Pinnacle Software Consultant Matthew James explains why getting materials requirement planning exactly right is so critical. He discusses why putting your bills of materials under the microscope is the essential first step to a successful software implementation project.
No room for randomness
When the Pinnacle team visit a new customer to start planning the implementation of their new software in detail, we ask them to analyse how their business works and to review their established processes with a critical eye. The new solution is then built on a firm foundation of streamlined, efficient operations.
A major priority is to look at how many BoMs are in use and to start breaking them down. The BoM, of course, triggers the reservation of components in stock and requisitions for components that are out of stock.
Often we find that detailed written BoMs are kept only for certain products: below a certain level, ordering stock is ad hoc. We point out that for stock data to be accurate, the business must have a clear understanding of exactly what is needed to manufacture every product.
Eliminating key man dependency
Usually the information exists, but it’s held in the heads of certain staff, who use their experience, and often their instinct, to predict what will be needed. Dave in the storeroom knows from a glance at the shelves what stock is available, while Gary on the production line can calculate the materials required off the top of his head.
We encourage our customers to eliminate this key man dependency by capturing the knowledge that Dave and Gary have accumulated over the years, so that if they are off sick, on holiday or leave the company, it can function perfectly well without them – better, in fact, as their informed guesswork is replaced with true business intelligence.
It pays to plan
Undertaking this exercise is often an eye-opener for our customers. It reveals inaccuracies and discrepancies. Even without the subsequent implementation of new software, the business is already in a stronger position.
Creating formal BoMs also uncovers opportunities to maximise purchasing power. If you can consolidate purchases of stock you expect to use over time, it strengthens your ability to negotiate on price with your suppliers. In contrast, picking up the phone and ordering as and when stock runs low dilutes your purchasing power.