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Differentiating ERP & MES

What are the key points in differentiating the MES software from the ERP software? As one client put it recently: “We have ERP, and are investigating both rolling out ERP modules that we don’t currently use (but own with ERP) and also rolling out a MES solution at the manufacturing level.

There is overlap in what the two solutions offer, and our ERP supplier is pushing to use the ERP offerings….I’m concerned about execution in the ERP level. As I don’t think that is what ERP was designed for“. Sounds familiar? Then it’s time to take a closer look.

ERP-Based Manufacturing: One size fits all?

ERP systems, in general, can be used to perform MES functions in certain manufacturing situations and environments. By and large, ERP works if routings are simple, if the product mix is low, if there isn’t much shop floor automation to interface with, and production is relatively simple.

In this scenario, the ERP provides a very “paper on glass” role in which operators view work instructions and interact with the system directly by manually entering data about goods produced, consumed, steps completed, etc. for the purposes of material reconciliation and quality reporting. But things are not always that easy.

Better-off with MES? Drawing the Line…

Without knowing your environment, it may be difficult to recommend where to draw the line. However, we find IT groups are increasingly mandated to use their ERP system wherever possible, often without regard for functional fit. For manufacturing execution, this may be a naive, risky, and costly proposition. This is what we generally recommend to check out before making the final cut:

  • Data model – ERP systems target materials and costing, with the process routing used primarily to assign labor, m materials, and overhead costs to work in process (WIP). Is it possible to model complex processes, especially e exception handling?
  • Specialty markets – While ERP vendors have invested in making their products more attractive to specific vertical markets, they can’t afford to add specialized functionality unless there is a large market.
  • User Interface – The user interface of ERP are geared for heads-down planners, accountants, and analysts who sit in front of the computer most of the day. Making sure that all the features are available for the many different ways companies may use the ERP system results in too many fields and screens for lean factory operations. No line worker is going to spend two minutes entering data into ERP for an operation that took 10 seconds. Many companies find they have to hire data entry clerks when they implement a new ERP system because line workers simply don’t have time to enter the data.
  • Automated data collection – ERP systems are built around manual data entry concepts. To automate data collection from process equipment requires complex programming, scripting, and interfacing, and is difficult to synchronize with process events.
  • Expensive implementation services – With enough brute force, ERP systems can be extended, through user exit programs and customizations, to handle some of these hurdles. However, building these extensions requires both extensive scripting and coding in languages not commonly used in manufacturing computing, such as SAP’s ABAP, and Oracle’s PL/SQL. Programmers with these skills command a high salary and relatively few of them have plant-floor experience. This results in very expensive implementations.

Once you’ve gone through this exercise, the line between the ERP and MES may become apparent. ERP has it’s place in Manufacturing, and it’s Limitations.

Some corporations, however, have bought into the vision that ERP can be applied to the breadth and depth of manufacturing business processes. While lower TCO (Total Cost of Ownership) and the prospect maintaining one single application have been seductive selling points at the corporate level and the plant level, reality is settling in. You can’t improve performance if the tools and technology aren’t up to the task. If ERP has to be heavily customized to support manufacturing, as is often the case, lower TCO goes out the window.

Be mindful that system integrators are in the business of writing interfaces and developing custom functionality – that’s how they stay in business. Furthermore, ERP systems in general, are more highly engineered “solutions” than your typical MES (as a percentage of $$ spent on customization versus software license cost). Prospective users should exercise caution, ask many questions and remain vigilant against overzealous sales messaging.

Conclusions & Considerations

For highly complex manufacturing environments with high product mix; real-time, event-driven conditional workflows; and automated data collection requirements (such as for lot/batch tracking), MES vendors continue to deliver proven, closed-loop, lower cost systems.   

Nevertheless, if you do bring the ERP down into the manufacturing environment, make sure you ask for a very detailed run-down of how the ERP system is being applied, specifically what has to be customized, and what its going to cost you each time you need to make a change because of changes to your production business processes.

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