Many enterprises are still confused about its specific role and value in production management when introducing ERP systems. This article will delve into the core content of ERP production management, interpret how the “four management and eight management” framework can achieve digital implementation through ERP systems, and how ERP can help enterprises achieve efficient production in dynamic balance.
In the operation map of manufacturing enterprises, production management is like a hub, which should not only connect the order demand of the front-end, but also link the supply chain resources of the back-end. According to data from a research institution, enterprises that adopt systematic production management methods have an average increase of 35% in order delivery timeliness and production efficiency by more than 20%.
As a classic framework of production management, “four management and eight principles” builds a complete system of production and operation through the overall control of people, things, things and money, as well as the details of strategy and information. As the core carrier of production digitalization, the design logic of ERP system is to transform the methodology of “four pipes and eight principles” into digital tools that can be implemented, realizing the leap from “experience-driven” to “data-driven”.
Digital mapping of the “four pipes”: the production management skeleton of the ERP system
The core contradiction of production management lies in the “dynamic balance” – finding the optimal solution between changing order requirements and limited resources. The four dimensions of people, things, things, and money focused on the “four pipes” just constitute the core design skeleton of the ERP system production module.
Human management is reflected in the ERP system as “rule digitization + behavior traceability”. For “rules”, the system solidifies the operating specifications through the process engine, such as the management of onboarding rights on the production floor: only employees who have passed the training and assessment will be given the operation authority of specific equipment, and each operation will be recorded. “Doing training” is realized through the linkage between the human resources module and the production module, and the system will automatically push the training course according to the job requirements, and bind the assessment results to the job qualifications. An auto parts company reduced the onboarding cycle of new employees from 2 weeks to 5 days and reduced the operational error rate by 40% through the training management function of the ERP system. The system can automatically count the production quantity, quality compliance rate and other indicators of employees, connect with the preset incentive rules, generate performance appraisal results, and avoid the lag and error of manual statistics.
The management of things forms a “full life cycle data link” in the ERP system. The inventory management module works deeply with production planning to guide material receipt through real-time inventory data to avoid “downtime waiting for materials” or “material backlog”. The equipment management module realizes the whole process tracking from procurement to scrapping, collects equipment operating parameters through the Internet of Things interface, and automatically triggers early warnings when the equipment has abnormal vibration and high temperature, and generates work orders in combination with maintenance plans. Environmental management is connected to the temperature and humidity sensors and dust monitoring equipment in the workshop to transmit data to the ERP system in real time, and immediately remind managers to adjust once the standard value exceeds the standard, which is especially important in industries that are sensitive to the production environment, such as electronic components and precision instruments. A semiconductor factory maintained a workshop environmental compliance rate of more than 99.5% and increased product yield by 3% through the environmental management function of the ERP system.
What does a product manager need to do?
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The management of events is achieved through the ERP system to achieve a closed loop of “planning-execution-review”. At the planning level, the system supports layer-by-layer disassembly from master production planning (MPS) to material requirements planning (MRP) to shop floor operation plan (SOP), such as decomposing monthly production plans into daily crew tasks and automatically associating resources such as equipment and personnel. Process control relies on the real-time synchronization of the production execution system (MES) and ERP, and after each process in the workshop is completed, the system updates the production progress in real time by scanning the code or entering data at the terminal, and automatically pushes early warnings to the relevant person in charge when there is a process delay. The result review is realized through custom reports, and the system automatically summarizes data such as production quantity, pass rate, equipment utilization, etc., and compares it with the plan to generate a difference analysis to provide a basis for subsequent optimization. Through this closed-loop management, a machine manufacturing company increased the production plan completion rate from 75% to 92%.
The management of money is reflected in the ERP system as “refined tracking of costs”. In terms of precise investment, the system will calculate the cost of materials, labor, equipment depreciation and other costs according to the production plan, and generate a budget plan to avoid wasting resources. For example, if the material consumption of a batch of products exceeds the standard, the system can be traced back to the specific collection link to check whether the loss is excessive or the picking error. A home appliance company reduced the production cost per unit product by 8% through the ERP cost management module, saving more than 10 million yuan per year.
The implementation of the “Eight Principles”: how ERP realizes the digital sorting of details
If the “four pipes” are the skeleton of production management, the “eight principles” are the flesh and blood that fills them, involving eight key details from strategy to information. The ERP system transforms these details into actionable digital tools through a modular design.
The combing of strategy and goals depends on the linkage of the “planning layer-execution layer” of the ERP system. The system will decompose the company’s long-term strategy into annual production targets, and then refine it into quarterly and monthly indicators, such as “10% increase in market share” into “15% increase in monthly production capacity”. Through the target management module, the progress of achieving the goal can be tracked in real time, and when the actual data deviates from the target, the system automatically analyzes the influencing factors, such as whether it is caused by insufficient equipment capacity or material supply delays.
The management of risks and systems is reflected in “built-in rules + risk warning”. For example, in the product quality inspection process, the system will force the inspection to be carried out according to the preset standards, and if it fails, it will not be able to enter the next link. Risk management and control are achieved by setting key risk indicators (KRIs), such as “equipment failure downtime” and “number of days of material shortage” into system monitoring, and triggering the early warning process immediately once the standard is exceeded. A chemical company reduced the incidence of production safety accidents by 60% through the risk warning function of the ERP system.
The optimization of responsibilities and processes is achieved through the “Role Permission Matrix + Process Engine”. The system will define clear responsibilities and permissions for each position, for example, the production supervisor can approve the production plan, while the operator can only enter production data to avoid overstepping the authority. For example, when an order is urgent, the system can automatically trigger the expedited process, skip non-critical approval links, and record the reason for the adjustment for traceability.
The management of standards and information is the core advantage of an ERP system. The system digitizes various standards (such as process parameters and inspection specifications) in the production process to form a reusable standard library, and new employees can directly access standard documents to learn operations. Information management breaks the “information island”, summarizes sales orders, material inventory, production progress and other information in real time through the data integration platform, and generates production and marketing collaborative reports, so that managers can grasp the overall situation at any time. A food company consolidates information through an ERP system to reduce order response time from 48 hours to 12 hours.
The core logic of ERP system design: balance and synergy
In the framework of “four management and eight management” of production management, the design of ERP systems is not a simple stack of functions, but a collaborative digital platform is built around the balance goals of delivery, quality, cost, and efficiency.
The system realizes cross-departmental collaboration through “horizontal integration”, such as linking the production planning module with the procurement module to ensure that material supply and production schedule are matched. Connect with the sales module and respond to order changes in a timely manner. “Vertical penetration” realizes the connection from the top-level goal to the grassroots operation, managers can view the overall production situation in real time through the dashboard, while workshop workers obtain specific tasks through the terminal, and the two-way flow of data ensures information transparency.
The practice of a large equipment manufacturing company shows that after introducing an ERP system that conforms to the “four management and eight principles” logic, its production cycle is shortened by 25%, the work-in-progress inventory is reduced by 30%, and customer satisfaction is increased by 20%. This case confirms the value of ERP systems – not only as a digitization of tools, but also as a manifestation of management thinking.
The highest level of production management is to maintain balance in dynamic changes. The ERP system carries the systematic approach of “four management and eight management”, so that production and operation can shift from “passive response” to “active control”, and finally achieve orderly and efficient production goals. For enterprises, when choosing or designing an ERP system, the key is whether the management concept can be transformed into system functions, so that digital tools can truly serve the essential needs of production.
