As a small manufacturer, you may be thinking of investing in an ERP (enterprise resource planning) or MES (manufacturing execution system) solution to digitize your operations. Or you are a medium to large manufacturing enterprise with an already running ERP system and are wondering if you really need to make an additional investment in an MES.
To make the best investment decision for your manufacturing business, it is key to understand what ERP and MES systems are and how their key features differ from each other, as these terms are sometimes confused or used interchangeably.
Quick spoiler: The right combination of both ERP and MES systems can revolutionize your manufacturing operations as both systems complement each other.
Enterprise Resource Planning (ERP) systems are a type of software that businesses use to manage their daily operations across multiple departments. In other words, organizations use ERP systems to centrally manage business processes to gain visibility and control of business data across the whole organization. The central, usually cloud-based system enables organizations to identify process improvements and efficiency gains to save time and costs and increase productivity.
ERP systems consist of flexible software modules that cater to the specific needs of the organization: ranging from supply chain management to accounting, to human resources, marketing and customer relationship management. The ERP software integrates all these financially driven business functions into one system to better manage the business’ resources.
The different modules pull and push relevant data to and from each other, storing all data in a shared (usually cloud-based) database. This enables the organization to automate key business processes, improve visibility of processes, run real-time analytics and manage resources across the whole business through one central platform. Next to cloud-based ERP systems, ERP solutions can also be deployed on-site or in a hybrid form.
Manufacturing Execution Systems, or manufacturing execution software (MES), are software solutions that control and give real-time visibility on all manufacturing operations of a business – monitoring the whole production process across the factory, from raw ingredients to the finished product. The goal is to optimize production and quality management processes based on real-time production data, increasing efficiency and productivity. Highly regulated industries such as food and beverage or pharmaceutical manufacturers use MES software solutions to facilitate and ensure traceability and quality compliance.
The MES software enables manufacturing businesses to immediately and accurately collect production data that is usually stored in the cloud. This allows for tracking, tracing and analyzing manufacturing data across the whole production cycle. Organizations can, therefore, make informed business decisions, track and trace products and their ingredients from inwards goods to dispatch and efficiently manage production resources, including staff and equipment.
ERP and MES systems cover different levels of manufacturing operations (see figure 1): While ERP solutions are considered a level 4 system for optimizing business and resource planning at the management level, MES systems are level 3 systems that cover manufacturing and quality operations management at the planning level within the organization.
ERP systems integrate processes of various departments of a business into one system, allowing for free data flow within the organization and data-driven decision-making by management. MES solutions tightly control and execute production on the manufacturing floor in real-time, which is usually not covered by an ERP system. So, while ERP systems support strategic management systems and can issue production orders, MES support operational decision-making and execution of manufacturing processes across the factory.
While ERP systems can give a holistic view of a business, MES software solutions can integrate with manufacturing equipment such as barcode scanners or IIoT sensors, facilitating automation and presenting a link between overarching ERP systems and process control systems on the shop floor.
ERP systems trigger actions based on financial transactions, such as an order placed by a customer or an invoice sent by a supplier. MES systems drive actions based on production process events, such as a non-conforming product temperature.
Most large manufacturers already use ERP systems to optimize their operations across the business. However, ERP software solutions usually do not offer production modules and, therefore, have gaps in managing manufacturing execution. The MES takes over where the ERP system ends: on the shop floor. The MES system schedules and manages batch runs and optimizes quality management during production, which is usually not covered by an ERP system.
Manufacturers who want to increase productivity and efficiency should not think of deploying either MES or ERP systems. Most manufacturers will need a blend of both systems to make their operations most efficient, taking advantage of the unique benefits each of the two systems has on offer.
To make the most out of both MES and ERP systems, businesses can integrate both, with the ERP system as the general solution to cover orders and inventory control whereas the MES focuses on the production floor, including batch records, equipment management, weighing and general maintenance.
By integrating ERP and MES systems, organizations can connect the production floor to the rest of the organization, allowing for smooth data flow across the entire organization. Manufacturers can, therefore, create a data ecosystem to optimize forecasting and inventory management, avoid production delays, increase productivity and reduce business risks by detecting quality issues faster.
Contact us now if you want to learn more about the benefits of integrating MES software with your existing ERP system.
New Zealand has moved to COVID-19 Alert Level 4 last night. The NZ government guidelines for all industries to operate under Alert Level 4 have come into effect again. More information can be found here.