Integrating Enterprise Resource Planning (ERP), Data Warehousing (DW), and Knowledge Management (KM) to Create a Quality Management Culture
Authors
Dr. Eliot S. Elfner, Ph.D., P.E., St. Norbert College
Mr. Eric Elfner, CPIM, Deloitte & Touche LLP
Mr. Christopher Elfner, Cardinal Directions, Inc.
Paper presented at the Quest for Global Competitiveness Forum, March 11-12, 1999, University of Puerto Rico, San Juan, Puerto Rico, co-sponsored by APICS E&R Foundation.
ABSTRACT
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In this paper we present a discussion of the components of a quality environment and also describe the tools of Enterprise Resource Planning and Data Warehousing as specific mechanisms that are directly related to a implementing a quality environment. We also describe the components of the recently emerging concept of knowledge management. Their similarities suggest that an appropriate strategy would be to integrate one with the other. We conclude that an organization pursuing the development of a quality culture would be well advised to consider implementing both ERP and DW in support of a knowledge management strategy. Once commitment to these approaches is made, they will each complement the other as they evolve. Finally, a case study illustrates the experiences of an organization in the process of developing such an integrated environment.
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INTRODUCTION
The emergence of quality cultures, as a philosophical approach to management has become a widely accepted approach among global firms. Many proponents of quality management have been published. To exercise this philosophy, management and workers need to use modern information technology and new concepts of management. Enterprise Resource Planning (ERP) and Data Warehousing (DW) are both tools of the information technology age. The recent emergence of Knowledge Management (KM) as an approach for enhancing the information captured in such tools captures the human judgement components of the quality movement. Integrating these approaches becomes the solid foundation needed to successfully implement a quality management system within an organization.
This paper draws together ideas and approaches to quality management from several complementary sources in manufacturing management. An integration of the ERP and DW philosophies will lead to a conclusion that quality management results from the serious integration of well thought out and implemented ERP and DW systems in support of Knowledge Management. Finally, a case study serves as an example of the ways in which a manufacturer has begun this process.
This paper first presents a brief theoretical and historical background of the quality management movement. This review will describe some well-recognized approaches to quality management from the literature. Then this paper presents a definition of quality, and suggests several central components of a quality management process for a manufacturing environment. The basic philosophy of ERP and DW are developed. These are then integrated into the KM process and we conclude that this is the means by which an organization can implement and develop a true quality culture.
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WHERE DID THE QUALITY MOVEMENT COME FROM?
The original pioneering concept of quality management is usually attributed to the late W. Edwards Deming. Dr. Deming was a student of mathematics and physics, and became interested in the application of statistical process control concepts early in his career. He applied these during the second World War to help the Allies to victory. General Douglas McArthur invited Dr. Deming to participate in the design of the reconstruction of Japanese industry. Though his approaches to quality were available domestically after World War II, a quantity perspective, rather than a quality perspective drove the U. S. economy. U. S. industry thus ignored the teachings of Dr. Deming.
Other early pioneers of quality management included Philip B. Crosby and Joseph M. Juran. These, and other proponents of TQM, developed a rich body of knowledge, primarily in the context of industrial applications. More recently, two widely distributed video documentaries, produced and narrated by Lloyd Dobyns, have presented the case for quality - "If Japan Can, Why Can't We," (Dobyns and Frank, 1980), and "Quality or Else" (Dobyns and Crawford-Mason, 1990). Both served to expose a wide audience to the concepts and principles of TQM/CQI.
A related book appeared in 1982 when Tom Peters and Robert Waterman published "In Search of Excellence." Through the presentation of several case studies, Peters and Waterman illustrated the characteristics necessary for organizations to achieve excellence. Their approach is parallel to those presented by Deming.
This brief review of the development of quality management literature provides an understanding of the relative importance being placed on quality management. The original work of Deming and his contemporaries serve as the foundation. These approaches to implementing quality management generated a broad-ranging set of questions about its benefits and costs. The growth in literature and learning opportunities lends credence to the idea that quality management is now widely applied. This conclusion leads to two important questions. How might one define quality? And, What is a quality management system - what are its components, and how do they relate to each other?
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HOW DO WE DEFINE QUALITY?
The term "quality" has been the subject of discussions in many environments. Pirsig's discussion in Zen and the Art of Motorcycle Maintenance suggested its complexity when he wrote "obviously some things are better than others . . . but what's the 'betterness?' . . . so round and round you go, spinning mental wheels and nowhere finding anywhere to get traction. What the hell is quality? What is it?" (Pirsig, 1974, p. 184).
The traditional dictionary definition of the term quality suggests that quality is excellence in character. It has to do with the properties or characteristics associated with an entity. We have an intuitive feeling for what quality is, but it becomes difficult to describe. Typically we understand quality to be the degree of goodness or excellence associated with an entity. One having high quality has much "goodness" and "excellence" associated with it.
The quality movement generally defines quality as the customer’s perceptions of how well a product or service meets their expectations. These perceptions can be in terms of several different characteristics of a product or service. For instance, quality can be related to the perceived conformance to specifications, fitness for use, reliability and durability, meeting customer needs, reducing variability, providing value, or the degree of product support and service.
One of the key components of any quality management system is the continuous nature of the effort. It is an ongoing quest, a never ending journey that requires a continuing commitment of all of an organization’s players striving to achieve the goals and objectives that relate to the organization’s mission and purposes. Quality is the result of a synergistic and ongoing process where individual efforts directed at achieving the organizational purposes aggregate into a holistic set of quality outcomes. To the degree that quality output is achieved then, an organization can be said to be one of excellence. The process of achieving quality results is ongoing, and requires widespread commitment among organizational constituencies to continuously review, analyze, refine and improve its processes.
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WHAT ARE THE COMPONENTS OF A QUALITY CULTURE?
In addition to defining the concept of quality, we need to develop an understanding of what the components of a quality system are. Marchese's definition (1993) of Total Quality Improvement (TQI) in higher education suggests several necessary components. TQI encompasses a large body of ideas focused on continuous improvement of all organizational processes that are important to those served by the organization. He describes a TQI environment as one where people have a collective sense of responsibility, listen to those they serve, and have a preference for data. They have an ethic for continuous improvement, a determination to develop to the fullest the talents of every participant, and they acknowledge they are professionally accountable to one another and to those they serve. This description provides an ambitious aspiration for an organization implementing a quality environment.
The literature presents a variety of characteristics associated with a quality management environment. A review of these characteristics suggests that a quality management culture is made up of several central elements. Based on the suggestions by Marchese and others, we present below a discussion of the central elements necessary in a quality management culture.
We suggest five necessary components for a quality culture. They are:
1. An Explicit and Strategic Commitment to Quality and Excellence in the Vision/Mission/Purposes of an Organization
2. Attention to the Supplier/Customer Chain
3. A Shared Passionate Commitment to Continuous Improvement
4. A Commitment to Education/Training/Teaming Concepts
5. A Systematic Approach to Data-Based Decision Making
Figure One depicts these components, and illustrates how their integration leads to the creation of a quality management culture for the organization.
First, and fundamental to the process, is that an organization must adopt a philosophy and culture of quality and excellence in its mission and purpose statements. This is a process that requires a common vision by everyone in the organization. Deming's concern for constancy of purpose illustrates the need to express commitment to in a widely accepted organizational mission of excellence. While top level commitment and leadership is required, it alone is not sufficient to successfully develop a quality culture. The commitment of middle and lower level personnel is also important, but again not sufficient. Until everyone associated with the organization is aware of and supports CQI, efforts to achieve other components of the quality culture will be unsuccessful.
Secondly, a subtle, but very important component of a quality culture, is implied in the above discussion. The concept of "everyone associated with the organization" is far-reaching and inclusive. In addition to employees within all levels of an organization, quality management environments require overt attention to those who provide resources to the organization. Examples are: manufacturers, which provide the equipment and materials used; stockholders and banks, who provide capital to support the acquisition of equipment and facilities; and people from the local community who become employees.
Also included among people associated with the organization are those served. Traditionally quality management is devoted to the "customer," and "customer satisfaction and delight" define quality. Marchese's phrase recognizing that organizations exist to provide service to others makes an important point. Therefore, attending to those served incorporates the customer focus of quality management. Rather than being confused about who is "the customer," anyone receiving the products or services from an organization is considered a "customer," and that central focus of quality management is accommodated. It is also important to acknowledge that those served have a large voice in defining the level of quality provided. This is the point at which customers and clients become part of the definition of quality. If a quality organization is one which accomplishes its purposes, and if it attends to its customers when defining its purposes, then to the extent the organization satisfies its customers it is a quality organization. It is important to recognize that customers in this context include the many various stakeholders of an organization.
Also included in this concept are the references to internal linkages among suppliers and customers. People within the organization supply goods or services to others within the organization. Others receive goods and services from colleagues within the organization with which they must work. It is imperative that the same attention to quality for external customers be applied to those internal colleagues who receive output from their colleagues. Thus the supplier/customer linkages that are central to the culture include both internal and external linkages.
A third component of a quality management organization is the imbedded cultural ethic of continuous improvement. By this we mean that organizational processes are never seen as complete, but rather as continuously evolving. The problems addressed in an environment require a focus on processes, not people. This is based on the assumption that quality problems are largely a result of the processes in place, not due to mistakes by the people in the system. Quality problems are all perceived as potential improvement processes. This does not imply that current processes are inappropriate or even inadequate, but rather that the processes can always be improved. "If it ain't broke, it CAN be improved" embodies this perspective.
The entire culture of quality environments must also be committed to cooperative training/learning/teaming approaches in striving for continuous improvement. This imperative is based on the presumption that, while those with an intimate understanding of problems with the processes may be most able to propose solutions, they need the resources and expertise of others to explore and implement solutions. Therefore, the direct knowledge of the problems, access to new information, technical processes, and the resources and expertise of others with expertise to assist are brought together in teams to address the quality problems that exist in the system.
This requirement imposes a necessity for extensive training of people. First, group processes need to be studied and experienced so that teams can be created and used effectively. Training in the tools and analytical methods of a quality environment will also be part of team training efforts. The training/learning/teaming imperative requires a major commitment of time, attitude, and effort of people.
Finally, in a quality culture, problem solving is based on a systematic approach, that involves gathering, organizing, interpreting, and using data and information. This involves a preference on the part of problem solving teams for data based decision making. It requires that intuitive decisions be tested against data. Deming proposed the theories of variation and the use of statistical tools as central in analyzing the data related to problems. Some fairly sophisticated statistical analyses can be usefully employed in team decision making processes. But numerous simple tools are also available that can be used to provide data for a team trying to solve difficult quality problems.
The study of variability recognizes that all processes have inherent random variation. Analyses that note special variation beyond the inherent amount imply variation due to special causes. Reducing and eliminating the causes of special variation are incorporated in the approach. Problem solutions that reduce the amount of random variation in processes are also a key to improvement in the environment.
These central components of quality systems are integrated into a cultural whole. A successful implementation of all five components will lead to the organizational culture being driven by the prescriptions of quality. Attention to suppliers helps the organization assure quality of resources; attention paid to customers and clients assures that necessary outcomes are being achieved. The devotion to continuous improvement of all organizational processes, by the use of data-based, team oriented problem solving involves a wide representation of the organization's constituents. Next we present a basic tool of operations management, Enterprise Resource Planning (ERP), and describe how it can contribute to the development of a quality culture.
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ERP AND QUALITY
Enterprise Resource Planning (ERP) software integrates forecasting, scheduling, resource planning and production reporting for manufacturing operations with other core organizational functions such as accounting, procurement, customer order entry and distribution. It is similar to Manufacturing Resource Planning (MRP II) systems, but is distinguished by more current software features such as a graphical user interface, relational database, fourth generation software tools, client/server environment and open systems.
ERP software implementations are not typically driven by quality initiatives. We suggest, however, that ERP systems, and the process of ERP implementation, support a CQI environment in the following ways: new features in ERP systems track specifications and conformance to specifications, ERP systems support and require accurate, high quality production data, and ERP systems themselves help an organization meet the requirements of a CQI culture.
Software Features that Support Quality
ERP software packages, and older shop floor control systems, have always allowed reporting of "good" and "scrap" production to track production costs. These data could also be used for tracking percentages or parts per million of product that passed inspection, but ERP systems’ initial strengths were not focused on quality management.
As the ERP software market matures, leading ERP vendors must incorporate added features to their products. Newer releases of some ERP packages incorporate quality management features. (J.D. Edwards, 1998) These systems track the documentation of tests, specifications and procedures performed as part of the quality assurance process. They also track revisions of these specifications as they are updated. This allows manufacturers to trace specific lots of products to the tests they passed in order to conform to specifications.
Quality features of ERP software also calculate which lots or products require inspection. Product specifications, dates between lots or other criteria determine which lots or products require testing. The manufacturer enters the test results into the system in batch or interactive mode. Some packages provide a certificate of analysis that documents the tests performed and verifies specifications of the product. This certifies the quality of the product to the customer.
ERP reporting may also provide information on the quality of the manufacturer’s products. The quality data contained in these systems is more detailed than a percentage of good products. A tested lot search indicates which lots in inventory passed the test. Non-conforming product searches identify which products do not meet defined specifications. In the future, quality management modules of ERP may interface directly with both Laboratory Information Management Systems (LIMS) (J.D. Edwards) and Manufacturing Execution Systems (MES).
Other new features of ERP software support a quality environment by allowing the use of just-in-time manufacturing instead of traditional scheduling and MRP functionality. Rate based scheduling in repetitive environments and the use of electronic kanbans are examples of these advanced ERP features.
Quality of Data Using ERP Systems
One of the benefits of an integrated ERP system is that the user only has to enter the data one time. Information that is used in multiple modules flows through the system, does not have to be rekeyed. From a user’s standpoint, this saves time and effort by eliminating redundant entry. From a quality of data standard, single point of entry eliminates an opportunity for errors and inconsistency in the data.
Effective use of an ERP system for production scheduling, material requirements planning (MRP) and shop floor control requires absolute accuracy in product data management (PDM). Without accurate bills of material and routings, the MRP systems fail. As part of any ERP implementation, all PDM information must be validated and its quality will improve.
Because ERP systems integrate all functions of an organization, data about that organization is stored in a centralized location. Instead of storing data in many disparate locations, the data is centralized. This facilitates backup procedures and reduces the opportunity for inconsistent data.
ERP Links to Customers and Suppliers
One of the components of a continuous quality improvement environment is a focus on supplier and customer linkages. ERP supports this in several ways. The integration of the system links order entry to the manufacturing modules. Order entry personnel are able to view inventory and production information. They can tell customers if they have product available to ship, and if they do not, can see when it will be produced. They can give the customer a promise date for delivery and reserve that production for a specific customer. Even though they cannot ship immediately, this visibility of the production system improves the company’s delivery reliability.
Another improvement to the supplier and customer linkages is the integration of ERP with electronic data interchange (EDI). EDI uses standard electronic forms and communication to transmit orders, invoices, forecasts, advanced shipping notices and other information between suppliers and customers. When implemented fully, purchase orders generated by a customer’s MRP system immediately appear as demand in the supplier’s scheduling system. Electronic transmission of other documents improves data flow and minimizes data entry.
ERP Implementation is a Commitment to Continuous Improvement
ERP software itself facilitates continuous improvement. ERP vendors are constantly evaluating business processes and incorporating "best practices" into their software. By reviewing their ERP package’s functionality, especially when the ERP vendor releases a new version, companies may be able to take advantage of improved processes and functionality that they had not previously considered.
An ERP implementation itself requires a review of processes and data requirements. PDM information is typically reviewed, culled of obsolete data and updated. The volume of work involved in integrating a company’s current processes into a new package provides an ideal opportunity to review all processes and implement process improvements where they make sense.
ERP Provides Numerous Training, Learning and Teaming Opportunities
Any ERP implementation provides numerous opportunities for training, learning and teaming throughout the organization. Successful ERP implementations require cross-functional teams to review current business process, learn the new package and map and improve those processes in the new system. Participating in these teams gives users a better understanding of their needs and processes, the needs of internal customers within the organization and the needs of external customers.
These cross-functional teams should be maintained beyond the implementation as well to evaluate the use of the new system and make recommendations for improvements. ERP packages are upgraded regularly and these teams provide a resource to the organization to determine when to implement the upgrade and to resolve any issues associated with that upgrade.
ERP Systems Collect Data that Drive Decision Making
An integrated ERP system is constantly collecting day-to-day data that flows through all areas of the organization. This data is necessary for the routine operations of the company, but it also provides insight to trends and opportunities that are occurring over time.
The data store that ERP creates over time can be accessed and manipulated to provide valuable information to the company’s decision-makers. User accessible report writers and data warehouses are tools that convert these data, developed over time, into usable information and knowledge to drive decision-making.
ERP and Quality
While ERP’s original goals were not directly focused on quality, features of the software enhance data quality and reliability. As the scope of ERP systems expands, quality features are being incorporated. Organizations that have a quality focus will benefit from ERP systems if they explore how ERP systems can support their quality initiatives. Another of the tools that has recently emerged from the information technology movement is that of Data Warehousing (DW). In the following section we present a discussion of how DW augments both specific ERP applications, and the development of a quality environment.
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DATA WAREHOUSING AND QUALITY
A Data Warehouse (DW) is a subject-oriented collection of data addressing long and short term business improvement objectives combined with a suite of query tools which provide enterprise-wide reporting, analysis, and publication. A DW improves upon an ERP system by integrating ERP data with other corporate-wide information, such as shop floor control systems or employee tracking systems, and by applying business rules to provide a single, well-defined data set for corporate reporting.
The data in the DW provide a centralized source for data based decision-making. These data can be sliced and diced on multiple dimensions using the suite of query tools. Users connecting from their desktop computers may run standard reports or do ad hoc reporting. Processes can be implemented to send email, voice mail, pages, or faxes identifying data inconsistencies and possibly even suggesting a corrective a course of action.
Data Warehousing and the Quality Initiative
A DW requires that an organization has committed to Quality and Excellence in its vision, purpose and mission. This commitment will ensure quality data in the source databases, which is necessary for a successful implementation of a DW.
Even as ERP systems incorporate more reporting functionality into their systems, the need for a well designed data warehouse grows because every business has its own subtleties that will not be addressed by the standard ERP reporting. A data warehouse takes all of the quality features of the ERP system and adds to them by integrating multiple sets of data, applying business rules, and allowing different dimensional views into the new data. For example, data from Manufacturing execution Systems (MES) can be integrated with ERP information in the DW. This allows analysis into the causes of second level quality outcomes. While the ERP system knows the batch numbers and lots, the MES knows which machines were used to create the product and which vendors supplied the materials.
A properly designed DW will reduce reporting and analysis resource needs. Many simple reporting needs can be addressed using automated processes that distribute information via email, voicemail, pagers, mobile phones, and fax machines. Users will get their information without being forced to turn on a computer, open the Query Tool suite, access the database, and run reports.
Many times reports are run from the operational and production systems. These reports are defined by those applications with specific user needs in mind rather than enterprise needs. The DW will decrease the amount of time spent reconciling and reformatting reports from multiple applications. For example, two different reports from different operational and production systems may appear to contain the same data, but there may be subtle differences causing formatting issues and conflicting values that need to be resolved before the reports can be delivered to management.
While an ERP system will allow for specific reporting of detailed information, the DW will summarize many transactions over a large period of time allowing trend analysis. If inconsistencies are found in this data, the DW will allow users to retrieve more detailed information on the data in question.
Data Warehouse Features that Support Quality
A properly designed DW transforms application specific data to enterprise data. Each third party vendor used a set of business rules when the application was designed. A DW provides the ability to generate a custom set of business rules specific to the organization. This provides the basic codification necessary for mining the DW to provide enterprise wide management knowledge.
The implementation of a DW forces the business to develop standard business definitions that can be easily attained by the business users. For example, there may be many very different definitions of a customer within an organization throughout the different divisions. In a DW, there would be one standard definition of a customer, and that definition would be available via the DW query tools.
Reporting from a DW ensures that quality data is available whenever the DW is available. Every time a DW is populated from the data sources, the data can be validated manually or though an automatic reconciliation. If any data inconsistencies or exceptions are found, they will be reconciled before the users are granted access, insuring that reports are accurate.
Data Warehousing Links to Customers and Suppliers
Because all customer and supplier information will be stored in one central location, the organization will be able to review all aspects of each customer finding hidden trends. By reacting to these trends, relationships with customers and suppliers can be greatly improved.
Data Warehousing is a Commitment to Continuous Improvement
Designing and implementing a DW is only the first step. Strategic and tactical business improvement objectives are dynamic, and the DW must evolve with these objectives. While there are costs associated with changing the DW, the cost of not changing is a decreased advantage over competition.
Data Warehousing Provides Numerous Education, Training, and Teaming Opportunities
The success of a DW is contingent on the teamwork of the entire organization. Executives must define the future directions and business improvement objectives. Managers need to identify the information that will move the organization in those directions while allowing the business improvements. Application users need to work with the managers to determine the available information and define future and current processes. Technical resources must work with everyone to design and implement a DW that will be considered a success.
A DW cannot be designed without knowledge of which enterprise information is important in determining future directions for the organization. If the directions and information needs are not well defined, the DW design will force the organization to define these directions and the information that will be required to move in those directions.
Once the DW is in place, it will provide unlimited analysis of enterprise-wide information. This analysis will provide insights into areas of possible business process improvement.
The enterprise-wide data requirements are documented in the DW via process and object definitions. These definitions can be used throughout the organization as reference and training.
Data Warehouses Provides a Centralized Source for Data-Based Decision Making
The DW will transform data from throughout the organization into enterprise wide data by applying default values, selecting the best data source, transforming the data using key structures, and summarizing the data. This ensures consistent reporting throughout the organization. It is reliable data that can be used for standard reporting as well as detailed analysis. All reports will reconcile.
Data Warehousing and Quality
Although data warehouses are not always implemented through a quality initiative, the end result often leads to quality improvement via streamlined processes and customer satisfaction. The concepts of continuous quality improvement must be applied for the successful implementation and evolution of a data warehouse.
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WHAT IS KNOWLEDGE MANAGEMENT?
The recent emergence of knowledge management has provided an additional emphasis on the components of a quality management culture. Wilson and Asay state that "A critical role exists for quality professionals who can see the continuity between the quality revolution and knowledge management." (1999, p. 26). The concept of knowledge management remains somewhat murky (Greengard, 1998, p.90). Many have attempted to define it. (for instance, see:Bassie, Chaney, and Lewis, 1998; Grayson, Jr. and O’Dell, 1998; Malhotra, 1998; Huang, K. T., 1998; Stewart, 1998; and Wilson and Asay, 1999). Central to each of their definitions is the necessity for developing the human capacity to gather, organize, analyze, interpret, and LEARN from the informational technology applications available to an organization. It is the process of gathering data, transforming it into information, and implementing systematic ways in which workers can codify, share, disseminate, and learn from this knowledge.
The central components of knowledge management include many which are similar to those of quality management. Wilson and Asay suggest that an organization focus on process, total employee involvement, continuous learning and improvement, and measurement and standardization (1999, pp. 28-29). Greengard suggests seven ways that organizations can implement knowledge management. They include providing leadership, establishing cross-functional teams, ensuring that a process is in place, implementing the technology necessary, nurturing a compatible culture, demonstrating the value of knowledge management to employees, and viewing it as a work in progress (Greengard, 1998). The parallels between the components of a quality culture and a knowledge management culture are clear. Organizations must include both in their strategic mission. They both are viewed as ongoing, continuous processes. They require the involvement of teams and the learning of new ways. And they impose the use of data-based tools and information technology to objectively assess and disseminate the knowledge necessary for decision making. Both integrate well with one another.
The tools favored by the knowledge management process are those associated with informational technology. In the global manufacturing environment, Enterprise Resource Planning and Data Warehousing tools represent the applications available for information technology. These tools are the foundations for the implementation of a knowledge management system that supports a quality management environment.
These concepts of quality environments, enterprise resource planning, data warehousing, and knowledge management, while each important in their own right, realize a tremendous synergistic effect when integrated into a related whole. Each helps implement the others. While it is conceptually possible to discuss such a synergistic integration of concepts, it is helpful to illustrate these concepts in terms of an actual application. Below we present a case study of an organization that has begun using the ERP and DW tools of knowledge management. It serves as an illustration of an organization that is moving toward the goal of integrating ERP, DW, and KW into a quality environment.
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CASE STUDY: U.S. Controls Corporation
U.S. Controls Corporation (U.S. Controls), a division of Ark-Les Corporation, is a manufacturer of electromechanical and electronic controls located in New Berlin, Wisconsin, USA. U.S. Controls’ products include switches, buzzers and other components for washing machines, dryers, dishwashers and other large appliances. The company recently made the decision to replace its financial and manufacturing software with J.D. Edwards OneWorld, a leading Enterprise Resource Planning (ERP) software package.
Throughout its thirty-year history, U.S. Controls has always had a focus on quality. The company has always used Statistical Process Control (SPC) charts to identify problems. The President reviewed any quality problems that were identified. Production employees have always been responsible for the quality of their products. They attend customer returns meetings and are required to fix any defects identified on their line.
U.S. Controls has always used automated testing equipment to test 100% of its products before they are approved for shipment. Instead of relying on pass/fail results of testing, U.S. Controls measures various attributes of its products to ensure that they fall within an acceptable range. U.S. Controls’ products do not get stamped with approval and date codes until they pass these tests, and the same machine that performs the test boxes most of the products. Finally, Quality Assurance personnel also audit samples of finished products to a C=0 (zero defects) sample plan.
About 8 years ago, U.S. Controls began a quest to become a world class leader in its field by taking a more proactive approach to quality. The new approach to quality was more preventative, team-oriented, and involved suppliers in the quality process. U.S. Controls accomplished this by implementing cross-functional quality training for all employees. The employees are introduced to TQM concepts and encouraged to discover the needs of their internal and external customers.
U.S. Controls involved its suppliers in the process by telling them which attributes of purchased components were inspected. They worked with suppliers to correct any problems and began to re-emphasize quality even if it meant higher cost in the short-term. U.S. Controls’ expects that higher quality products will ultimately reduce the suppliers’ costs and that the suppliers will pass those savings on to U.S. Controls.
Overall, communication between U.S. Controls and its suppliers improved, and they even worked with one supplier to help them implement SPC. U.S. Controls also eliminated suppliers who were not interested in becoming partners to achieve its quality goals.
U.S. Controls’ quality statement is: "Delight the Customer with Quality, Reliability, Service, Delivery and Continuous Improvement". The company continues its goal of continuous improvement with several recent initiatives. In 1997, they completed the ISO 9001 certification process at the same time they were pursuing aggressive cycle time reductions. Future plans include QA inspection by production personnel and continuing inventory reductions. The recent decision to purchase an ERP system also supports its continuous improvement approach in the following ways.
One of the components of a quality environment is a focus on customer and supplier linkages. The new J.D. Edwards software will give U.S. Controls a closer link to its customers in the form of Electronic Data Interchange (EDI). U.S. Controls is currently using EDI to receive sales forecasts and orders from its customers. However, the current EDI implementation is a stand-alone PC that receives the information via EDI. Once the order is received, someone at U.S. Controls must rekey it into its sales order system.
J.D. Edwards will be linked to the EDI system so that orders generated by its customers’ MRP systems will immediately appear as demand in U.S. Controls’ system. This visible demand will assist U.S. Controls in scheduling components from its suppliers on a just-in-time basis. This EDI configuration could be extended to U.S. Controls’ suppliers as well as its customers, but would require a great deal of effort to get its smaller suppliers linked to EDI.
Instead, U.S. Controls is exploring the use of information on component usage from its ERP system to generate a pull signal to its suppliers. Production information generates pull signals in the current environment, but an integrated ERP system may allow U.S. Controls to automate their pull signals with less user intervention.
The actual implementation of the J.D. Edwards software is providing a multitude of cross-functional teaming and learning opportunities. U.S. Controls appointed a cross-functional "Core Team" to implement the J.D. Edwards product. The members of the Core Team have to understand one another’s needs as internal customers to facilitate the data flow through the system.
In addition to the cross-functional teaming and learning at U.S. Controls, the different divisions of Ark-Les are gaining a better understanding of each others’ needs as they develop standards and procedures for a second phase of J.D. Edwards implementation in other Ark-Les facilities. These are truly multi-disciplined teams, which extend the cross-functional knowledge of the team members by involving Customer Service, Engineering, Quality Assurance, Manufacturing, Finance and Human Resources. All of these groups have a significant stake in the outcome of the ERP implementation and are putting forth a great deal of time and effort to ensure its success.
The latest version of J.D. Edwards' software includes some additional features for repetitive manufacturing environments that U.S. Controls will be implementing. As ERP packages become more comprehensive, scheduling can be based on production rates instead of discrete work orders. The software also contains just-in-time features such as electronic kanbans. Some of these new features may not be utilized in phase I of the implementation, but the opportunity to implement additional software features as they are developed promotes the continuous improvement philosophy of U.S. Controls.
Finally, the consolidation of U.S. Controls data collection into an integrated ERP package collects day-to-day data into a single repository for the company. J.D. Edwards’ reports give management some access to this data, but this single repository provides an opportunity to use data warehousing to convert this data into information, and even knowledge, to drive the strategic initiatives of U.S. Controls.
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CONCLUSION
In this paper we presented a discussion of the components of a quality environment and also described the tools of Enterprise Resource Planning and Data Warehousing as specific mechanisms that are directly related to a quality environment. We also described the components of the recently emerging concept of knowledge management. We suggested that because of their similarities, an appropriate strategy would be to integrate one with the other. We concluded that an organization pursuing the development of a quality culture would be well advised to consider implementing both ERP and DW in support of a knowledge management strategy. Once commitment to these approaches is made, they will each complement the other as they evolve. Finally, a case study illustrated the experiences of an organization in the process of developing such an integrated environment.
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