|
|
|
Problem: New ERP System Causes Wildly Fluctuating Production Variances
Background
The client, an international plastics manufacturer, recently implemented an
integrated ERP software package. The client also employed a large number of
limited-English speaking workers and one of their key responsibilities was
the reporting of finished production after each operation. Although user
training was performed, the production reporting screens were in English, and
proved to be very complex. The month the new software went live, the client
began to experience wildly fluctuating manufacturing variances. While the
ERP software tracked and recorded variance by type, it gave no clue who had
generated the variance and whether the variance was legitimate. Accounting
had little choice but to run an emergency physical inventory in order to close
the books for the month.
Intelligent-Information Solution
With the new system operational,
it was no longer possible to revert back to the old system. It was also determined
that a redesign of the production reporting software would have significant
costs and risks. Instead, an Intelligent-Information Solution was
designed to help management deal with the problem. Working directly with plant
management, supervisors, and the production workers, the VersiFit team developed
a solution to operate in a dynamic real-time manufacturing environment.
Essentially, the Intelligent-Information Application tracked each production
reporting entry as it was entered into the ERP system. It would then calculate
any variances by comparing to standards. If the variance exceeded a
predetermined threshold, it triggered an electronic notice, which required the
supervisor and the worker responsible to resolve the legitimacy of the variance
before their shift ended.
Results
Very quickly the value of the Intelligent-Information Application proved itself.
Within days, the number and volatility of production variances decreased to levels
experienced before the implementation of the new ERP system. Soon, the reporting
and classification of legitimate variances became a new target for management.
Because the client now had real time variance reporting, they could focus on more timely
and precise actions to reduce them. Now, cost accountants know about significant
variances as they happen, instead of, trying to unravel them at the end of the month.
This application has been in operation for three years and management has used it
to relentlessly drive inefficiencies from the manufacturing process.
For more information contact:
Mike Restle 920-882-1904 or
restlem@versifit.com
|
|