It used to be what happened on the plant floor stayed on the plant floor.
The manufacturing execution system (MES) -- a central system for managing all manufacturing information
Similarly, the enterprise resource planning (ERP) system, which pulls together and stores business operating information about human resources, accounting, customer relationship management and other financials, hummed along independently. Both systems have always been critical to the manufacturing organization, but until recently, had never been linked.
However, during the past five years, experts say many manufacturers have realized that by marrying these two mammoth systems, they can create an integrated ecosystem stretching from headquarters across multiple factories, warehouses, engineering centers and even sales offices. This allows them to more easily home in on all company operations and refine them as quickly as necessary. A more holistic view of purchasing, credit, accounting, supply chain management and manufacturing planning gives them greater agility and better data to aid in decision making and forecasting -- from sales and purchases to asset utilization and hiring and manufacturing planning.
Integrating MES and ERP brings operational clarity
Bonset America Corp. in Browns Summit, N.C., makes heat-shrinkable film used to create labels and safety seals for packaging. It faced the perennial problem plaguing many manufacturers: The manufacturing side and the business side didn't talk -- they simply had no effective way to communicate.
The company relies on a manufacturing execution system to track raw materials. But the enterprise resource management system, which tracks other business functions, couldn't receive that information.
"We just didn't have a means to automatically convert the data from the MES to the ERP," said Rob Richardson, Bonset's information technology manager.
That lack of system communication made it hard to sync business and manufacturing information for an overall view of company operations.
So, Bonset started an MES and ERP integration project -- but first had to solve a gating problem.
Although plant-floor employees could automatically weigh material put into the blenders, they still recorded raw materials manually. This manual input allowed Bonset to record only essential data. But the whole integration goal was to make as much data as possible available to get an overall look at how the company was functioning. So a key step in the project was implementing an automated data collection system from Radley Corp. in Southfield, Mich. The data collection technology helps track exactly which raw materials are used to produce finished goods. Integrated in tandem with the MES and ERP systems, this allows Bonset to track raw materials as well as finished goods.
The Bonset plant and its corporate side can now calculate efficiency and better determine costs.
"The biggest improvement for Bonset has been the ability to more accurately trace materials in our system and our raw material inventory accuracy," Richardson said.
It was a similar story when executives at Des Plaines, Ill.-based specialty chemical manufacturer UOP LLC sought a way to increase the value of its new ERP system from SAP. UOP, a wholly owned subsidiary of Honeywell International Inc., teamed with Raytheon Co. to deploy an enterprise-wide IT architecture that connected the MES and business systems.
"Return on an ERP investment can be increased by 50 percent by integrating it with accurate, real-time, plant information," said Dave Mueller, former senior systems specialist at Raytheon Consulting and Systems Integration in Pittsburgh.
ERP and MES software market responding to demand
As vendors have come out with offerings that ease integration and as standards-settings bodies have also stepped in to help, interest in marrying MES and ERP has really ramped up, adds Greg Gorbach, vice president of collaborative manufacturing at the ARC Group, a Boston-based manufacturing consulting firm.
"For the past four of five years now, we've really seen a sharp uptick in interest in people looking to integrate these business systems," Gorbach said.
The case for integration is sweetened in part because of new demands for fast response times in manufacturing. While both MES and ERP can give executives a detailed snapshot into what's happening within a business at exactly one moment in time, the ERP system returns basically a snapshot, while the MES offers a better way for organizations to react to the events it tracks.
ERP is essentially a reporting technology, a way to store myriad information in accessible form. But ERP simply gives an overview of company operations: what's been sold, what's been ordered. In contrast, an MES shows what's happening in real time and connects the dots more quickly, so manufacturers can react and immediately see results based on what they've changed. The MES system can show, for instance, that product inventory is 50 but 75 orders were just received, so inventory will need to be increased by 25 and the company should immediately start making more product. Or, if the MES system shows that orders for a particular item have increased, planners could react by ordering exact quantities of the raw ingredient needed to produce the item.
ERP plays an important role, too. MES systems can feed ERP systems accurate, timely information such as production levels, inventory, work-in-process status, and part and serial numbers, for tracking purposes.
The latter is particularly useful for companies that need to comply with stepped-up regulatory reporting to government agencies, such as those in the medical device, food and pharmaceutical realms.
It's that kind of ability to react and run a more efficient operation that business leaders seek by linking the systems, Gorbach said.
"Executives wanted to have visibility into the plant floor system to better answer questions from customers," he said. "Even during the manufacturing process, customers would want to know, where are you with the quality of my product?"
ERP and MES integration still challenging, but easier now
Integration is less a headache than in the past, due to new features in many of the technology offerings, but some companies still need to bring in third-party integrators. Others need to add extra software to aid integration, Gorbach said. Bonset's data collection technology implementation is just one example of additional capabilities that might support an ERP and MES integration project. Though the challenges of marrying the two systems are fewer than in early integration days, they still remain, analysts concur.
But the industry is responding to ease MES and ERP integration pains. Today's vendors offer easy-to-implement integration options, the analysts say. Also, the ISA standard SP95 addresses factory ERP communications, which helps ensure systems will operate harmoniously, said ISA's Chip Lee, director of standards, publishing. The standard helps make integration consistent across vendor offerings and companies.
And that kind of consistency helps keep these systems on speaking terms, exchanging vital information and helping manufacturers respond to new demands more efficiently than ever before.
Jean Thilmany is a freelance writer.