ERP and BPM integration lowers costs, reduces inventory

ERP and business process management (BPM) integration helps manufacturers measure key performance indicators (KPIs) across the enterprise. Integrating BPM with ERP improves workflow management and performance measurement.

As business process management (BPM) software spreads from the front office to the factory, manufacturers are turning to ERP and BPM integration as a means of tracking, monitoring and measuring key performance indicators (KPIs) across processes ranging from product development to supply chain management (SCM).

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"Tying and synchronizing steps, making sure no information is lost and orders are executed in a timely, cost-efficient manner, is much easier when you think of end-to-end business processes," said Christian Hestermann, a research director at Gartner Research. Integrating BPM and ERP can help accomplish this.

But before companies can manage business processes across ERP applications, they must define and harmonize those processes to ensure consistent deployment across the organization. This is especially challenging for large enterprises with multiple product line and multiple facilities that operate independently of each other.

The critical first step is to define or identify the optimal way of executing a process, then make sure everyone is following those guidelines. Only then can BPM be effective in mapping and monitoring work and information flow, measuring performance and optimizing processes across disparate, traditionally isolated parts of the manufacturing process.

Some ERP platform vendors offer BPM modules that are tightly integrated into their own platforms. This makes integration easier. However, third-party BPM products are generally better at modeling, designing and analyzing processes that span ERP and manufacturing applications, Hestermann said.

In either case, ERP and BPM integration takes advantage of critical ERP building blocks that, in concert with BPM, improve information management and workflow end to end. Paybacks include lower production costs, reduced inventory and scrap, improved on-time delivery and improved product quality.

"Manufacturers used to be happy enough just to have alerts that warn if something goes wrong, like an order taken but not handed to operations," Hestermann said. "Now they are investing in software to find out how well they are performing."

About the author: Elisabeth Horwitt is a freelance journalist who has covered business IT trends, issues and technologies for over twenty-five years. She is based in Waban, MA.

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