Production management - myths, opportunities!

In order to be able to start dissecting production management systems in the first place, some definitions need to be described. We will describe them as simply as possible. Production management systems can be divided according to their level of complexity and sophistication. They are divided into MRPI, MRPII, ERP. It is worth noting that by changing the word from production to service, we can define service management systems in the same way. For simplicity we will use the word production.

• MRP I (Material Requirements Planning) - inventory management. It is a company in which production is carried out efficiently, as many raw materials as we buy we will produce, the limitation may be the capacity of the machine. Comparing to an ordinary household: we manage the stocks in the fridge.

• MRP II (Manufacturing Resource Planning) - production resource management. This is production, where we know how many raw materials we need to order, we know how many workers we need to operate the machines and what the theoretical capacity of the machines is, there are "recipes" for production. Comparing to an ordinary household: we manage the stocks in the fridge, I know how many pots we have, what cooking system, we even have a cookbook, we cook.

• ERP (Enterprise Resource Planning) - management of the entire enterprise. In such a company we know as much as in MRPI/II, we also know that machines need to be serviced so that they work without interruption, that production workers need support from human resources (training), that the production must be clean, tools must be arranged (e.g. 5s), they must be efficient. The whole company works together to make production as efficient as possible. Comparing to an ordinary household: to a fridge, pots, induction plate and recipes add a clean kitchen, clean fridge, arranged accessories, sharpened knives, a cook with experience).

When a manufacturing company is built from scratch, moving from one MRP level to another is very difficult and labour-intensive. Only companies transplanted from the "West" are immediately built in ERP standard. They are built this way, because their owner once developed his parent business from MPRI to ERP and understands the benefits of ERP, does not allow himself that his daughter companies do not operate in such a standard. However, let us return to the situation where the company is developed personally. Is it possible to define what the company needs to move from level to level? In general yes (e.g. evolution of the organisational structure) in detail unfortunately not (e.g. differences in organisational structures). Each company is a living organism, each is slightly different, and in each company the skills of the manager or owner have characterised it by a certain management system. This is why a company that wants to develop a management system needs a specialised consultant, who will get to know the company, explain what stage it is at and indicate what should be done to reach a higher level of management.

The advisor is external to the company, he has a broader point of view (transposing it to home conditions, he is like our guest who noticed that somewhere we have a light bulb instead of a lamp, and we got used to it). When is it needed? Production works in the same way for years, in a way that seems good, the only wonder is why productivity does not increase and sometimes even decreases (how to measure productivity will be discussed in the next essay).

Productivity as the level of production management increases should increase (when not replacing machines and equipment). This is the case when the transition from MRPI to MRPII or MRP II to ERP has been done correctly. But very often companies jump from level to level because, for example, they install an ERP information system. Do we already know what an ERP information system means? Let's think what happens when we implement an ERP information system to a company at MRPII level. Unfortunately productivity may even decrease because the tool (information system) will work well only when it receives data it requires. And it requires data at ERP level and not at MRPII level. Then such a company gets lost. What will be the differences? ERP means production times for particular product groups, material booms, load management for employees and machines, known service cycles for machines, etc. Again, we can compare situations to ordinary life. We play a sport, without a coach we will not get to a higher level, we may seem to succeed but we will develop bad habits, we will not become a professional. In the case of a company, when you need to move to a higher level of management, can you trust the knowledge of an advisor? Yes, but it would be advisable to first talk to such an advisor to find out what solutions he or she can propose to the company. The advisor cannot build a system in the company which will not be in its DNA. Changing habits is very difficult, sometimes necessary, and sometimes the habit can be used as an asset. The adviser should help you take your company to the next level in such a way that it is an evolution towards greater efficiency. Yes it is possible.

Companies often at any level of development (MPR-ERP) implement different systems, philosophies e.g. ISO standards or Lean, Kaizen.

Philosophies and standards (norms) are nothing but tools to improve management. They are effective if implemented wisely and flexibly. ISO 9001 (quality) can already be implemented at MRP I level. ISO TS 16949 (automotive industry standard) will be difficult to implement at MRPII level, you will need ERP level. It is similar with Lean, Kaizen philosophies. They are interesting and effective but up to MRPII level. We will prepare a separate article on Lean and Kaizen management philosophies. We will not discredit these systems. We want to show that these systems are nothing else than decent, good management. However, it is important for companies to develop the basic management system first and improve themselves second (here ISO, Lean). A good management system is the basis of a strong company. We wish this for every company.