ERP systems have been growing steadily in scope for years. So the question arises: do manufacturing businesses need anything else – other than, probably, links into engineering design and PLM (product lifecycle management) software? And, surprisingly for some, the answer appears to remain 'yes and no'.
Talk to ERP vendors and you'll hear a fairly strident 'no'. You'll also hear persuasive reasons not to veer from the pure path. Craig Such, managing director of Microsoft Dynamics NAV ERP house Azzure, makes the point that going the alternative 'best of breed' route is expensive, in terms of software licences and support, as well as potentially fraught when it comes to upgrades. "If you want a streamlined solution across the business, you need a single, integrated ERP system," he advises.
Neil Rushby, supply chain divisional manager with Access, takes a similar line, adding that, although integration with third party systems is far easier than it was, managers need to be wary of assumptions. "In this day and age, nothing really gets in the way of one application talking to another," he says. "But what is important is how [software] suppliers are prepared to work together." There is also a great deal of certainty to be gained by sticking to one supplier where possible, he argues. "They know what's feasible out of the box versus what is technically possible, but at a cost."
The right formula
So let's examine ERP's limits. Take Formula One, widely acknowledged as at the extreme end of high-speed engineering, but also manufacturing, assembly and logistics, with tight integration required from trackside to serialised production. ERP is not new here. Way back in 2005, the then BAR Honda revealed some of its success with a SAP All-in-One ERP system, implemented by Ciber UK. At the time, a spokesperson told this journal: "Our IT now gives us complete control of all our processes, from designing components to building, testing and developing them and the car in the months leading up to the season, through racing and into obsolescence."
Sounds good? The clear implication was that, if ERP is good enough for F1, surely it should work anywhere? And that was reinforced later that same year with Red Bull trumpeting its achievements on Epicor Avante ERP. Interestingly, though, this team observed that its requirement wasn't ERP per se, but a master file management system. Nevertheless, Red Bull's spokesperson described its implementation as: "Everything you would expect [to see] in a manufacturing company, [handling] from the receipt of the BoM – so MRP, purchasing, production, routings, goods receiving, parts control, stock management, logistics and tracking, but not accounts."
But that's not quite everything. There are some 'module' omissions that manufacturing businesses today probably wouldn't want to tolerate. Think about CRM (customer relationship management), APS (advanced planning and scheduling), BI (business intelligence) and MES (manufacturing execution system) functionality.
And little has changed in F1's IT. Fast forward to 2011 and look at Marussia, formerly Virgin Racing, which went live with Sage X3 in October of that year. Operations manager Kevin Lee – a committed advocate of systems and processes – describes his initial ERP roll-out as covering finance, stock control and purchasing. "It managed all of the product cycle, from creating a part number to purchasing against it, receiving through goods-in, inspection and into stock, and paying for it," he recalls.
That has since been extended to include the evolving race car BoM as well as works orders and associated functionality. "The aim is for Sage to control the full lifecycle of all components on each car," explains Lee. "We may use it to record usage, too, although currently that's in a separate subsystem. Then, next year we intend to integrate Sage ERP with Siemens TeamCenter PLM."
Verdict: perfectly capable, but still not sufficient for many manufacturing businesses.
Now, though, let's turn our attention to Ferrari – not Formula One, but its prestige sports car production business. This iconic manufacturer recently reported success with the second phase of its Infor ERP LN manufacturing software upgrade – integrating supply chain management (with material handling and warehouse management handled by a third party logistics provider) and shopfloor control (in the form of Siemens MES for flexible production management) for its new V8/12 turbo engines line.
Speed and agility
This project started a couple of years ago, with Ferrari first proving to owner Fiat that its centralised IT and standardised SAP ERP template weren't the way to go for Ferrari. CIO Vittorio Boero says that Fiat's SAP model would not have delivered against the requirement to drive faster production in a configure-to-order environment, where the strategy was to capture market share in the world's fastest-growing, but increasingly impatient, economies.
So, faced with a demand for more speed and agility in production, Ferrari opted to update its ERP (Baan IV) software to the latest Infor LN, with project phases covering manufacture, finance, the aftermarket and ultimately Formula One. Central to the decision was LN's flexibility and its automotive industry functionality, designed to handle the complexity of building custom-configured vehicles in sequence, while maintaining good production line efficiencies and sequencing with the supply chain.
However, Ferrari was also impressed by its scope, which enabled it to act as a hub, integrating with both the supply chain and manufacturing technologies. That was enabled from within Infor by its lightweight middleware Infor ION, which links business processes, including order configuration, APS, assembly line scheduling and sequencing, as well as supplier management.
Clearly, ERP cuts the mustard for Ferrari in almost every regard. But note also its specific exception of supply chain management and MES. MES specialist Seiki Systems' sales director Paul Lane suggests the latter is because of the specialised nature of automating and interacting with plant, machinery and people in complex factory environments dogged by the real world of production variety, multiple routes, machine stoppages and moving priorities.
Clearer vision
Much the same argument used to be trotted out for APS and shopfloor data collection systems – until the technology and expertise were largely acquired by ERP vendors. That said, companies such as steel wire products manufacturer Siddall and Hilton – which makes everything from furniture springs to prison fence panels in a huge range of types, sizes and batch numbers – prove the veracity of Lane's assertion.
Operations director Phil Goy paints a picture of a company benefiting from ERP, lean manufacturing and advanced machinery. However, prior to purchasing APS from Preactor and machine monitoring systems from Seiki, he says that it lacked "visibility of what was happening, and more importantly, why something was not happening". Management was aware, for example, that setup times were often taking too long and unscheduled breakdowns happening, but wasn't sure why.
Seiki's part of the solution comprises its Machine Monitoring system integrated with shopfloor data collection and electronic work queues. That works with the APS package to deliver and capture meaningful job/operation and machine status data for performance analysis. Now, explains Goy, whenever a machine is stopped, whether by an operator or automatically, the data is instantly recorded, and reasons and subsequent actions captured.
And the result: "It wasn't long before we had enough visual information to know where the biggest areas of efficiency gain could be most quickly achieved," he says. Indeed, on the first live machine this led to reworking its 61 decoilers and the associated workflow, which reduced the most common changeover time from 4.5 shifts to 1.5. That, combined with other efficiency gains attributable to the Seiki/Preactor system, led to an effective doubling of machine uptime.
As Seiki's Lane puts it: "Shopfloors need to deliver the right product to the right quality in a timely manner, while retaining flexibility." For as long as that takes engineering know-how, not just software, it's likely to be outside ERP.
