The Traditional American Manufacturing Organization

Integrated Resource MangementClassic or traditional manufacturing organizations in the United States have reflected the specialist-oriented educational degree programs offered through American universities and colleges. Students graduate with degrees in engineering, accounting or marketing and go to work as specialists, often for their entire professional career.

A stereotypical career path for a person with a degree in Engineering after joining a traditional American manufacturing firm could include several years as a design Engineer, a promotion to Engineering Supervisor and retirement after becoming the Vice President of Engineering. Specialists in traditional American companies do not communicate effectively with other departments, develop separate systems and goals, and incur an "us against them" attitude within the organization.

A traditional company with specialist-oriented roles does not foster the team effort needed to become a "world-class" enterprise. By contrast, team effort and support is essential to maintaining the sharedMRP II data base integrity.


Three Levels of Manufacturing Management

In the MRP II concept of formal management each company should be managed at three levels:

1. Finance and Administration Focus

2. Manufacturing Focus

3. Sales and Marketing Focus

It is essential that the management practices at each of these three levels support one another and, together, implement the business plan. Each management level must carry out its management mission by continuously cycling through the three steps of "plan, execute and measure". Closing the loop consists of using the measurement information from the previous cycle to update the planning assumptions for the next cycle. This is a continuous process for improvement.

Each level of manufacturing management is supported by specific system elements, procedures, policies and computer programs. The computer programs that provide automated support of the three steps by level are:

Financial: Software needs include budgets and allocations (plan); accounts payable and accounts receivable (execute), and general ledger and product costing (measure).

Sales and Marketing: Software requirements for the demand level include forecasting (plan); order entry and billing (execute); and sales analysis (measure).

Manufacturing: Software requirements include master production scheduling, distribution requirements planning, material requirements planning and capacity requirements planning (plan); purchasing and receiving, shop floor control and inventory control (execute); and performance measurement (measure).