Page 9 - Logistics News - May 2021

OP I N I ON

ERP: What it is and why IT still matters

By Doug Hunter, doug.hunter@za.syspro.com

All ideas are fueled by necessity, improved by efficiency and made sustainable by adaption and
innovation – as with ERP and SYSPRO.

“Friends Romans, countrymen, lend me your ears and/or raw materials in a structure of quantity and lead
I come to bury Caesar not to praise him time relationships. This advanced thinking was only really
The evil that men do lives after them, used at the time by very large ‘progressive’ organisations.
The good is oft interred in their bones
So let it be with Caesar. The Nobel Brutus The MRP innovators in the 1950s were Rolls-Royce
Hath told you Caesar was ambitions and GE aero engine manufacturers who used MRP for
If it were true it was a grievous fault the first time, followed by Polaris nuclear submarine
And grievously hath Caesar answere’d it” manufacture. Quite fitting that the defence industry was
first to use BOMs.
Enterprise resource planning (ERP) is like Caesar –
everyone knows about it, it’s powerful, few understand New technology innovation
it, many fear it, it has many enemies and it sets standards Enter the IBM mainframe with 16kb (not gigabytes)
for the future. ERP’s enemies, like Brutus, want to be of RAM, walls of mag tapes, two impressive industrial
emperor, fear change, don’t understand or wish to engineers, Joseph Orlicky and Oliver Wight, plus Toyota
learn new ways or even good old ways, are protectionist and Black & Decker as customers. In 1964, Orlicky
and seek market share rather than general market innovated more for MRP to be computerised for Toyota,
beneficiation. But to reap the rewards from ERP, just like capturing the immense computer processing power. And,
Caesar, ERP needs more than ERP. in 1975, he published the MRP bible – creatively titled
Material Requirements Planning – to share with the world,
Early days and manual ways and, by the end of 1975, over 700 manufacturing and
Some of you remember the days of reorder point (ROP), distribution companies were using MRP.
reorder quantity (ROQ) and rows of Kardex cabinets.
Planning started with raw material. We pulled out the Another milestone in 1978 was when SYSPRO was
right drawer and looked at the Kardex card (marked with born to produce the first South African mini computer-
the product number), like an old library index system. based MRP system – one that is used globally today, 43
We checked what the last planner had written – stock on years and many versions later.
hand, order quantity, order point. We calculated what our
job needed, updating the card to reduce the stock and, if Business process enablement – MRP to ERP
required, marking a new order and its need date. We or Most companies start their process enablement journey
another planner created a purchase order on the supplier. with systems to control materials or stock, reducing
It worked for decades because we understood why we working capital. But, in 1983, Oliver Wight documented
were doing it, the chaos we caused if we got it wrong manufacturing resource planning (MRP11), enabling
(which we did) and it was shared data, a team sport. production jobs and operations to be efficiently scheduled
These tasks became second nature as everything was and have the right materials supplied to production at the
manual and planning skill became invaluable to efficiency right time.
and cost management. This was the start of material
requirements planning (MRP). Distribution requirements planning (DRP) came next L O GI S T I CS NEWS
– planning and scheduling finished goods through the
Another innovative planning idea was the bill of supply chain from customer demand to purchase location
materials (BOM) to link finished goods to assemblies back to manufacturer or DC (and vice versa).

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