Is integration having an effect on how manufacturers approach the product development process?

Is integration having an effect on how manufacturers approach the product development process?
by Nilesh Mandani

As an integrated ERP system shifts industry status from nice to have to must have, the benefits of such systems are more commonly being leveraged by process engineers and plant managers. Process engineers are spending less time procuring cost data, sourcing materials, and compiling data. More effort is focused on continuous process improvement, quality goals, and waste elimination. Plant managers are offered a vast array of Key Performance Indicators upon which to manage their equipment and personnel. Workers are more effectively incentivized, and the reaction to production issues is more swift and effective than ever before.

As data integration becomes increasingly granular, the true cost of each step in the manufacturing process has become more accurate. In plants with well-integrated MES systems, clients are frequently finding the cost of rework and line change-over is significantly higher than initially estimated. This has led many to shift focus from output rate KPI’s to quality and downtime KPI’s. In most cases, this has led to a reduction of scrapping materials, as quality data allows for process adjustment before critical characteristics drift out of specification. In rare cases, this process has led to an increase in scrapping, as the true cost of rework occasionally exceeds the per-part cost. In any case, it is the improved accuracy and speed with which information becomes available to ERP systems that allows for quicker analysis and reaction in modern manufacturing environments.

How is ERP integration affecting supply chain tendencies? Has it had an effect on purchasing decisions?

Integration of ERP, SCM, and MES systems has served to optimize supply chain decisions in ways never before possible. As MES systems return real-time data on materials consumed, and ERP systems push the most current data on outstanding orders, supply chains can be kept in constant motion without the risk of part shortages that once necessitated large warehousing operations. The warehousing operations that remain have, as a result, become more localized, with higher turnover. Cost savings are also met in other ways. Data managed in ERP allows alternate suppliers to be more quickly tapped when scheduled deliveries are not met. Quality data improves supplier accountability. Execution data improves the calculation of true costs. Since raw material supply usually accounts for the majority of manufacturing costs, it is vital for any enterprise to identify a single master repository for material data (usually ERP), and to make sure that the SCM system has a clear path to these data.