In my last post, I discussed craft production as the origin of manufacturing and identified its characteristics: There was no formal planning or capital expenses, few assembly lines, and the volumes were low. As rudimentary as craft production now seems, it was an impressive achievement for its time.
I then moved on to the advent of mass production. In this phase of manufacturing’s history, orders for multiple items increased, which was both a cause and effect of a significant manufacturing mindset change. The transition to mass production precipitated other advancements like control of out-going quality, on-time delivery, and diversification of product. Henry Ford’s application of mass production and the assembly line to the automobile industry revolutionized manufacturing in America—and progress has been moving at an exponential rate ever since!
Mass production ignited the manufacturing industry
In this post, I will continue our exploration of how mass production catalyzed other significant advancements in manufacturing. We’ll discuss milestone achievements that have served as building blocks in the evolution of manufacturing technologies. Whether you are a manufacturing professional or a consumer of manufactured goods, reflecting on the past, present, and future of this industry is a fascinating exercise.
The gradual transition from craft manufacturing to mass production enabled lower costs of standard goods due to the larger volumes produced. This change was a critical enabler of many other advancements, because reductions in costs made products more available and affordable to many more people. The mass production movement not only created many more jobs, but it also improved the quality of products being produced. On a macro level, mass production opened up the future to mass markets and to the worldwide consumer demand for products that we have today.
This evolution ultimately paved the way for planned production and the development of new planning software. So, where are we now? Let’s move on to our discussion of present day manufacturing.
Manufacturing technologies enable today’s sophisticated business environments
In today’s markets, we see make-to-stock and make-to-order goods, with a wide variety of some products, a limited range of others, and lots of dedicated automation. The unprecedented growth of information technology, which was driven by microeconomics and computer hardware and software systems, has influenced all sides of computing applications across manufacturing companies of all sizes.
Today’s business environment has become highly complex. Companies require ever-increasing information flow for things like timely decision-making, procurement of product parts, management of inventory, accounting decisions, and distribution of goods and services.
When we examine the evolution of software, we see that back in the 1960s we had simple inventory control packages. In the 1970s, Material Requirement Planning (MRP) entered the scene, and once again, the landscape in manufacturing changed. In the 1980s Manufacturing Resource Planning (MRP II) came about, and by the 1990s Enterprise Resource Planning (ERP) systems brought all of these technologies to bear for business in a highly efficient format. Each of these milestones was built on prior advancements, and each has remained essential to the continuing development of manufacturing technologies and processes.
This extraordinary growth of computing power and the internet is bringing even more changes to ERP vendors and customers. ERP systems have been redesigned with many new add-on modules being introduced in rapid order. Technological refinement with software systems is a never-ending process that demands continual reengineering and development of new products and solutions for the ERP market.
Let’s examine what we mean by “ERP systems”
Fundamentally, Enterprise Resource Planning systems (ERPs) are software systems used to manage the businesses with various modules for each business function. The infrastructure or “guts” of this software provides transparent integration of various modules, which provides a flow of information between all of the individual software and business functions. ERP systems are integral to the very structures and processes of the companies in which they are used.
The American Production and Inventory Control Society (APICS) defines an ERP system as “a method for the effective planning and controlling of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution or service company.”
ERP system characteristics
The history of ERP systems has been just as remarkable as that of computer hardware systems. Based upon the technological foundations of MRP and MRP II, ERP systems integrate many business processes including manufacturing, distribution, accounting, inventory management, transportation, and other areas of the business, and provide complete accessibility, visibility, and consistency across the entire enterprise. When we compare today’s systems to earlier versions, the differences in functions and features—as well as their impact on the businesses that use them—are astounding.
It is reported that more than 60% of the Fortune 1000 companies rely on Enterprise Resource Planning systems. These are some of the characteristics of today’s ERP systems:
- Centralized common database management system
- Modular design comprising many distinct business functions including manufacturing, accounting, and distribution
- Modules work in real time with on-line and batch processing capabilities
- Flexible structure, to enable companies to use their best practices and processes, or incorporate industry-standard best practices
- They can be configured to integrate with company business practices
Some of the core modules in a good ERP system are used for management of manufacturing, accounting functions, production planning, inventory control, transportation, sales and distribution, supply chain, customer relationships, and e-business. In many cases, modules can either work independently or as stand-alone units. The best-of-breed ERP systems allow flexible combinations of modules to be integrated into a complete system.
Coming in the next post
So what’s next for ERP and manufacturing in the future? In the next post, we will complete our discussion on manufacturing in the present and peer into the future with an emphasis on ERP.
Until next time.
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