Sage ERP X3 Version 6: A Sneak Peek

6:44 AM

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We saw it. It’s all in there—from purchasing to sales, to inventory and accounting, to customer relationship management (CRM) and production. Of course, it would take hours to see how it all works. To track performance and key performance indicators (KPIs), X3 uses the Crystal Reports generator, which houses a library of 400 reports and Business Objects technology for dashboards and Web access.

New Technologies for Collaboration and Monitoring

Integration with Microsoft Office allows users to create, edit, and save files without leaving the system. This also makes collaboration between users easier since all files are saved in the database. Another interesting option is that customers and vendors can interact with the system.

Complex but Reliable Security and Workflows

Workflows are really easy to define and modify: a click or drag-and-drop will suffice for simple processes. The Visual Process Designer comes with over 100 predefined processes. The level of complexity supported is supposed to be very high, but this is something that cannot be demonstrated but worth mentioning. Security is essential when processes become complex, and X3 offers Web encryption as well as access control by user, group, and role.

Flexible for Growth and Changing Needs

The modularity of the system allows companies to implement only the modules that they need (others can be added later). The Sage ERP X3 fourth generation language integrated development environment (4GL IDE) can be used to create custom applications, which can be integrated within the product. This is another feature that cannot be demonstrated during an online demo, but it’s worth mentioning since it’s one of the features that sets X3 apart from its competitors.

Finally, here are the major enhancements in Version 6 compared to Version 5 (see graph below):
- Finance has been entirely rebuilt and now completely covers the functionality for this module. The main changes are related to multi-country, multicurrency, and multi-legislation compliance, as well as advanced fixed assets and advanced budgeting.

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Reflections on Lean Philosophy and the Theory of Constraints

6:43 AM

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Lean manufacturing and the theory of constraints (TOC) may well go hand in hand. Lean manufacturing makes value flow through the factory, for instance, by trying to separate value streams so that they use dedicated resources sized to the same capacity (even if kanbans do not optimize the constraints). TOC takes this idea further by recognizing critical bottlenecks, which are the most overloaded resources that determine the maximum flow rate of production, and making value flow through these bottlenecks. It does this by allowing manufacturers to optimize production through their critical bottleneck in order to meet market demand.

This is Part Seven of a multipart note entitled Lean Manufacturing: A Primer.

For these reasons, a TOC production planning solution might be appropriate for manufacturers with make-to-order (MTO) environments, where demand is volatile and where different product lines share the same resources, resulting in bottlenecks. It could also be used for mixed mode manufacturing. In fact, by offering daily production planning for customer orders received, TOC enables business performance improvements in such environments in terms of lead time or cycle time reductions, increased throughput and sales, service level improvements, and inventory level reductions.

Thus, despite the fact that many people immediately invoke a vision of kanban when lean manufacturing is mentioned, TOC supports a lean philosophy where there is a complex environment. However, where lean planning focuses on the flow and the takt of the flow through the factory, TOC optimizes the flow through the factory by focusing on planning the takt of the flow through the bottleneck. TOC is also consistent with lean manufacturing in that both kanban, which is a part of the just-in-time (JIT) philosophy, and drum-buffer-rope (DBR), which is a part of the TOC philosophy, represent synchronized and pull signal production control approaches.

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Inflation’s Demise: The Impact on Business Informa

6:42 AM

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Inflation occurs when an abundance of money exists in relation to goods. This creates artificial demand as consumers accelerate their purchases to avoid future price increases. Suppliers, competing to meet this demand, confront temporary capacity shortages that they alleviate by shifting resources to higher-margin goods and raising the prices of lower-margin goods. In addition, they accelerate purchases of material to avert shortages and avoid future price increases. These actions create additional demand for goods, perpetuating the inflationary cycle.

Today's ERP systems originated from Material Requirements Planning (MRP) and Manufacturing Resources Planning (MRP-II) techniques developed in the 1970s and early 1980s. They focus on improving the accuracy, speed and visibility of short- to medium-term resource planning and allocation decisions, thereby improving management's ability to confidently make profitable commercial decisions. They also focus on minimizing operating costs, and maximizing short- to medium-term revenues, through improved coordination and execution of daily sales, engineering, procurement, production, logistics, maintenance and accounting activities. In short, they are designed to maximize profits by timing business events so exactly that productive resources are committed as late as possible, but never too late to miss profitable sales opportunities.

These are very important business problems during inflationary times, because one or two avoidable, critical resource shortages could mean a missed sale and reduced ability to recover fixed costs. For example, accidental over-commitment of a bottleneck work-center or shipping vessel may delay the arrival of finished goods and cause upstream work-centers to shut down until the backlog is cleared. The cost of underutilized upstream capacity is still incurred, even if production or shipping delays cause lost or delayed revenues.

Prices stabilize or fall when an abundance of goods exists in relation to money. This artificially reduces demand as consumers postpone their purchases in anticipation of even lower prices. Suppliers, challenged to recover their fixed costs, now have excess capacity. They respond by cutting the prices of goods, especially their high-margin products, in order to stimulate sales. In addition, they decelerate their own purchases of material to use-up existing stocks, and await future price decreases. These actions further postpone the demand for goods, setting the stage for a deflationary cycle.

At this writing, Asia and other developing regions are slowly recovering from an acute recession and strong deflationary pressure, while other regions (notably, the United States) continue to enjoy robust growth and modest inflation. This disequilibrium has created a combination of inflationary as well as deflationary pressures throughout the world. For instance, demand for goods remains strong in the United States because buyers there still have inflationary expectations. Asian suppliers have cut prices in order to boost export sales and utilize excess capacity.

If, as many believe, the world is in transition from inflation to price stability or perhaps deflation, how will business priorities be affected before, during, and after the transition? How will changes in business priorities affect ERP system requirements?

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