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Integrating ERP, MES and Automation levels

January 16, 2014

Integrating ERP, MES and Automation levels

Manufacturing organizations around the world are increasingly facing the pressure to move towards a more collaborative, more agile and more value chain oriented, operational structure. The reason for this pressure is the way in which economies, technologies and customer preferences have changed over the last couple of decades. Lead times have reduced, so have margins, multiplicity of options and increased customization are the major contributors. Customers are demanding transparency into the operations and are expecting nothing less than the highest possible compliance standards to be maintained. Even modern social and internet based technologies are constantly exerting pressure on manufacturers to be more open and act faster to changes. Competitors sitting across the world, who previously did not pose any threats are now competing in local markets and are winning business because they are more flexible, more efficient, cheaper and faster.

Complacent behavior in such fast changing and highly demanding times can be extremely dangerous, especially for manufacturers, as they incur huge capital investments in setting up and operating their plants. Even manufacturers who have enjoyed high market shares previously, need to realize current success is by no means an assurance of future growth. Organizations need to realize that they can no longer act as an island. The need to collaborate and integrate has arrived, and this applies to more than just establishing strategic partnerships. It requires both vertical and horizontal collaboration, without undermining the flexibility of the entire structure.

So the next logical question is what is the best way to cope with these pressures and is there an elixir of sorts to become more agile and collaborative? Well, there is no best way for sure, as the way in which a company would react will depend on their long-term strategic perspective and the contingent situations they face in the short-term. However, a basic high level understanding of how to achieve tighter collaboration and become more competitive can be established.

Information systems will play a crucial role in making organizations more agile. For manufacturers, it is imperative to link business goals to operations and operational goals to actual plant activities. Today, our focus will be on integrating various enterprise, operations and automation information systems, to achieve better results from the current operation.

Information systems have existed in manufacturing for a long time now. Depending on the industry and business needs, various disparate systems exist in almost every organization. But are stand-alone IT applications really effective in the current business environment? The answer is No. Stand-alone applications are capable of catering only to specific and limited needs of one particular stake-holder group, which means other groups either can’t access the info or get it on a delayed basis. The flexible, collaborative, supply/value chain perspective calls for end-to-end connectivity of information systems, starting from the last-tier supplier, to the plant floor, to the end-customer. Unless this architecture for information systems is established the operation of any organization would be at best, reactive.

Let’s consider an organization XYZ, which is planning to establish a new plant in a different geographic location than their current plant. Let’s also assume they already have an ERP which connects them to their customers and their major suppliers. Now the ERP being web-based can cater to the new plant’s financial and basic inventory/customer needs. However, the company has to plan the automation level applications like the PLC or SCADA and also consider whether or not they require a more comprehensive MES application alongside the automation. Now in this scenario and even when the plant being set-up is the first one, it is important to understand two things. First, what are the business goals/requirements from the facility both in the short and the long run? And second, are the current information systems capable of providing real-time information to meet these business goals?

If XYZ requires a collaborative set-up, it needs to understand the need to have information systems which can communicate and provide information regarding all aspects of production, both upwards and downwards in their supply chain. To achieve this integration, they need to analyze what it is that each information system is capable of, i.e. understand merits and shortcomings of all systems, which in this case would be automation systems, ERP and the MES.

If XYZ automates their plant with latest robots, high-end equipment and fails to incorporate an MES, their operation would remain detached from their value chain. The MES acts as a layer between the ERP and automation, thereby providing visibility throughout the supply chain. It links quality/production/material/inventory related data from the PLC/SCADA or other automation systems, to the business requirements and demand from the ERP.

MES applications save time and money by acting as an interface and enabler of change between the enterprise level and automation level systems. For XYZ, the ideal scenario would be to have a team from all major stake-holders work together with application providers to align business goals with information requirements. They would require this team to analyze the need for and the requirements from, all three information systems, the ERP, the MES and the automation. Once a clear view of what is needed is formed, application providers can then work together with the team to establish interfaces between each application, with the automation being at the bottom, followed by the MES and finally the ERP.

It is important to remember that for the sake of maintaining flexibility, the complexity and need for interfacing should be considered. Also careful attention should be paid to avoid functionality redundancy. Making unnecessary and complex interfaces, for functions which can easily be performed without such interfacing, does not make business sense. The idea is to make a strong team with a clear knowledge of current and future business/operational needs as well as a clear perspective of how much is too much when it comes to joining two applications. Interfacing should be carried out solely as an exercise to meet business needs and not as a platform for portraying software development skills. So, if an operation can be performed manually, without decreasing the overall effectiveness of the entire operation, establishing an interface would only be a waste of time and money.

Integrating ERP, MES and Automation levels Let’s say XYZ needs data regarding each processed batch from equipment A, to be analyzed for quality control, reported for quality conformance and weight of material B consumed during the operation. In this case, the MES would obtain data from the automation regarding a particular batch, and then provide quality control data through an SPC, further provide requisite documents through its DMS. This data along with material weight data would then be provided to the ERP, which will then intimate both the customer and supplier in real-time. The customer will receive the quality conformance reports and the supplier will receive the material status update or requisition.

The above scenario is only meant to establish a simple and high-level understanding of how interfaces should be made and pursued; the actual implementation would remain company and plant specific. Technically, the interfacing exercise might range from simple file or XML database interfacing to more complex and codependent subsystem creation. What is important to note here is not to get too engrossed in the activity and detail of how interfacing happens as long as application vendors are able to provide what is needed and where it is needed.

Business leaders and operations professionals should understand that interfacing should be pro-change, pro-agility and pro-collaboration. Rather than trying to immerse themselves in the technical aspects, they should try and envision future needs and ensure that the interfacing of applications meets those as well as current needs. Conditions under which integration of applications is performed will generally be far from ideal. It is important to perform cost-functionality and time-effort trade-offs. Having an experienced team would definitely help the cause: people who know the process and the application and people who can decide the correct degree of integration are pivotal for such projects to succeed.

To sum it up, manufacturers will now need to become more value chain oriented and establish information systems throughout this chain. Only then will they remain fit to compete in the current global scenario. The critical need is to integrate information systems, exactly to the extent they should be and be able to harness the nexus between these systems for better operational results across the value chain.


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