How to Combine MES and ERP for Production

Executive Summary

• How ERP requires support from specialized manufacturing systems like the MES application.
• We cover MES ERP or ERP MES for complete production management.

Introduction

For decades ERP companies, along with most of the major consulting companies, have overestimated to their customers how much ERP software can be used for. Several reasons for this are too involved for this blog post. However, all this is that companies that use ERP systems show a powerful tendency to overuse ERP systems. What does overusing an ERP system mean?

See our references for this article and related articles at this link.

This leads to a commonly stated question by executive decision-makers.

“Shouldn’t a company use the ERP system as much as possible as they already purchased it?”

This statement rests on some assumptions. One assumption is that a large percentage of any application cost is the money already invested in it. This assumption is incorrect. Application software and hardware only average roughly 15% of the total costs of the application. For the rest of the costs, the far greater percentage is in implementation and maintenance. These costs do not “come along for free” when an application is purchased. That is, they are primarily incremental.

Therefore, the more a company uses an application, the more it pays to use it. Of course, companies that are not aware of how their costs break down regarding incremental usage can often use an incorrect assumption on which to base their decisions.

A second important factor to consider is that the most important reason an application is because it fulfills the business requirements. This means the application has the appropriate functionality for the need, and it is simply beyond debate whether any ERP system has a production scheduling feature. At the end of this document, we will describe how we can easily prove this to you.

How ERP Requires Support from Specialized Manufacturing Systems like the MES Application

ERP systems may be thought of as a sort of information system hub. It is a bit of oversimplification because ERP does not contain much of the systems’ data that connect to it. However, no matter which way one looks at it, the ERP system requires the support of some tools that oversee all facets of an operation: product planning and costs, product development, HR, manufacturing, sales, marketing, inventory management, and distribution. While at one point ERP systems were sold under the pretense that they could replace every single system that a company had purchased, the days where that concept seemed even remotely feasible are long gone.

One important tool that ERP was originally supposed to address but which ERP systems have not been able to adequately address is the Manufacturing Execution Systems MES application. Let’s look at this category of software.

The MES application collects the various pieces of information in the database regarding the production cycle. The MES application performs this at a level of detail far below where ERP systems are designed to work. As with production scheduling, ERP systems need help in this area as well. This combined system of ERP MES or MES ERP is the backbone of manufacturing. Most companies start by implementing an ERP system or already have and do not implement ERP MES or MES ERP until a later time. Some companies are even lead to believe that an ERP system is all that they need. I can say quite definitively that an ERP MES or MES ERP system is necessary. ERP systems are generally quite weak in the details of manufacturing.

Detail Level and Time Focus

So what can ERP systems be relied upon for manufacturing?

You can look at it this way: ERP creates and manages a basic plant schedule and focuses on analyzing this plan against what happened in the past. The ERP overview applies to time-horizons such as months, weeks, and days. It is the macro view of an operation that looks down into and organizes the details.

On the other hand, the MES application drives the manufacturing operation in real-time — examining what is happening on the shop floor in minutes, hours, and shifts. The micro view collects data on every aspect of the manufacturing process, such as alerting floor supervisors in real-time of missed opportunities or problems on the floor.

Let’s take a look at the value the MES application brings to an operation:

• Exception management: Real-time notifications of issues and exceptions, providing the opportunity for supervisors to correct deficiencies during a shift
• The capture of pertinent production data: Customized lists of important data that interface with the ERP system
• Crystal-clear plan progress: Run-time data on what has been completed and what remains to be accomplished
• Ensures product quality with data transparency: The unbiased facts of events taking place during the manufacturing process are easily reviewed.

Reactive Versus Planning Systems

It is effortless to fall into the trap of considering a word like “planning” as virtuous and “reactive” as negative. That is not what we are trying to do by using these terms. If we think of the term “transaction,” this is a reactive term. It just means the recording of information. ERP systems are referred to as transaction systems, not as planning systems.

Any company requires both reactive and planning systems to make both its manufacturing operations and the rest of their company work correctly.

Both ERP and MES are primarily reactive systems, responding to what has happened in the past. To be specific, ERP has planning capabilities, but the ERP planning capabilities are higher and quite a simple level. The ERP system creates the initial production plan by running MRP. MRP is just a first cut-off when production and purchase orders could be scheduled, without considering a whole host of important factors, and of course, MRP only places a production order into a daily bucket. But of course, this is just the place where production scheduling and MES begin.

By adding a proactive tool that integrates into and adds value to the ERP system. An Advanced Planning and Scheduling (APS) module can bring the next level of detail down. Production schedulers can run a system at the specificity and time horizon that they need to do their job and, with our system particular, to do that job remarkably efficiently.

Enhanced Flexibility of the MES Application

Interestingly, there is an uncountable number of articles on flexible manufacturing – but did you know that one of the most important ways to improve manufacturing flexibility is a quality production scheduling application?

Using production planning and scheduling, we can add, move or delete a production job from the production schedule, rerun our optimizer, and very quickly – in many cases instantaneously show the new schedule. That is flexible.

While beyond the scope of this article to describe this in detail, we go far beyond this. This is because any change can be made to a production schedule, and that change can be saved to a new version of the production schedule, and multiple versions can be saved and compared. In fact, some production planning and scheduling software can also automatically come to production schedules by running towards objectives, which results in production schedules that will change based upon which targets are selected and how they are weighed. Imagine doing that with a combination of an ERP system and a spreadsheet.

Conclusion

If your company is using an ERP system or, more likely, a combination of ERP and a spreadsheet to perform production scheduling and MES, your company is leaving money on the table and is reducing the efficiency of their production operation.