The impact of real time shop floor information on operational decision making

Abstract

The concept of Operational decision making is not new, but in the context of Enterprise Resource Planning implementation as is the case at PFK Electronics (PTY) Ltd., it becomes part of what ERP process that makes organisations more competitive and profitable as Wallace and Kremzar (2001) comment, "Effective forecasting, planning, and scheduling is fundamental to productivity and ERP is a fundamental way to achieve it. Properly implementing ERP will give you a competitive advantage and help you run your business more effectively, efficiently and responsively." The Operational decision making process that forms part of the research question is a process known as Sales and Operational Planning process (SOP's). The research paper is looking at how Real Time Shop floor information can impact on the decision making process, as Wallace and Kremzar (2001 : 165) state that this is the most important element in making ERP systems work. The study looks at what information is required to make effective decisions in the SOP's process and how the respondents perceive information quality, its value and the impact on decision making in the SOP's process. The research sought to further investigate a diverse demographic population, the behavioural culture within the organisation and their perception on having this information in real time directly from the shop floor. Data was collected via a survey questionnaire and an interview process which also required the review of organisational documentation where available. The research aimed to investigate what information Operations (SOP's) need to make effective decisions to meet the organisational strategic objectives and to determine the best means of obtaining and communicating the information to managers. Developing this further the research was then broken down into three objectives: • To investigate 'what' information sales and operations managers need in order to make effective decisions that will have an impact on them meeting strategic performance objectives. • To evaluate 'how' real time shop floor information can improve the decision making process in Operations in meeting strategic objectives; by understanding the types and methods used in decision making and the significance of time on information. • To recommend suitable Information Communication Technology (ICT) systems to obtain and communicate information to managers effectively within operations. During this process time constraints were of a concern, which manifested in objective three not being able to be completed to the satisfaction of the researcher. However the research process, which included the survey and interviews of respondents, the researcher felt that respondents where honest and open in expressing their views which adds to the validity and reliability of the research. The results showed that there was a clear understanding of the topic amongst the respondents. It showed that the respondents had a good understanding of information and its importance in meeting strategic objectives by making better decisions. It became clear that ERP was generally working well but that timeliness of information was the biggest obstacle in meeting strategic objectives in balancing supply and demand. The research identified the information necessary for the SOP's process to be effective and it also showed the impact of having real time shop floor information available to the decision making process. It also showed that there would be other benefits as performance could also be improved by having real time performance indicators that are used to set the pace and common goal. The report also identified some cultural differences between PFK electronics culture and NUMSA unionised employees culture and the impact it has on relationships and communication. The report concludes with the research question being answered and with a recommendation that the single most important means of improving operational effectiveness is going to be to improve the quality of information used in decision making. The research has shown that getting this information in 'real time' or as close as possible to real time is the best means of improving the quality of information and its impact on management decisions. It is further recommended to investigate the implementation of systems such as Manufacturing Execution Systems to link the shop floor directly into the current ERP system and lastly to find a means of bridging the cultural differences between NUMSA unionised employees and PFK behavioural culture.