Throughput #14
Are you still relying on Excel spreadsheets for scheduling, with no real-time production visibility – despite a huge investment in your ERP?
Unfortunately, this is just one way that ERPs miss the mark.
ERP investments are soaring, but most still fail to deliver the desired benefits.
Gartner research projects that:
- By 2027, more than 70% of recently implemented ERP initiatives will fail to fully meet their original business case goals.
- As many as 25% of these will fail catastrophically.
Catastrophically?! (See these epic ERP fails).
This is because ERP operations planning and scheduling algorithms are based on outdated batch manufacturing and forecast-dependent methods from the 1950s, which are no longer effective in today’s highly variable manufacturing environment.
And that sends everything sideways from the start.
How outdated business models trigger ERP problems
In our experience, this adherence to outdated business models triggers the four main reasons ERPs don’t achieve business goals as expected:
1️⃣ ERP algorithms require an accurate forecast of future orders.
An accurate forecast is not just challenging, but impossible.
As soon as circumstances change, supply chain analysts start relying on intuition to compensate.
Inventory remains high, yet there are consistent stock-outs and poor on-time delivery.
2️⃣ ERPs lack the tools to effectively schedule production flow.
Production planners and manufacturing managers continuously attempt to keep production line capacities balanced across the plant.
They pursue 100% efficiency or utilization everywhere, which can only lead to sub-optimizing system performance and lowering the overall output.
Production costs remain high while output and lead times suffer. Plus, there is constant “firefighting”.
(The Theory of Constraints solution is to maximize output at a single constraint of each flow stream and synchronize all other resources to its pace in order to minimize operating cost and achieve maximum line throughput.)
3️⃣ ERPs don’t provide flow-based measures.
Decisions are made using cost-based measures such as Local Efficiency, Manufacturing Cost and related Profit Margin that offer a misleading understanding of plant, product and business profitability.
Decision-making regarding customer profitability, product pricing, production capacity and sales strategy is not understood and aligned with market opportunities, reducing revenue and raising operating costs.
4️⃣ In an attempt to create a singular, “perfect” IT system, management relies on the ERP to perform many simultaneous business functions.
This approach often demands complex operations from the software, high volumes of data entry, and uses substandard and dated algorithms (especially for production planning and inventory management) built into the ERP functionality, making the system slow, inaccurate, cumbersome and often misleading.
Necessary customizations add to ERP cost, while additional complexity slows the software down, increases session duration and requires more resources to manage.
So what’s the solution for today’s manufacturing realities?
An ERP strategy that flexes with your business.
A successful ERP strategy for 2026 and beyond is to augment your ERP system with business-results-driven software that replaces the old “Push” approach of the 1950s with a modern “Pull” approach.
Theory of Constraints (TOC) and Lean manufacturing provide excellent principles and rules for a Pull approach – the missing link for ERP systems.
For example, our TOC-based software, Roadrunner, automates Drum-Buffer-Rope (DBR) production planning and Demand Driven Replenishment (DDR) principles for inventory management and production execution (ending the spreadsheet workaround).
Roadrunner software includes 4 modules supporting Flow Management System (FMS) implementation of TOC and Lean manufacturing methodologies:
- Roadrunner Rx for inventory management
- Roadrunner Mx for production execution
- Roadrunner Px for project execution, and
- Roadrunner Bx for business intelligence (Business Dashboard with KPIs to monitor and maximize profitability across the board).
The Roadrunner suite works with all ERPs, so you can ditch spreadsheet stopgaps and finally get the results you need. Want to see how it works? Get in touch.
The Goal Simulation Workshop | Detroit, MI | Dec. 4
The brand new Make Manufacturing Strong Again edition of our Goal Simulation Workshop is coming to Detroit, MI, Dec. 4 (9 am – 3:30 pm) at the Sheraton Detroit Metro Airport.
Join us for a hands-on, risk-free session to learn how to apply the production & inventory management lessons described in the business bestseller The Goal to:
- Increase productive capacity
- Improve on-time delivery
- Reduce inventory
- Reduce costs
- Increase net profit
Email [email protected] to book your spot today.
Can’t make it? More dates for 2026 are coming soon – or contact us to book a customized workshop for your team.