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224 MANAGING KNOWLEDGE WORK AND INNOVATION

On the other hand, it becomes more difficult to massage sales forecasts as these
feed the system. This limits your room for manoeuvre and the ability to play the
role of ‘cheerleader’ in the management team.

>> JO ARMSTRONG: PURCHASING MANAGER
In a few minutes, you will be attending a meeting of a working group chaired
by Alex Rheingold (your MD) to discuss the possible adoption of an ERP sys-
tem in Oakland. The meeting will include a consultant’s presentation. You are
responsible for controlling the raw materials stock levels. The maintenance of
adequate stocks of quality timbers is a particular concern. You are interested
in what you see as Japanese-style management technologies and ideas such
as just-in-time (JIT), although you do not know how to go about introduc-
ing them. You are not sure how relevant JIT is to your timber stocks; timber
requires conditioning before it can be processed. But, you feel that a simple
JIT system might be more appropriate for Oakland than ERP. You think this
is because JIT is based on a ‘pull system’ – pulling production through based
on orders received at the shop floor. In contrast, ERP seems to be no more
than an elaborate name for the conventional Western approach or push system
that people used to call MRP2 (Manufacturing Resources Planning) – push-
ing through production to meet anticipated sales controlled by a centralized
production plan. OK, so ERP is broader, but what is the real difference? Cur-
rently Oakland tries to operate a simple reorder point system for raw materials.
This is certainly possible with the manufactured items such as hardware and
chipboard. As far as possible, you negotiate bulk discounts through competi-
tive tendering. This can lead to substantial cuts in purchase prices, but it does
mean that you have to carry very large stocks of certain items. However, Oak-
land’s manufacturing suppliers (who provide chipboard, block board and the
like) will only deliver in certain minimum batches, for example, 10 tonnes of
ply – 10,000 square metres or so. The purchase of solid timber is particularly
problematic.
You know a lot about timber, especially in choosing high-quality stock. Here
it is very rare for large purchases to be made. The variation in wood as a natu-
ral material and the selection necessary means that unpredictable and varying
amounts will be purchased as and when timber stock of the appropriate quality
and type becomes available. Moreover, because of the natural characteristics of
wood, timber stocks have to be held under controlled conditions sufficiently
long for the material to stabilize. In some cases the company takes an option
on wood still standing. In these cases, of course, the final yield is difficult to
estimate. There are also occasional opportunities to purchase excellent specimen
timber stocks in small quantities, for instance following gales or storms which
inevitably bring some trees crashing to the ground unexpectedly. You are always
on the lookout for such opportunities. In such cases, you keep close contact with
Rowan Gregory, the designer, who will come up with ‘specials’ which incorpo-
rate the specimen timber as a feature.

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