New initiative to pull demand-driven manufacturing

PeopleSoft, the global number two in ERP behind SAP, last month finally launched its much trailed end-to-end demand-driven manufacturing suite (in PeopleSoft EnterpriseOne 8.11, due for release next month) plus an implementation methodology, tools and services based on lean/agile thinking. This is rather different, and demonstrates how serious the company is about manufacturing – beyond its claimed 10,000 factories deployed. Despite the rejuvenated Oracle hostile take-over bid its been facing since June last year, PeopleSoft has poured big money into R&D and come up with a combination that looks very right for our challenging times. Because this is no ordinary new ERP release. Yes there’s new functionality and, yes, the rhetoric sounds similar to that from other leading ERP vendors – it’s about managing from customer demand to supply chain planning to manufacturing planning and production to in-bound supply, all pragmatically pull-based and all operating in real-time. But this is about several important aspects coming together. First, it’s about adopting lean and agile thinking top to bottom, with a ‘road map’ for companies to adapt their production to fast-changing customer demand. Second, PeopleSoft facilitates that through new tools – both analytical software for business transformation (capabilities assessment, business benefit analysis and best practice implementation plan) and ERP that isn’t based on MRP or derivatives. Third, and unusually for a major software company, it’s about leading with extended lean and flow consulting from the practice it acquired last year in the form of JCIT – and certainly not just focusing on factory floors. And fourth it’s actually about the IT infrastructure itself, the middleware and the system’s 100% Internet-enabled services-orientated architecture (SOA). That’s what enables the spread and automation of lean business processes both internally and across complex, supply chains. Indeed, George Lawrie, senior consultant at analyst Forrester Research, believes this latter is the single greatest differentiator for PeopleSoft now from SAP, Oracle and the rest. “The fact that PeopleSoft has decided to focus on the business applications and leave the middleware to IBM … and plug-and-play standards makes the SOA a reality. That’s what will enable business processes to straddle supply chains that involve different IT systems.” He draws the distinction with, in particular, SAP and Oracle, both of which are about driving their own middleware as well as business applications, albeit with connectivity into the mainstream. But there’s more. According to Carol Ptak – PeopleSoft’s vice president of manufacturing and co-author of ‘Necessary but not Sufficient’ with TOC (theory of Constraints) guru Eli Goldratt – from the ERP perspective, this represents a transformation. “It’s as significant as the move from the agrarian society to the industrial revolution,” she says. She insists that manufacturing in the developed world is dying on its feet in the face of global competition from low cost economies, excess capacity and adherence to outdated business structures that don’t cope well with change and volatility. “The old KPIs of efficiency, productivity and utilisation inside the four walls have to go if companies are to survive,” she says. Tony Gorski, JCIT’s chief operating officer and himself a demand flow practitioner, is convinced that manufacturing companies are structured as they are today because of MRP. It’s a moot point – most argue that MRP merely attempted to manage and automate what was already there. But the truth is, both the structure – functional production areas, departments and controls around release dates, work and material movements etc – and MRP were the best available. Now, generations of manufacturers have grown up with MRP, we’re in the state we’re in and it’s proving difficult to shake the devil we know: witness the problems with APS (advanced planning and scheduling) engines in a sceptical world. Recent years have seen improvements that have mostly attempted to bolt on to what became business-wide ERP, but neither manufacturers, nor software companies, nor for that matter the IT, have seemed ready for a fundamental change. And hence PeopleSoft’s all-round approach to planning, scheduling and pulling work through factories and indeed whole businesses and their supply chains, as per recent lean thinking, with software and the JCIT tools and consultancy. Will it finally change minds, as others, including Oracle, SAP, Microsoft through eBECS, QAD and so have tried to? Even an upbeat PeopleSoft is aware of how hard that is. But Ptak makes two key points. First: “Leading manufacturers are now understanding this – they’re getting it and we’re not having to look for beta sites: we have a long list of companies wanting early releases.” And second, if manufacturers don’t take advantage of what’s now on the table pretty soon, they won’t be around any more. PeopleSoft is aiming the approach and its supply chain synchronisation software at OEMs, Tier Ones and mid-market manufacturers. Initially, appropriate modules are embedded in Enterprise One 8.11, but we understand availability is also assured for Enterprise (the PeopleSoft original) and Enterprise World (the former JDE AS/400 ERP system) for companies down to around $25m turnover, the latter costing about $100,000 all in.