We’re seeing the same issue come up repeatedly with U.S. manufacturers in the $30 million to $75 million revenue range.
The company has grown, sometimes quickly. There are more customers, more SKUs, more purchase orders and more jobs moving through the plant.
They usually have an ERP.
The problem is that the business isn’t always being run through it.
Material planning has a spreadsheet. Purchasing has another tracker. Production has its own schedule. Customer service may be keeping a separate past-due list.
Before long, there are multiple versions of what is supposed to be the same information.
That’s where the problems start.
It Usually Starts With the Data
One of the biggest warning signs is hearing someone say:
“The ERP isn’t right, so I keep my own spreadsheet.”
There may be a good reason they started doing it. Maybe inventory wasn’t accurate. Maybe lead times weren’t maintained. Maybe planning parameters were never set up correctly. Maybe people weren’t consistently making transactions in the system.
But once people stop trusting the ERP, they start building workarounds.
Now the MRP says one thing, the planner’s spreadsheet says something else, and what’s physically sitting in the plant may tell a third story.
A job gets scheduled because the system says the material is available.
Production gets ready to run it.
Then someone discovers a component is missing.
The job stops, another job gets pulled forward, purchasing starts expediting, and the schedule changes again.
By the time leadership sees the problem, it looks like production isn’t hitting the schedule.
The real problem may have started weeks earlier.
Production Planning Is Just as Important
Even if the material is there, someone still has to tell the floor what actually needs to be built.
A plant might have 50 open jobs. That doesn’t mean all 50 have the same priority.
Which orders are tied to customer commitments this week?
Which jobs have all the material available?
Which jobs need to move now because of downstream operations?
Where is there a capacity constraint?
What can wait?
If production planning isn’t actively answering those questions, priorities start getting determined another way.
The floor works what’s available.
A supervisor pushes a job because it’s almost finished.
Sales calls about an upset customer and that order jumps the line.
Another customer calls the next morning and the priorities change again.
Everyone stays busy, but being busy isn’t the same thing as producing the right work.
Then the Firefighting Starts
This is where we see some very recognizable symptoms:
- Material planners spending their days chasing shortages
- Buyers constantly expediting suppliers
- Jobs starting and stopping on the floor
- Supervisors looking for parts instead of managing production
- WIP accumulating without finished product getting out the door
- Production priorities changing multiple times during the week—or even during the day
- Overtime increasing without a meaningful reduction in past dues
- Customer service repeatedly asking operations for realistic ship dates
- Leadership getting pulled into individual orders and customer escalations
At that point, the instinct is often to add people.
Hire another planner. Add another buyer. Put more people on the floor. Approve more overtime.
But adding resources to a broken planning process can just create more activity around the same problem.
This Isn’t Necessarily an ERP Problem
A company can spend a significant amount of money implementing an ERP and still have this problem. The software may be perfectly capable of doing what the company needs. The question is whether the organization is actually using it correctly.
Are planning parameters accurate?
Are lead times being maintained?
Does system inventory match physical inventory?
Those are operational questions, not software questions.
Growth Can Outpace the Planning Process
This is one reason we see the issue in manufacturers ranging from $30 million to $75 million in revenue.
A process that worked when the business was doing $10 million may not work at $30 million.
And the process that got the company to $30 million may start breaking at $50 million.
Revenue, customers and production complexity can grow much faster than the infrastructure behind them.
Eventually, the gap shows up in delivery performance.
Sometimes You Need Someone to Get Underneath the Problem
This is where interim and fractional leadership can be particularly effective.
A company may not need another permanent executive. It may need an experienced operations or supply chain leader who can come in, get into the data and determine where the breakdown is actually occurring.
That means working across material planning, purchasing, production planning and the floor, not looking at each function independently.
At Work Industries, we provide interim and fractional operations and supply chain leadership to help manufacturers address this exact issue.