Why Isn’t ERP Fixing My Late-Order Problem?
ERP’s sweet spot lies in its ability to manage the financial information surrounding the purchase, production, or assembly of parts.
Your firm is not alone if it put in the time and outlaid the capital on an ERP deployment only to find the challenge of on-time customer shipments still an active and pressing problem.
The issue is particularly acute for businesses that have any kind of variety in their order type—think configurable or engineer-to-order goods. In these cases, there is no safe, repetitive process for planning, which puts companies at greater risk of production miscues given the unpredictability of everything from sales orders to late-stage engineering design changes.
ERP’s domain is the operations side of the business, which includes how a product is made related to tracking costs, materials, production capacity, orders, labor factors, risk, and compliance. In spite of this wide swath of functionality, ERP stops short of managing the product-innovation process that stretches from design conception all the way through end-of-life.
That’s where Product Lifecycle Management (PLM) with advanced manufacturing engineering tools and processes comes into play. Along with its strengths in managing product innovation, the latest PLM platforms now allow for simulation and validation of production-process plans from the earliest stages of design. Examining factory floor and production issues when a product is still evolving may seem premature, but it’s actually a crucial tool for predicting and avoiding subsequent production problems. PLM that includes manufacturing processes does this by optimizing work cells and product flow, and testing tooling change-up strategies.
PLM-driven factory floor simulation can better inform ERP-centered engineers about production workflows based on things they likely never considered. For example, through simulation, they could evaluate how to ramp up to accommodate a component’s shape, its handling characteristics, and tolerance settings, in addition to traditional planning considerations like the status of machine availability. With such early visibility, companies are better prepared to accommodate manufacturing unpredictability before the design is locked in as opposed to making last-minute production changes, which are far more difficult to orchestrate and, ultimately, far more costly.
Gaps in ERP
ERP’s sweet spot lies in its ability to manage the financial information surrounding the purchase, production, or assembly of parts. Design information, created using tools like CAD, ECAD, simulation, and manufacturing simulation, can be loaded into ERP as part of a Bills of Material (BOM), but the platform lacks the ability to effectively leverage that data to guide decision making about production capacity relative to what’s happening in design. For example, ERP is not able to determine whether finished parts will perform as expected, if a particular design variant is more cost-effective to produce than an alternative, or if a product can be assembled ergonomically without collision or interference from plant floor assembly systems.
Even ERP offerings with sales configurator capabilities fall short of effectively managing production variability. These tools can manage and assemble the configurations customers want, but they have no ability to validate whether each and every configuration can perform as expected or be produced efficiently. ERP platforms are simply too clerical in nature and lacking in predictive capabilities to perform the types of root-cause analyses that need to originate in design.
The Role of PLM in ERP
Not so with PLM, which is fully capable of playing this role in both early-stage design and late-stage production. As mechatronics engineering dominates, PLM platforms are being widely used to manage traditional 3D CAD models in addition to software and electronics content and workflows. In an age where competitive advantage is predicated on digitization and mass customization, PLM can help companies manage many more product variants and validate new design configurations before orders are placed.
PLM’s increasingly sophisticated tool set also enables simulation of both product behavior and manufacturing processes, going far beyond ERP to connect the dots between design activity and production planning. For example, when a new requirement comes in, PLM automatically determines what subsystem the change impacts, what specific designs support that subsystem and, through process simulation, can explore whether manufacturing methods need to be modified to accommodate the design change or customer variation.
Add APS to the ERP/PLM integration?
Once customers start buying, there’s a whole new level of complexity related to queuing up work orders to match actual sales orders. Beyond ERP and PLM, manufacturers can add in an advanced planning and scheduling (APS) tool on the backend to model constraints such as work-cell changeover times, cycle times, and inventory constraints. This allows them to optimize and allocate raw materials and production capacity in real-time based on changing demand and customer needs.
The ability to operate and respond at this next level is the Holy Grail for manufacturers of advanced, multidisciplinary products. By augmenting ERP with PLM, and possibly APS as well, manufacturers of highly variable product families can make the unpredictable more predictable, minimizing disruptions and unanticipated costs. They are also much more likely to hit the elusive on-time customer-delivery target.