Manufacturing organisations aim to create more and better innovative products and bring them faster to market. This is enabled by enterprise product development and manufacturing tools and technologies to automate core business administration and execution functions so that they operate in an integrated manner. As such, Enterprise Resource Planning (ERP) and Materials Requirements Planning (MRP) solutions provide enterprise-wide collaborationand real-time (or semi real-time) reporting capabilities, while Manufacturing Execution Planning (MES) solutions allow dynamic information to drive effective execution of factory shop floor operations. Together, they constitute the operational backbone of the enterprise.
ERP: Business Practice Automation
ERP is essentially a reporting technology, a way to store and share large volume of information in accessible form. ERP systems help connect the wider-enterprise, allowing for resource capacity planning, job costing, asset tracking, and providing an array of business value, in terms of:
- Optimising data input and management by leveraging automation
- Improving customer service and satisfaction
- Improving communication with customers and suppliers
- Enabling informed decision making by connecting core functions and support functions
- Providing advance and real-time planning, monitoring and execution of transactional operations across various enterprise processes
- Increasing cost control and operational visibility when managing demand
- Feeding business and technical data to downstream applications (and functions), such as MES and other systems
MES: Manufacturing Execution Foundation
MES allows companies to track and monitor just about every aspect of their manufacturing processes, in terms of:
- Providing material / component traceability and dynamic production scheduling
- Enabling visual data traceability, live and accurate performance dashboards
- Connecting manufacturing operations to the entire organisation
- Reducing make-to-order and order-to-ship times, as well as cost of regulatory compliance
- Enabling process traceability, quality management, planning and forecasting
- Optimising shop floor operation and machine utilisation through effective diagnostics and problem solving
ERP-MES: From Coexistence to Integration
Historically, there has been a clear separation of purpose and capabilities between ERP and MES: the former was to enable effective office-based functions (such as finance, procurement, HR, supply chain, asset management, etc.) to operate swiftly and efficiently, while the latter was to effectively run factories and integrate shop floor to top floor.
Integrating ERP and MES can significantly increase operational clarity, and equip organisations with a powerful digital ecosystem to monitor and adjust performance against business plan.
Nowadays, ERP and MES share an increasingly wider scope. However they differ in terms of level of control and accuracy. ERP and MES overlap in some areas, which can cause confusion. Technically, there is a lot more in MES than data storage and reporting as it provides event-driven tracking and planning tools.
ERP and MES have mutual data dependencies: ERP feeds MES with receiving, POs or sales orders, Bills of Materials (BoMs). MES feeds ERP with accurate, timely information such as production levels, inventory, work-in-process status, part and serial number usage, scrap material information, all for tracking purposes. The return of ERP-MES investments can significantly increase competitive advantage in delivering on-time quality products that are compliant with customer orders.
Simply put, ERP knows “why” (strategic decisions), while MES knows “how to” (operational decisions).
ERP systems are not designed to reach the shop floor as they are not designed to be truly “real time” applications; they lack “speed” and responsiveness, and tend to be static or have significant latency. In contrast, MES systems are fast and they allow real time decisions. On the shop floor, it may not be necessary to analyse static data of the recent past, but instead to focus on current information on what is happening in the present and perhaps on an evolving trend related to the information in question.
ERP cannot perform everything. Different types of information, and the people who consume it, necessitates the use of a diversity of systems: both ERP and MES have their own purpose and performance requirements which make them very complementary solutions from shop floor to top floor.
ERP and MES must communicate and act as a seamless whole to allow the manufacturing industry to meet the dynamic demands coming from customers, regulators, suppliers and even internal staff.
And in reality the gains in manufacturing operations are quicker to achieve with MES due to exception highlighting and 24/7 view of manufacturing and equipment: however it is still highly dependent on the quality of the upstream information. ERP and MRP systems are essential but not sufficient to make mass-production organisations competitive; they are basically “must-have” solutions to automate the relevant ‘hygiene processes’ to run the business effectively and efficiently.
What are your thoughts?
This post was originally published on LinkedIn on 10 February 2017.