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FAQ - What benefits should you expect from a Business Excellence project?

Almost everyone who has implemented an MRPII or ERP system will tell you the same thing. Do not expect to get many benefits from just implementing ERP (enterprise resource planning) software unless you change your ways of working to take advantage of the new opportunities that an ERP system gives you, we call this Business Excellence.

The benefits of implementing a Business Excellence programme will vary depending on how well you plan and control to start with, the type of company and how well the concepts are adopted. Likewise the time scale will vary depending on your current status and the resources you are able to commit to the improvement project. If you appoint a full time project leader and currently have an MRPII (manufacturing resource planning) or ERP (enterprise resource planning) system implemented, you should expect to see the benefits below in about 6 months. If you current plan manually or with spreadsheets and are implementing a planning system using the Business Excellence principles, the benefits should take about 18 months to realise depending on the software implementation time scale. In the worst case you should see the benefits below 18 months after cut-over to the new ways of working.

The typical benefits achieved by companies we have worked with, including the companies in the case studies, are as follows :

Typical

Better companies

Inventory reduction

 30% 75%
On time delivery (make to order) or stock availability (make to stock) To 95% To 99%
Lead time reduction Down 50% Reduced to 1/10th.
Manufacturing cost due to both more efficient use of people and equipment as well as improved productivity Down 10% Down 50%
Purchased material costs by using greater visibility and vendor scheduling Down 3% Down 12%
Reduced stock obsolescence 20% 50%
Stock record accuracy Up to 95% Up to 99%
Bill of material accuracy Up to 98% Up to 100%
Stock turns Doubled Ten fold increase

Typically the better companies spend twice as much on education and training staff on both the software and the business excellence issues before implementation but achieve a 200% return on investment as opposed to poor implementations which never see a net return. The best education course to help you achieve these benefits is the Business Excellence Fundamentals course; there are 1 day to 4 day versions of this course depending on your needs and resource availability.

Phil Robinson - www.bpic.co.uk
BPIC - your manufacturing planning resource