Enterprise Resource Planning (ERP), like many applications, is an ever-expanding and -evolving suite of products designed to help businesses become faster and smarter. The question many manufacturers ask today is: “Where is ERP technology going?” The short answer is that ERP is becoming more integrated, more efficient, and more interconnected, while increasing the security provisions for manufacturing operations and processes. But it’s important to understand, “How…?”
ERP is rooted in efforts to help businesses make good decisions with regard to their assets and inventory. The evolution of ERP over the last few decades has progressed beyond the back office (costs, ledgers and inventory.) Modern ERP is a combination of manufacturing, supply chain, order processing, inventory management, personnel functions, and customer relationship-management programs, with built-in, real-time reporting capabilities and graphical interfaces. Your ERP can help you track customers, prospects, secure your data, and run an efficient operation.
Modern ERP is Cloud-based, Internet of Things (IoT) enabled, integrated with best-in-breed specific utilities, and offers advanced functionality. Some of the functions for which a manufacturing-specific ERP might offer integrations include: Electronic Data Interchange (EDI), Payroll, Manufacturing Execution Systems (MES), and Customer-Relationship Management (CRM.)
Manufacturing Execution Systems are the backbone of manufacturing processes. In the simplest terms, MES provides real-time information on the status of raw materials to a finished product, ready to ship to a customer. The connection and monitoring of the MES typically allows for improved efficiencies within both operations and the manufacturing process.
Some manufacturing companies may even manage their business with just an MES and bookkeeping software. The MES is used to manage and report on machine-specific activities in the manufacturing process and drive the manufacturing operations. A bookkeeping software, such as QuickBooks, might track the basic Accounts Payable / Accounts Receivable (AP/AR) activity, while payroll (and let’s not forget commissions) would be reported as a separate function.
Integrating complexity — Typically, an ERP or MES provider would offer application program interfaces (API) with “best-in-breed” programs, with an eye toward integrating specific, complex functionalities such as payroll or EDI. An application programming interface is an interface or communication protocol between different parts of a computer program, intended to simplify the implementation and maintenance of software. An API may support a web-based system, operating system, database system, computer hardware, or software library.
For metalcasters, EDI providers typically must stay abreast of the requirements for Big 3 automotive manufacturers as well as the large-scale industrial and mining equipment manufacturers, and be able to respond to fast-changing shipment schedules. Fully integrated EDI enables this speed and accuracy; people, not so much.
For payroll, there are state-by-state labor requirements as well as tax and/or garnishment and insurance considerations that need to be managed. Typically, payroll-specific software providers offer a more robust solution than the payroll within a generic ERP. Subsequently, both the ERP system and the payroll system have a need for common data, so providing a way to have that data shared instead of re-keyed is an absolute must-have advantage for error-free processing, as well as part of a manufacturer’s embrace of Lean methodologies.
Talking technology — MES providers have increasingly added IoT machine integrations to their software functions, allowing various elements of the technology to “talk” to each other more efficiently, and removed manual data entry (human translation) from the equation. The benefits of having integrated IoT systems are higher accuracy as well as real-time data. Additional benefits may include increased efficiency as operations can be controlled at the machine level and reported electronically.
For more robust production and operational reporting, MES may be combined with ERP. When MES is paired with ERP via an API, it will improve visibility into manufacturing operations. The detailed MES data on items like weight, height, and diameter per part become part of the information reported up to the ERP, and allow for enhanced production granularity beyond what is typically found in an ERP.
Some of the manufacturing details that are improved with MES and ERP integration include tracking by job numbers, part number details, heat and chemical specifications on material, operational and production output, and digital work instructions for set-up and job operations.
A couple of decades ago, a premier USA automotive manufacturing firm popularized the phrase, “Quality Is Job One”. Quality is still the first objective, but these days manufacturers must prove it. You do so with controlled documents, certifications, and audits. To complicate this, your various customers have various quality levels that you agree to meet in order to do business with them.
Instead of managing a myriad of spreadsheets, some businesses will opt for Quality Management Systems (QMS). This is a great example of seeing a task, researching the solution, and going with the best solution rather than reinventing the process through spreadsheets and documents. Today, most QMS system providers are acutely aware that it makes sense to integrate with existing ERP systems, and hence also to provide an API for this purpose.
All-in-one options — Typically, an ERP will already have customer contact information for use on invoices and prospect information for use in quotes. This has made offering simplified Customer Relationship Management (CRM) functionality more typical in manufacturing ERP systems. The all-in-one nature of ERP with CRM makes integration of documents, emails, job notes, and even planning scheduling by customer, a boon for your manufacturing business. It also simplifies data entry for your sales staff. Additionally, the real-time data updates on customer information ensures that quotes and products flow out smoothly. Functional integrations and tracking with a CRM embedded in ERP include activity tracking, email integration, follow-up tasks, goals tracking, prospect database, and sales stage tracking.
Some manufacturers may think that having an ERP that incorporates all of this functionality is a much better idea than an ERP with APIs. Usually, an all-in-one ERP option is not industry-specific, but rather business generic. And, for some businesses, an all-in-one but not industry-specific option might be the better business choice. Every business is unique and has its own processing requirements. But you must make sure, whatever your choice, that common data is never re-keyed but rather is integrated within the ERP environment — preferably by API — to preserve the accuracy of your data.
Your ERP can even make your manufacturing facility more secure by putting your data in the Cloud. The Cloud environments offer security from being breached by hackers that your backroom server cannot. In addition to this, typically a Cloud-based computing environment offers redundancy and disaster-recovery options as well as lower upfront costs. This modern model of ERP ownership lessens the burden of software and hardware maintenance on metalcasters — because no manufacturer should have 46 individuals comprising its IT staff!
In this Age of Cyber Insecurity, modern ERP can also offer options that support your security requirements with features such as two-factor authentication. Today’s electronic commerce capabilities have expanded the reach for many businesses, but along with that reach come security risks. ERP providers, because they deal with their customers’ data, have been aggressive and forward-thinking in their methods of protecting this data. So much so that even companies subject to the Sarbanes-Oxley Act can rely on Cloud-based ERP for safety and security of their data while still enjoying all the technology benefits of a modern ERP.
Patrick McCrevan is an account executive with B&L Information Systems. Contact him at [email protected], or visit www.blinfo.com.