are many decisions to make when installing ERP, many forks in the road, choices are great but if you can’t visualize the outcome decisions become difficult.


Exposure to setting up and using systems here is critical. If you don’t have anyone internally to provide this for you make sure you do your homework with the vendor. Make sure the have the technical ability to understand your business and how information should flow.


ERP is not just software it is a combination of software, processes and procedures used to reduce waste, create efficiency and provide a platform for growth.

Select the best team members for ERP project.

Select the best team members for the project.


The better the project team members, the better the project’s results. Having knowledgeable, team-oriented people on the project will be invaluable for success. Remember the following criteria for selecting team members:

1. Choose Members Based on Knowledge and not Tenure
2. Keep the Group Size Between Five and Ten People
3. Identify Not Only the Team Members but Departmental Back Up Representatives as well
4. Choose Members Who Can Dedicate the Time Required for Project Participation
5. Choose Members Who are Well-Liked, Well-Known, Considered Knowledgeable, and   Respected within the Organization
6. Choose Positive Individuals Who Welcome Change

Selecting team members who are the least valuable to the organization to be on the project team because it will minimize the disruption to daily operations will doom a software selection project before it begins.

Who will provide my ERP training?

The best Partners have dedicated, experienced people focused on training.

Take note : a highly skilled implementation consultant does not always make a good trainer!


Ask to meet the trainer or to audit a training session so you can evaluate the quality of the training.
 
for me, i will prefer a consultant with accounting knowledge, so we can communicate the same level.
 
Vivienna from erp2u.com

What training is included in the quote for which modules or parts of the system?

Make sure your Partner includes sufficient training in their quote or it may cost you more money in support down the road.

You will also deal with the immeasurable cost of frustrated and unproductive users.

Vivienna from erp2u.com

Project Management: Who’s guiding this ship?

You should see time for “Project Management” listed in your quote. If it’s not listed separately, it’s probably built into the quote. At first, you might balk at more overhead, but a well-managed project will save you money in the long run.

Ask: Will I have a specific project manager assigned to my project? What is this person’s experience level?
Ask to meet your project manager in person. Make sure you like their personality and trust their expertise, as you will be working very closely with this person over the duration of the project.


Insist that this person be at all critical meetings over the course of the project. For the most successful project, assign someone to manage the process on your side and to communicate regularly with the Partner.

Make sure the proposal clearly states who is responsible for what - on your side and the Partner’s side.
For example, who will do the data extraction from your current system to enter into your new system? If the Partner expects to receive the data from you and finds out you cannot provide it, he may charge you for extra billable hours.

Clarifying expectations upfront saves you both grief and dollars as the project moves forward.
 
vivienna from erp2u.com

The Hardware-The Engine That Makes It Go

Many companies carefully budget for the costs of the software, the services, and everything in between, but they forget to factor in the costs for the hardware required to make it all run. Missing this cost can be a painful stab to your budget.


We have outlined a few of the critical hardware pieces to factor into your budget.

Many accounting software Partners do not sell hardware, but they should have partnerships with experienced IT companies who can review your options with you.

Customization & Custom Development:

Proceed with caution!

Minor customizations made by an experienced Partner can give you the one feature you need to make the software a perfect fit.


But major software customization should only be considered if you have a business critical process that cannot be changed.
 
To Save $ : To minimize customizations, take the time to fully define and review your internal processes. This exercise may uncover ways you can be more efficient using the software as it is.
 
Vivienna from erp2u.com

ERP Data Conversion

When you have figured out approximately how many records will need to be converted, the Partner can give you an estimate of the amount of time involved.

To Save $: Some companies find that hiring a temp worker or intern to manually enter information into the new system is a less expensive alternative.

ERP Data Conversion

Data Conversion: Moving a Rock versus a Mountain

The “X” factor (or big unknown) in any services quote is data conversion. Companies often overlook this and end up with a big, fat bill they didn’t expect.

The most obvious way to minimize your costs for data con-version is bring into the new system only data you need to use often. Remember, even if you choose not to convert some data, you’re not losing it forever.

If you’d like to refer back to historical information such as invoices and AP history, you can keep hard copies of reports, or you can choose to keep the old system “alive” even after you switch to the new system.

To Save $ : One way to save money is to convert data from the old system at a summary level instead of a detailed level. For example, convert a summarized open invoice as BF figure for an entire month’s activities instead of bringing over open invoice entry for the month.

Vivienna from erp2u.com

Advantages VS Disadvantages of ERP Systems

Advantages of ERP Systems
There are many advantages of implementing an EPR system; here are a few of them:

 

1. A totally integrated system
2. The ability to streamline different processes and workflows
3. The ability to easily share data across various departments in an organization
4. Improved efficiency and productivity levels
5. Better tracking and forecasting
6. Lower costs
7. Improved customer service

Disadvantages of ERP Systems

While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced:

 

Usually many obstacles can be prevented if adequate investment is made and adequate training is involved, however, success does depend on skills and the experience of the workforce to quickly adapt to the new system.

 

1. Customization in many situations is limited
2. The need to reengineer business processes
3. ERP systems can be cost prohibitive to install and run
4. Technical support can be shoddy
5. ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.

The Ideal ERP System

An ideal ERP system is when a single database is utilized and contains all data for various software modules. These software modules can include:

Manufacturing: Some of the functions include; engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etc.

Financials: Accounts payable, accounts receivable, fixed assets, general ledger and cash management, etc.

Human Resources: Benefits, training, payroll, time and attendance, etc

Supply Chain Management: Inventory, supply chain planning, supplier scheduling, claim processing, order entry, purchasing, etc.

Projects: Costing, billing, activity management, time and expense, etc.

Customer Relationship Management: sales and marketing, service, commissions, customer contact, calls center support, etc.

Data Warehouse: Usually this is a module that can be accessed by an organizations customers, suppliers and employees.

ERP Release

Ask When was the last release and when is the next release scheduled on the ERP Software
?
Companies stuck with old versions risk losing support from the vendor or having compatibility issues with newer technology. Plus, each release is packed with useful new features.

ERP Software Editions: One size doesn’t fit all

A vendor may offer different editions of a software product for different levels of functionality. Of course, the higher edition you choose, the higher the price.

So how can you determine which one you need?
First, it is important to be comprehensive in determining the functionality you need for every phase of your project—now and in the future.

Once you confirm that the functionality is available for all your long-term needs, you can decide how much of it you need to buy right now.

Can ERP Add additional modules ?

Ask: Can I add additional modules, or transition to the advanced version, as my needs change in the future?

If you have the option to upgrade to the higher edition later, then purchase the edition that gives you the functionality you need for at least the first year. This will save you money in several ways.

Is the ERP system priced by concurrent users or named users?

In our opinion, concurrent user pricing is usually the most cost effective option.
This means, if you have 10 people who use the system, but only 5 of them need access at the same time, you only need to pay for 5 licenses.

To Save: If some people only need access to reports, consider publishing these on a web portal with limited access instead of buying an extra user license.

ERP User Count: Choose wisely to save a ton of money

The first step to determine software cost is to decide the num-ber of people (or users) that will need access to the system.

Remember, this can include people who may be outside the accounting department. For example, salespeople who man-age orders may need access to look at invoices or purchasing history.

People in the shipping area may need to see whether a particular order is paid and ready to be shipped.

A good software partner will guide you through this process and help you determine what type of access is needed by different users.Of course, the fewer users you purchase access for, the lower the price.

Is the ERP software sold by user-based pricing or module-based pricing?

User-based pricing means you will pay one license fee per user, which includes access to all modules in the system.

Module-based pricing means you buy the functionality you need (general ledger module, accounts payable module) on an a la carte basis, plus a small per user fee.

If you only need very limited functionality, both now and in the future, buying a module based system can sometimes save you money.

For most companies though, user-based pricing is often a better value and a better investment because you get more for your money.