Managing far-flung, large-scale operations is no small or easy task but new ERP choices can ease the pain
When you’re managing a global manufacturing enterprise, there’s no choice but to go big. Large manufacturers, and even mid-sized builders, need the latest and best available technology in fast, real-time enterprise resource planning (ERP) software to handle the rapidly changing situations on the shop floor, often at multiple manufacturing sites located anywhere in the world. To accomplish this task, manufacturers increasingly are turning to cloud-based ERP software solutions that offer fast, easy updates, and minimal to no IT overhead costs compared to on-premises ERP installations.
Manufacturing operations today need to look toward applications that leverage cloud-based technologies, including those that can be easily integrated with the many product lifecycle management (PLM) solutions in place at most major corporations.
“The key trend is the advent of cloud computing,” said George Trudell, partner at Ultra Consultants (Ultra Corp., Chicago), an ERP consultancy working with manufacturing companies. “If you are not there yet, you are behind.”
What Cutting-Edge ERP Offers
The digitalization of manufacturing demands that ERP and other software developers supply users with the key tools to get manufacturing data off the shop floor and into the hands of key decision makers at all levels of the manufacturing enterprise. At the Best Practices in Automotive conference conducted by SAP (Walldorf, Germany) last October in Detroit, manufacturers shared their successes in getting best-in-class solutions implemented at large automotive tier suppliers and OEMs.
With SAP’s ERP, manufacturers get data from the shop floor in fractions of a second. “The value is getting data off the shop floor,” said Mike Lackey, global VP of Solution Management, LoB Manufacturing, SAP. Using systems like SAP Connected Manufacturing, manufacturing operations personnel and top-floor executives can pull data from the shop floor in just 100 milliseconds.
Connecting manufacturing shop-floor data to the enterprise, from the shop floor to top floor, is a key focus of companies’ Industrial Internet of Things (IIoT) and Industry 4.0 approaches, leveraging their factory data to make manufacturing more flexible, noted Stefan Krauss, global general manager, Discrete Manufacturing, SAP. “Nowadays, it’s really about connecting to the machine to run predictive maintenance,” Krauss said. “This world of IT and OT [operational technology] is coming closer together. This is allowing us to be able to collect that information, analyze it and simulate, and then trigger business processes. That’s where SAP’s strengths come into play.”
Companies like Robert Bosch are investing in these technologies, with Bosch partnering with SAP on IIoT and Industry 4.0 efforts in its factories using SAP’s cloud offerings. Global networking continues to grow exponentially, said René Deist, executive vice president, Applications, Robert Bosch GmbH (Stuttgart, Germany). Connected systems offer manufacturers and users scalability, convenience, and added value, said Deist, noting that Bosch has decided that all of its devices will be connected by 2020. “Digitalization provides huge opportunities if you face the challenges,” Deist said. “Bosch is on the way, and it’s a huge step.”
Several technology trends that are affecting manufacturing customers are SaaS Cloud, mobility, manufacturing execution system (MES), IIoT, and analytics, noted Hemant Makhija, senior director, Production Marketing, Plex Systems (Troy, MI). “These technologies are helping our customers transform their businesses, resulting in higher productivity, greater connectivity, more informed decisions and better collaboration—all in all, making them more competitive,” Makhija said.
“Plex believes that an end-to-end connected manufacturing organization [connected from shop floor to top floor, across multiple plants, and across the extended supply chain with its customers and suppliers] is more efficient and profitable, and is better at responding to market needs,” he said. “By putting supply chain planning, ERP and MES on the cloud, companies are establishing a new level of connectivity and execution within their organizations. With integrated cloud-based analytics, they are empowering better informed decision-making at all levels of the business. In the past, the big problem for discrete manufacturers was getting accurate real-time data and effective management of transactions. Today, the opportunity is for all organizations to gain enterprise-class insight to compete globally.”
Going with Cloud ERP
Should manufacturers drop their old on-premises ERP installations in favor of cloud ERP’s advantages in cost savings and ease of updates? “It is the future. This is where everyone is going,” stated Trudell of Ultra Consultants. “It makes the most sense.” Cloud-based solutions leverage the ERP vendor’s capabilities, he noted, thereby effectively reducing costs to the user. “For the customer, the big advantage is staying current, not having to re-introduce new software every five to 15 years, with huge ‘bet-the-company’ projects. Picking the right vendor is big, as it could be a 20-plus-year relationship.”
Major reasons business leaders should be interested in the cloud include not just saving money, but also reducing risks and improving productivity, Trudell noted. Cloud ERP deploys faster and lowers implementation costs, as well as making application refreshes easy with constant upgrades. Cloud ERP can reduce risks, offering higher levels of security, uptime, and staff requirements, and productivity is improved with applications staying current.
“The main pillars of innovation in ERP today are centered around scaling the cloud, a very dynamic user experience and workflow, intelligent applications which are data-aware, enabling a vibrant ecosystem using APIs, cross-device communication [IoT], predictive analytics and intelligence, and support for secure high-volume transactions,” said Himanshu Palsule, chief product and technology officer and executive vice president, Epicor Software Corp. (Austin, TX).
Manufacturers must address the challenges in managing an increasingly overwhelming volume of data that operators need to convert into actionable intelligence, Palsule said. “It is important to note that IoT data will be gathered and disseminated by a stream processing application. A manufacturer’s ERP system must have the ability to integrate with the stream processing application to allow for specific, filtered data to be passed to the system, allowing the ERP platform to make better decisions.”
Next-generation ERP solutions leverage new technologies to bring information to those who need it, at the moment they need it, in a form that they can use, Palsule said, and in a way that they can take action immediately, anywhere. “The value comes from increasing the reach of ERP via cloud and mobility, dashboards and analytics, to assist every part of an organization and make it as usable on the shop floor as it is on the top floor.”
The economics of cloud deployments are undeniably compelling, moving ERP from a capital to operational expenditure, Palsule said. Some of the more hidden economic benefits of the cloud he cited include:
- Not being as capital-intensive as an on-premises deployment because of the subscription-based pricing model.
- Better and more instant scalability, allowing clients to add (and sometimes remove) users to their system on demand and saving them from having to invest in hardware and software at the “high water mark.”
- Eliminating or reducing the direct and indirect costs of infrastructure, from server to database systems to the actual hardware and replacement cycle cost.
- Eliminating or reducing the hidden costs of maintaining the servers yourself.
- The benefit of the reduced deployment times (and corresponding improved ROI) that are typical for cloud deployments, as the necessary infrastructure is in place already. “The Software-as-a-Service [SaaS] cloud model takes the onus off of internal IT resources to manage the software and related technology infrastructure, and also offers additional benefits of expedited deployment, ease of upgrades, a lower total cost of ownership and improved cash flow via a subscription model, as well as the ability to leverage best practice security and data protection capabilities,” Palsule said.
Modern cloud-based ERP solutions can also assist manufacturers in their efforts to grow by streamlining system consolidation during mergers and acquisitions, he added, and providing an extensible technology footprint that can support global “land-and-expand” initiatives.
Integrating ERP with PLM
Most mid- to large-sized discrete and process manufacturing organizations can speed product developments by either buying or integrating ERP with known PLM solutions, Ultra Consultants’ Trudell noted.
“Half of the Tier I vendors have this as part of their offering with solutions that they own, and everyone else has a known integration,” Trudell said. “With Tier II vendors, about half of them have known integrations, and the other half do not. It is a more critical need with larger organizations.”
The top tier of ERP vendors include SAP, Microsoft, Infor, Epicor, IFS and Sage, all of which book $1 billion in revenues annually except for IFS, noted Trudell. “The key to this is either buying or integrating PLM with known ERP vendors,” he said, adding that most ERP vendors have a known PLM solution, like SAP.
“PLM is the answer—you need to be doing it, either integrating it or you’ve bought it, or you wrote it,” Trudell said. “In many of our projects for our larger clients that are engineering-related, we end up doing both. It’s not uncommon for us to do a two-pronged approach.”
For a larger manufacturing operation, integrating PLM with ERP is essential. “If you’re anywhere north of $100 million, that’s going to be a factor.” Large manufacturing enterprises need an integrated approach to these applications in order to have the quality of business processes in place, Trudell added. “Once you make that happen though, it’s amazing. Every time we walk in and they haven’t implemented a high-end PLM, they’ll ask us, ‘How do I get information out of my CAD systems into my ERP?’ That’s the big issue.”
Integrating a manufacturer’s CAD data with ERP systems is no trivial task. At last fall’s SAP Best Practices in Automotive conference, Allen Heindel, SAP global process leader for CAD, Crown Equipment Corp. (New Bremen, OH), described how forklift manufacturer Crown accomplished a successful migration of its CAD data from a legacy product data management (PDM) system into SAP’s Engineering Control Center (ECTR).
A key goal with the migration was taking the company’s systems to the next level. “Can they support the company’s growth for the next 10 years?” Heindel said. Among the lessons learned by Crown in migrating its Siemens PLM Software NX CAD/CAM data is that “your data is more complex than you think it is … and your data is not as clean as you think it is,” Heindel said. Manufacturers embarking on such an undertaking need to start very early to identify and clean or enhance CAD data, he said, and to “estimate how much time’s needed for that data—then add 50% to it.”
ERP Transforming Manufacturing
There are myriad ways ERP supports improved productivity, Epicor’s Palsule noted. “Improved operational visibility can reduce downtime by providing status information on key aspects of shop floor operations such as labor, raw materials and production lines so companies can ensure they are all in synch and/or resolve potential issues before they become issues.”
Additionally, he said, because ERP aids the enterprise in back-office operations as well as on the plant floor, it can also assist with mission-critical activities such as invoicing/billing and supplier management and streamline other key business operations such as corporate governance and regulatory compliance.
“From a finished product perspective, we’re seeing a re-imagining of products to embody intelligence and be more self-aware—for instance, smart refrigerators, smart washers and dryers, even smart sneakers … Many of these products are being produced via joint partnerships of traditional manufacturers and newer companies with predominantly digital DNA,” Palsule said. “As more intelligence is ‘baked’ into products, manufacturers need to boost capabilities for traceability around products and components including sensors and embedded software and work to eliminate blind spots in internal quality processes and eradicate waste that can impede velocity of new product introductions.”
New ERP features tend to be in verticals as manufacturers and distributors try to shore up their offerings, noted Trudell. “Process manufacturing, both chemical and food and beverage, is a key market segment that most ERP vendors are going after today, if they are not already there,” he said. “The increased federal regulations
in these markets [and pharma] are driving the manufacturer to seek out new systems,” Trudell said. “Note that distributors in this market segment are also driving new systems demand. This market was underserved, as many of the mid-market vendors had left this business, for example, Infor is taking on process manufacturing with its latest release of CSI [cloud suite industrial].”
Big Data and the IIoT are most important for larger companies, Trudell noted. “These organizations have the resources to invest and drive efficiencies, by truly linking the shop floor to the back office. The key is that this linkage is machine to machine, which implies we need data to figure this out,” Trudell said. “Pick one project, one driver and go after it, for example, quality or machine uptime. Don’t try to build all the data at the beginning.”
For high-speed number-crunching, some users turn to the high-speed, in-memory computing technology of SAP’s HANA, but in most cases such technologies may not be needed except for the largest of manufacturers. “It’s more of a large-scale manufacturer issue. SAP’s HANA is a great solution to leverage for the collection of the big data,” Trudell said. “The ERP systems database is the proper home for most of this information, as most of the information is about the orders—manufacturing, purchasing and customer. These orders are the things that the manufacturer would want to collect information about and around. However, it probably does not make sense, if the organization does not have SAP to move forward with HANA. Instead they should look for solutions supported by the ERP that they own.
“As far as speed, this issue [with respect to ERP] is going away with new technology, but an organization needs to be on the most current release of their ERP,” he added. “These speed issues are mostly related to an older version, as many applications are moving towards browser-based applications. However, speed can be an issue for very Big Data. And then these applications begin to make sense for analytics and reporting.”