ERP Implementation for Production Planning at ECakes Questions/Answers per the case attached – Case Study Example
ERP Implementation for Production Planning at ECakes Make-to-order (MTO) refers to is a production strategy that allows a company to manufacture products that are already on order for a week or a month for specific permanent customers. This type of production occurs only after demand is confirmed and therefore the company can go ahead and manufacture a product that has immediate market(Portougal 1-9).
Make to stock (MTS) is the direct opposite of the MTO such that a company manufactures good to be stocked depending on demand forecasts. The stocks are usually managed by a rule called the min-max rule. In this rule production only starts when the stocks are below the minimum or are approaching the minimum and will continue until they reach the maximum level. Therefore production is triggered by stock levels rather than customer orders (Portougal 1-9).
EA wanted MTS over MTO for a number of reasons. The first reason is that it allowed for expansion of the market by attracting new customers and by taking advantage of unexpected opportunities. The second reason is that it allowed for the use of capacity more efficiently through the use of inventory cushions rather than capacity cushions (Portougal 1-9).
I agree with EA’s decision to employ the MTS strategy because it minimizes opportunity lose and therefore the company is able to get new customers and take advantage of other unexpected opportunities thus expanding the market. The only problem that the company will encounter is the ability to make accurate predictions about demand of their products. If this is not done they may undergo losses as a result of the nature of their products.
Aggregate Capacity planning (ACP) refers to the attempt to balance capacity and demand in order to minimize costs. It starts with the development of the sales budget that predicts the amount of products to be sold in the future and directs the sales and marketing efforts of the company. This plan should be realistic and should be able to meet the business and financial objectives of the company. Master production scheduling is a tool that ensures that the available capacity is allocated by concentering on customer service. The tool is used to identify the areas where capacity is lacking for meeting the schedule or where the capacity utilization is inadequate within the schedule. Shop floor scheduling refers to the actual arrangement for a given week with a daily subdivision that is specified by production lines and products (Portougal 1-9).
The production staff views SAP negatively as they think that the modules are irrelevant to their business processes. Their opinion was that SAP just like most ERP systems still focus on specific functions such as production, accounting and inventory among others. Therefore they were of the view that I order to use the ERP systems businesses have to modify their activities which they were not ready to do. They insist that they made the current system and it is effective compared to what the management wants to introduce (Portougal 1-9).
The IT staff had a different view concerning the SAP and it was the exact opposite of the production staff. They argued that the existing SAP software was capable of providing adequate computer support. They supported their argument by saying that the ERP’s employ the best practices and solutions and they produce a system that better fits every process within the company. They were of the view that although the solutions may not fit specifically, the SAP is a worth investment that has the advantage of providing long term flexibility and better solutions to the problems in the company. (Portougal 1-9).
The management of EA was tone between the ideas resented by the various groups. They did not know whether to adopt the IT specialists’ ideas and continue implementing the SAP modules but face losses as a result of planning inefficiency or to believe the planning staff and order high cost computer support to augment the existing SA system. Therefore with this dilemma they decided to hire a consultant to advise them on the best idea to follow. The consultants finally suggested to the management to design a rough prototype system and through its analysis they could reach a viable solution (Portougal 1-9).
It is true that a standard software system like SAP can give adequate computer support to an individually designed business management system. This is because the SAP programs are designed following best practices in a given area or process. These programs have been designed and used by companies that have both individually designed business management systems and corporate designed systems. They integrate the best solutions and approaches in each of these systems to come up with standard software that can be used on virtually any system.
Portougal, Victor. "ERP Implementation for Production Planning at EA Cakes Ltd." Khosrow-Pour, Mehdi. Annals of cases on Information Technology. Auckland: IGI Publishing, 2006, pp 1-9.