"Manufacturing is an integrated extension of corporate policy to the extent that the total enterprise exists and is organized as a system of transformation/ value-adding activities to satisfy pluralistic needs and expectations. The objective of the manufacturing enterprise, then, is the means to a strategic end. If one can acknowledge this viewpoint, then, the entire organization must be manufacturing-oriented, because manufacturing is the engine of development."

Author, R.P. Mohanty
Production Planning and Control

The Manufacturing Enterprise to the Service Enterprise

If one agrees in principle with this statement, then the driver for strategic planning in manufacturing enterprise becomes manufacturing strategy formulation.

To effectively formulate manufacturing strategy, all areas of an organization need to be considered, and a synergistic plan needs to be developed. These areas include design and development, back and front office (customer relationship management, finance, human resources, information technology), distribution and logistics, and supply chain. The formula that creates synergy between all of these areas is Enterprise Resource Planning (ERP), and it becomes the critical element in the business process.

ERP started out as an extension of the manufacturing resources planning (MRP) concept. These systems are the main transactional systems used in modern manufacturing plants to automate and integrate both business and production-management processes. By recording transactions i.e., the receipt of inventory or issue of a work order, the systems track resources used in financial, manufacturing and distribution management.

The software has become the means to support and speed the entire order-fulfillment process. What's more, functionality has been introduced to support the specific needs of vertical industry segments, such as automobile manufacturing, food processing, consumer goods or utilities, as well as special operations such as demand and supply chain management.

Along with functionality for enterprise and supply chain management, ERP is also associated with the use of relational database technology, client/server and the Unix or Windows NT operating systems. ERP can be the means for business-process reengineering, increasing flexibility and responsiveness by breaking down barriers between functional departments and reducing duplication of efforts.

Until now ERP has largely been utilized by manufacturing concerns, but service organizations reacting to increased competitive pressures are also becoming aware of the ERP benefits to be reaped. Benefits such as improved customer service, cost reduction, faster time to market, globalization are all part of the new ERP paradigm. Companies in the service industries need enterprise solutions to link plant functions to all three levels of service: planning, execution and control. In the past, these three layers of service providers exchanged information infrequently, with little or no automation. In today's service environment, information exchange between all functional areas of the enterprise is an everyday and sometimes every minute necessity.