All the latest news from the industry weekly compiled by the editorial team for you free of charge.
This eMail is already registered.
An unexpected error occured.
Please accept our Terms of Use.
Registration successful.

Manufacturing is all about synchronising supply and demand across the supply chain in a way that most profitably allows you to meet your customers’ objectives

Image: Adobe Stock

Production Software The changing role of ERP in manufacturing

Feb 14, 2018

The article highlights the solutions that will help manufacturers overcome challenges, while helping them optimised and align their manufacturing operations and the extended supply chain.

Enterprise Resource Planning (ERP) software is a very important tool for manufacturers. It forms the transactional backbone of the organisation, gathering transaction information from every corner of the enterprise and translating it into financial data and insights. As a system of record for the financial health and management of the organisation, ERP is hard to beat. But, ERP often falls short when it comes to managing the activities behind those transactions.

Production scheduling is one of the most common shortcomings. Due to their origins as financial systems of record, many traditional ERP companies often take a transactional, materials-based approach to production scheduling. When an order is entered into the system, the manufacturing module (usually some form of Material Resource Planning or MRP system) looks at the materials and components at hand. Available inventory is also allocated. Any additional inventory or components needed are either ordered or scheduled for production. Each of these events then creates a financial transaction that flows through the system all the way to the general ledger.

This transactional, materials-based approach does not work well with the reality that is modern manufacturing where available capacity is just as critical as material availability and when demand changes or events require schedule adjustments at a moment’s notice.

ERP manufacturing attachments are not enough

Over the years, manufacturers have added attachments to their transactional tools, such as Advanced Planning and Scheduling (APS) and Finite Capacity Planning (FCP), to address the needs of manufacturing operations. Many of these attachments fall short because the primary transactional design of the ERP software still takes precedence. Often, this transactional design leads these solutions to be too complicated or not agile enough for the modern manufacturing environment. Or, they don’t allow for the manufacturer to evolve, using modern manufacturing philosophies like Lean, Theory of Constraints and demand driven/ pull manufacturing.

To compensate, many production managers and planners have dismissed these solutions and resorted to working with spreadsheets. This approach also quickly becomes unworkable as multiple spreadsheets mean different people are working from different versions of the truth, all of which contain outdated data to some degree. Visibility into the entire supply chain isn’t even within the realm of possibility, leaving decision makers in the dark and putting the organisation at a distinct disadvantage compared to their more agile competitors.

The supply chain planning system of record

Manufacturing is all about synchronising supply and demand across the supply chain in a way that most profitably allows you to meet your customers’ objectives. An organisation’s stage of supply chain maturity reflects their ability to accomplish this goal.

Gartner research describes an organisation’s Supply Chain Planning maturity in five phases. In phases one and two, manufacturers rely on spreadsheets and ERP attachments. In phase three, manufacturers take a giant leap forward with a supply chain planning System of Record (SOR). Phases four and five go even further, with ever-more sophisticated algorithmic planning and innovation garnered through the vast amount of curated data available through the Industrial Internet of Things (IIoT). To get to phase four and five, however, an organisation must achieve maturity in phase three. This is best accomplished by optimising and aligning their manufacturing operations and the extended supply chain through a Supply Chain Planning SOR that sits on top of the ERP system. This provides the agility and “single version of the truth” needed by today’s manufacturers. Refer to Figure 1 for supply chain maturity stages.

Layered technology approach

The Synchrono® Demand-Driven Manufacturing Platform takes the layered technology approach recommended by Gartner, allowing manufacturers to progress to stage five at their own pace. The first step for manufacturers is to layer SyncManufacturingTM software on top of their existing ERP implementation to synchronise planning, scheduling and execution across manufacturing operations and the extended supply chain based on real-time demand. This software achieved “Gartner Cool Vendor” status and gets manufacturers to stage three maturity and beyond. Additional platform components can then be layered on to further maturity, allowing manufacturers to leverage IIoT & Big Data by aggregating actionable data from disparate sources, such as shopfloor devices, then analysing and serving it up in realtime via customised dashboards reflecting status, metrics, alert notices, and more.

Getting faster results

The problem with ERP solutions is that even after spending six figures (or more) with the vendor, one has to wait for a year or more before the implementation is far enough along to add any value. ERP add-ons like APS and FCS aren’t typically even included in phase one of most implementations, so the ROI is delayed even longer.

The average implementation of SyncManufacturing™ takes anywhere from three to four months per site. The software is an enterprise class, web-based solution, meaning that it offers a comprehensive set of capabilities that are all easily configured to a manufacturer’s unique environment. Another reason for faster implementation of this solution is that we are not replacing anything. Manufacturers have the flexibility to keep using their current ERP system and our solution allows one to change any necessary parameters in their system, such as switching from ROPs for material replenishment to eKanban. We also have a program for bringing people up to speed on how demand-driven manufacturing works and any changes to their processes that they need to follow.

Gaining real value from the age of manufacturing digitisation starts at the core–where and how to deliver value to customers. Thus, replacing manual processes or technologies, that do not allow one to work with smart, adaptive technology and help deliver added value to customers, is, worth exploring.

Image Gallery

  • Figure 1: Supply chain maturity stages

    Image: Synchrono

Companies related to this article
Related articles