Ever since the analyst firm Gartner coined the term ‘enterprise resource planning’ or ERP, it has been clear that combining manufacturing functions into a single enter prise-wide system enables more effective management of a mid-sized to large enterprise.
However, in recent years, the number of stand-alone software solutions or ‘best of breed’ soft ware applications has grown, threatening to roll-back the progress experienced by manu facturers over many years.
These software products deal with only a segment of the enter prise, inhibiting the free flow of communication, and reducing efficiencies. The more these soft ware products proliferate, the more expensive and confusing enterprise technology becomes, and the more difficult it is to extract real-time data for report ing purposes. Indeed, ERP systems allow a greater degree of interaction between functions that would otherwise be relegated to separate data silos, combining data on manufacturing, finance, supply chain management and maintenance in a single universe. This allows executives more effective visibility and control of the many manu facturing and business processes that are cross-functional.
Why integrated ERP delivers
Imagine the situation faced by a manufacturer who needs to design a product that uses fewer regulated heavy metals, ships more easily to reduce carbon footprint and meets requirements for recyclability at decommission. This would require tight integration between engineering, supply chain management and service management, at a minimum.
What about the capital equipment manufacturer working on amendments to a wind turbine design, at the time when long lead-time items need to be ordered and fabrication needs to begin. This would require tight integration between engineering, project management, supply chain management and manufacturing. Failing this integration, it would be near impossible for manufacturing to work on the same revision of the design, or for purchasing to know which bill of materials was current so they could plan accordingly.
Fortunately, a packaged ERP system based on a granular, service-oriented architecture delivers this integration quickly and cost-effectively because each component is designed to work together in a plug-and- play configuration. Each manufacturer may have slightly different business processes, but a modern ERP system ought to be configurable enough to meet a variety of different business models and process flows.
The decline of ‘enterprise’
Due in part to a recent flurry of merger and acquisition activity among manufacturers, many companies find they are no longer realising the full benefits of ERP. They are left with numer ous acquired divisions that each run separate ERP solutions or collections of standalone ‘best of breed’ solutions, and lose the true ‘enterprise’ perspective in their ERP system. This means that though they may be one company on paper, they cannot behave like one company because they do not have visibili ty or the ability to collaborate across their entire combined operations. To solve this prob lem, many try to integrate numerous best-of-breed and divi sional software products, which can be expensive and often keeps them from realising the full potential of an enterprise solution.
There is, in fact, a place for integrating best-of-breed solu tions with ERP, but the best way to accomplish this is through a mechanism known as extended ERP. Extended ERP provides enhanced solutions, such as inte grating warehouse management with traditional ERP, using mod ern integration principles such as service-oriented architectures and web services. When done properly, this approach can pro vide a tight integration without creating duplicate data and ‘application gridlock’ that pre vents future upgrades.
Keep it simple
As manufacturing becomes more challenging and complex, there is an increased, rather than a diminished, need for simplicity. Enterprise software delivers this simplicity by bringing data and processes together. A good ERP system ought to be like an open concept office, where everyone can interact and collaborate freely, maximising organisational agility.
Best-of-breed solutions, whether or not they are owned by the same software vendor, throw up walls where there should be windows and doors.