Learning from the history of ERP

In recent decades, industrial companies have invested a lot of time and money in machines and production line automation on one hand, and in ERP systems on the other hand. Between these two IT/automation layers lies another: usually called the MES layer or MOM layer. MES covers all the activities that take place within a manufacturing department. These include preparatory activities, such as detailed production scheduling and BOM/recipe management, and retrospective activities, such as data collection, reporting and analysis.

If we look back to the time before ERP systems became commodities, companies used different kind of software solutions for different purposes. Separate packages for Finance, Sales order, Logistic, Procurement, Manufacturing, MRP Planning etc. In many cases these systems originated from various vendors and had often limited or no integration.

 

It worked, but as we know today, not always very efficient and seldom it provided the needed overview to optimize the business processes.

Today ERP is mandatory for all companies; nobody would invest in core ERP sub-functionalities from different vendors.

 

MES is the new ERP for production

 

Today we are facing a similar situation regarding MES. Many factories are facing challenges with production efficiency due to poor system landscapes, overlapping process and a lot a manual work and paperwork on the production floor. I.e. they use MS Excel for their detailed scheduling and reports, and MS Words to manage operator instructions and recipes/BOM.

When there are advanced applications available, these come from various vendors and are seldom integrated.

If we look at all the systems needed to optimize an enterprise we will find the MES layer on the shop floor. MES is the glue between the ERP system and the Scada or PLC’s.

 

MES is from a planning point of view focused on the scheduling part, meaning it’s focus is on optimizing the master plan (coming from the ERP planning or a dedicated Finite Capacity Planning tool).

This means that MES will advice on how to optimize the resources and capacity on short term (mainly for one shift, one day or similar).

 

Without MES you will lack control of data and processes

Many factories are used to report average raw material consumption and production results back to the ERP system after each production run instead of the actual amount of materials used and produced. This also goes for the time spent on each production order or batch, due to lack of an integrated Time & Attendance application. As a result – and depending on the type of industry – one must count or measure inventories on a daily, weekly or monthly basis and correct the ERP system’s administrative inventory.

This means these factories do not have their processes and data under control. This inaccuracy of the administrative inventory can even cause production stops because the proper raw materials are not available. Try to imagine the cost and expenses for a few hours downtime due to this.

For factories where traceability is an important factor the lack of control can cause serious pains and increase the risk of being non-compliant, especially in cases where regulatory demands are required.