When considering Cloud ERP, look into manufacturing execution, product safety and genealogy, bar coding, and quality assurance.


Two workers review production data from a Plex Online screen at the GR Spring & Stamping manufacturing facility. Source: Plex Systems

The trend toward Cloud computing is hard to ignore. Turn on a television, and you can see commercials with happy families publishing, editing, sharing videos or other content via the Internet-based infrastructure known as the “Cloud.”

There are many definitions of Cloud computing, but it basically refers to delivery of information technology (IT) including software via the public Internet or private networks based on Web standards. However, as widespread as familiarity with the Cloud is getting, in manufacturing, a couple of key questions linger. For starters, what’s possible with the Cloud when it comes to business systems like enterprise resource planning (ERP)? And second, can Cloud-based ERP even handle manufacturing concerns like detailed production tracking? The answers to these questions are not exactly simple, but the short answer is yes. Cloud ERP can fit a manufacturer’s needs, but companies need to dissect those needs and compare them to solution support in areas like manufacturing execution, product safety and genealogy, bar coding, or quality assurance.

Manufacturers and software vendors can work together to drive improvements. Source: Plex Systems

Why Cloud ERP?

Cloud computing and the related trend of software as a service (SaaS) are catching on because they avoid some of the thorniest challenges with the traditional “on-premise” model for using software. One of the biggest problems: waiting for a software vendor to come up with a new release every year or two, and then migrating your implementation to the new functionality.

Unfortunately, many companies customize standard, on-premise software in a way that complicates the migration or upgrade process. With SaaS solutions, the product is always up to date. The vendor continuously adds enhancements in a way that supports rapid application development and a “user-community” approach to new functions. But this fundamental advantage can only work if the solution uses what is called a “multi-tenant” architecture.

With multi-tenant SaaS, all the companies are using a consistent, “single instance” of the software. As the term implies, multi-tenant is like a big apartment complex where many tenants make use of the same infrastructure such as hallways, elevators and heating, but furnish their apartments to their unique tastes.

SaaS vendors use techniques such as configuration settings, libraries for forms, or glossaries for terminology preferences to let operators configure the system to fit their business without changing the single instance foundation. To get back to the analogy, the vendor can update an apartment complex’s entire infrastructure in the blink of an eye, but the tenants do not have to move their furniture, change décor or rearrange their kitchen shelves.

The multi-tenant concept is vital to the ongoing efficiency of Cloud ERP. Without it, a so-called Cloud solution might actually be little more than a one-off, Web-hosted solution fraught with the same migration challenges that face legacy systems.

Of course, SaaS also eliminates the need for IT specialists to run the software in-house. Such advantages are driving a thriving market for Cloud-based systems. Analyst firm Gartner estimates SaaS delivery accounted for nearly one-third of the market for customer relationship management (CRM) software in 2011. For ERP, Gartner places the SaaS-delivered share considerably lower, at about 7% in 2011, but sees SaaS-delivered ERP growing at a 14.7% compound annual growth rate from 2010 to 2015. (According to Gartner, Forecast: Software as a Service, Worldwide, 2010-2015, 2H11 Update, November 2011.)

A worker at GR Spring & Stamping works at one of its many presses on the shop floor. Source: Plex Systems

Dissect Plant-level Needs

The overarching question for Cloud-based ERP in manufacturing is: how can you keep a consistent, multi-tenant approach but still fit the needs of individual companies, plants or processes? Here is where companies need to ask about a vendor’s approach to unique settings, and evaluate how well that approach and the breadth and depth of the offering fulfill needs at the plant level. The bottom line is that the software has to work for each operation regardless of how it is delivered.

First and foremost, Cloud-based solutions for manufacturers should offer detailed functionality in areas like quality and production management. Here is where vendor focus is a consideration. If the SaaS vendor is trying to build for too many verticals-everything from health care to banking to insurance and so on-the product will be cumbersome and more difficult to use.

A Purpose-built Manufacturing Solution Should Include:

Production and scrap tracking and OEE (overall equipment effectiveness) reporting

Production scheduling of various flavors including kanban, finite and infinite scheduling

Detailed process/work instructions with support for images and video

Support for unique part numbers and bill of materials for optional configurations

The ability to keep work instructions in sync with engineering changes and workflow to manage the engineering change order process

Product traceability and part genealogy

Support for quality or safety procedures, such as workflows that support production part approval process (PPAP) in automotive, or in the food industry, safety, hazard analysis and critical control points (HACCP) functionality.

Potential SaaS users should consider whether such functionality exists and how easily it can be configured.

In manufacturing, there is also the need to incorporate vital data inputs coming from programmable logic controllers (PLCs), machinery or scales. Bar coding and labeling are critical features. Many believe that the Cloud is too ethereal to link to such plant-level systems, but it can be done quite readily.

SaaS vendors with industry focus have pre-built bar code data collection functions, and some offer bar code label libraries. Via the use of eXtensible Markup Language (XML), it is possible for Cloud solutions to exchange messages with PLCs or machinery. For older controls or machinery that do not speak XML, middleware can be configured to relay information. Granted, this takes some extra effort, but it can done so it does not impact the single instance, while supporting the information flow of order instructions downward, and consumption and status data upward.

It is important to take a step back from all the Cloud hype, dissect your manufacturing needs, and then assess if the Cloud is a fit. If operators need to download recipes from ERP to machinery on the floor to ensure quick, accurate setups, can a Cloud solution do that? If the company does metals processing, and integration with dimensional data from computer-aided design (CAD) is vital, can a Cloud solution bring that information front and center? Break down the company’s needs, and then see if the solution-whether Cloud or on-premise-stacks up.

Deep, full-featured manufacturing solutions that include virtually everything a manufacturer needs to run the enterprise exist. Some SaaS vendors use a different approach. They have basic ERP functions, and use an extensible platform architecture to allow operators or third parties to develop extended applications. This can be a valid approach, but only if the companies needing the extension are willing to accept the development overhead and deal with multiple vendors.

With software as a service (SaaS), the product is always up to date. Source: Plex Systems

Think User Community

The multi-tenant basis of Cloud-based solutions is lending itself to a new way of improving systems. Rather than wait for individual requests or customizations to be folded into a vendor’s next release cycle, the vendor can add specific functions continuously.

In some cases with Cloud solutions, a user company might help pay for a point function to be developed, but since other users also are requesting enhancements and the vendor is adding them, chances are that every user will come across many useful, new functions initially driven by others. Again, because of the multi-tenant nature of SaaS, all that is needed is to opt-in for the new feature. The result is a “user-community” approach to continuous system improvement.

For example, a global provider of components, systems and services used in appliance, heating, air conditioning, refrigeration and residential products drove a suite of key enhancements to their software system. Electronic assemblies require dozens, sometime hundreds, of components such as resistors, capacitors and integrated circuits. It is essential that every component be reliably delivered to exactly the right position on the assembly. Furthermore, it is essential that the actual manufacturer of every component used in assembly is known.

The solution was the introduction of product traceability features, which included an approved vendor list that ensures the correct sourcing and inventory of components. Features such as workcenter source position specification and validation ensure the correct placement of component supply at the point of use in the assembly line, greatly reducing the possibility of defective product and costly rework and scrap.

What’s next for Cloud-based solutions? For one thing, vendors are leveraging social media tools such as Wikis and blogs. Wikis lend themselves to collaboration and content management on customer support issues, while blogs can be a way to exchange ideas with customers. Using such tools, the vendor and the user community collectively drive improvements. Under that approach, it is a good bet that ongoing industry needs will be met.

Tech Tips

Cloud-based solutions for manufacturers should offer detailed functionality in areas like quality and production management.

Rather than wait for individual requests to be folded into the next release cycle, the vendor can add specific functions continuously.

Vendors are leveraging social media tools such as Wikis and blogs as a way to interact with customers.