Sep 16, 2021 5:30:00 PM / by David Crowley
Nowadays, manufacturers create more information than ever before, but it is typically isolated and not available to other systems. Enterprise Resource Planning (ERP) and Manufacturing Execution Systems (MES) are two application suites that hold large volumes of vital corporate data. Connecting them enables manufacturers to improve visibility, enhance demand forecasting, and streamline manufacturing processes.
ERP and MES systems perform distinct functions and generate different types of information. ERP software is the corporate backbone, supporting back office functions, such as accounting, finance, sales, purchasing, and reporting. This application suite allows a manufacturer to standardize and automate key business practices, gain visibility into mission-critical business processes, and manage corporate resources.
MES software manages the actual shop-floor process and operations of your production line in real-time. An MES system also delivers reporting in real-time due to the fact that an MES system should be integrated directly to machines or via machine interface. The solution monitors complex plant floor manufacturing processes and generates a great deal of production and process data. These tools help to improve manufacturing process quality by notifying executives about items, like shifts in demand and system performance. Frequently, ERP systems work as a top layer to handle orders and inventory, while an MES system focuses on real-time operations.
Changes in supply chains and manufacturing occur throughout the day. Often, delays arise in responding to them because information is stored in separate silos. Sharing information between business systems and the manufacturing floor, ideally in real time, improves operations in numerous ways.
One challenge suppliers face is the complexity of the manufacturing process, which generates oodles of information. As noted, it is housed in various applications and used by different departments. Consequently, managers only see pieces of the manufacturing puzzle and not the complete picture. As a result, they are unable to connect data points in different locations and gain a better view of the causes and effects of milestones being hit or missed during the build process. Linking ERP systems and MES applications enables companies in the manufacturing industry to correlate information between those vital applications and gain more insight into their end-to-end operations.
Manufacturers want to be like Goldilocks and have just enough materials flowing through their supply chain in order to meet customer demand but not any more, which raises their expenses. However, the balancing act is delicate, and underestimating their needs and creating overages negatively impacts the business.
Underestimating demand means running out of a product when customers need and expect it. As a result, the supplier often loses a level of trust, and the customer may opt for another vendor with ironclad delivery guarantees.
Overestimating demand leaves companies with extra inventory, which creates a number of problems. The finished goods tie up cash that the business can put to better use elsewhere. Therefore, they need to spend time, effort, and money trying to quickly find a buyer for the item. Integrating ERP and manufacturing data provides more timely and accurate demand forecast data and mitigates potential inventory miscalculations.
To run leaner, information has to flow instantly and smoothly among a firm’s applications. A demand change recorded in an ERP system can be fed into manufacturing operations scheduling system. Through the advent of intelligent Internet of Things (IoT) sensors and wireless networks, changes can be made during a production run. The result is production run quantities more closely align with demand, so the supplier runs leaner and more efficient manufacturing processes.
Typically, executives bounce from application to application in search of understanding what is happening on the factory floor, especially when problems arise. Consolidating ERP and MES data provides them with more visibility into the production process, so they understand production status, where bottlenecks have arisen, and what caused them. In addition, manufacturers can automate actions based on predefined settings, for instance, sending out a notification to a floor manager that a production run is slipping below its forecast. As a result, managers become more productive and spend more time solving problems and less time trying to determine what is occurring.
Typically, customers are notified about production shortfalls only after they have occurred. Consequently, time passes from the time when a problem arises, say a shop floor device fails to operate, and the moment when the supplier notifies the customer about their product delivery delay.
Connecting MES and ERP data provides manufacturers with the ability to close the gap. As the impact of the snafu becomes clear, the supplier can take steps to remedy the problem, such as optimize workflow scheduling, minimize the impact of faulty equipment, and remove defective materials.
The manufacturing industry has created islands of information as the industry has moved from traditional plants to the smart factory. ERP and MES systems hold the bulk of the manufacturing process information. Connecting them offers suppliers a way to leverage information and new technology to streamline operations, reduce costs, and improve customer satisfaction. While you could use either an MES or ERP system exclusively, we recommend having them work together. An MES ERP integration provides clear operational insight into your shop floor with the ease of adjusting performance to increase overall equipment effectiveness (OEE).