Simulation analysis for ERP conducted in Japanese SMEs using the concept of MFCA

Abstract

Small and medium-sized enterprises (SMEs), which have limited resources, spend the majority of their time on routine business and have difficulty pursuing goals beyond economic efficiency, such as environmental preservation. In this study, using the concept of Material Flow Cost Accounting (MFCA), a simulation model for the Enterprise Resource Planning (ERP) business flow of a Japanese electronic related manufacturing SME was constructed, and the hidden problems of stock shortage and dead stock were actualized. By analyzing the causes of these problems and by using a tool called Arena OptQuest, an appropriate materials purchasing plan was determined for the company. This solution will improve production efficiency and reduce the dead stock that causes a negative environmental impact. As a result, an improvement in both economic and environmental performance can be achieved.