First off, let me confess I’m a gadget freak and a fool for technology. I love shiny little boxes with winking lights and buttons that miraculously do things for me. Things that previously required physical effort or mental cycles or guess work to complete.
I will always tend to look upon new technology as something positive and likely to make the world a better place.
However, I also realize there are some folks out there that are not so easily convinced; folks that look upon new technology with a degree of healthy skepticism. They aren’t quite as ready to jump in with both feet.
Finally, there are those that nearly always believe that the status quo is better than what seeks to replace it when it comes to technology. Those people are lost causes and I’m not going to address those luddites today.
Today, I want to just talk about the impact of technology on ERP. Has technology had a largely positive or negative effect on ERP as you know it?
One of the first explanations of what exactly ERP would do for an enterprise was explained to me over 20 years ago. The fellow mentoring me painted a picture of a shop floor with a plant manager’s glass enclosed office elevated off the floor to afford an unencumbered view of all plant activities.
The manager would monitor the activities on the floor, looking for bottle necks, snags, missing workers or unattended stations. That person might have some ability to see how part inventories were holding up in relation to scheduled production.
My teacher then explained that this was really not a suitable system since most factories built multiple products, dealt with fluctuating demand, volatile expenses and myriad other factors. Typically the manager in the glass box would not be able to see the plant floor because the glass windows would be covered with flip chart pages listing assorted production variances and demand changes.
Over in the administration building another side of the story would play out with the finance and executives guys waiting for sales figures to be verified. Those numbers would drive estimates for sales in the next reporting period. The sales estimates would in turn drive factory activity and supply requirements.
Automating these processes under the banner of ERP has been a long and not always pretty journey. But, the overall result I think most would agree has been positive. Frankly, I would argue that without EPR we would not be able to survive in the world of manufacturing as we know it today.
Think about the world of 30, 40 or 50 years ago. Plants, suppliers and markets were all located within a very short distance from one another. Most manufacturing was regional, some was on a countrywide basis but very few operated on a world-wide basis.
For the most part, demand was on a steady, ever increasing trajectory. The challenge for manufacturers was to keep up without over buying. Left over inventory would result in end of year sales and blow out discounting.
Look how much it has changed.
- Regulatory compliance issues – This is huge now and affects almost any industry.
- Globalization – Very few manufacturers can exist selling on a regional or national basis. You must be selling to the world.
- Globalization – Competition demands razor thin margins and this means chasing the best price, service and quality in your supply chain no matter where on the planet you have to look.
- Complexity of the product – Technology begets more technology. More and more manufacturers are building highly sophisticated products that demand highly sophisticated manufacturing environments.
- World-wide competition – You are selling your product everywhere, but your competitors are doing the same.
- Education of your workforce – Today’s manufacturing jobs demand a highly trained, technologically sophisticated work force.
This list could go on for pages, but you get the picture.
In many ways, this is the legacy that has been left over from the “age of the computer.” When one thing wants to go faster, everything eventually wants to go faster. The overall effect is the velocity, complexity and volume of business has increased and will continue to increase.
Technology will be the agent that helps us enable, react to, participate in and initiate that change.