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Digital manufacturing technologies a challenge for ERP

As the manufacturing sector undergoes digital transformation, poorly integrated ERP systems will soon be a thing of past, driving ERP vendors to reinvent.

Increasingly, manufacturers are becoming digital enterprises, adopting digital tools and processes to harness, analyze and glean insights from their data so they can operate more efficiently, respond to customer needs more rapidly and get their products to market faster.

Since ERP software is a key part of the evolution of digital manufacturing technologies, it must reinvent itself in response to this digital transformation or risk becoming extinct.

While that may be happening, there's plenty of room for improvement, said Pat Welsh, managing director of manufacturing ERP services at Revolution Group, a technology services firm in Westerville, Ohio.

Next-gen digital manufacturing technologies

"The ERP systems today are just sort of transforming from heavy complicated systems to more lightweight and nimble and accessible," Welsh said. "And that's largely through the cloud migration."

But these systems even have to go a step further to scale up digital manufacturing technologies.

"The most important thing is that ERPs have the capability of housing tremendous amounts of data, like quality inspection data or production downtime data, machine data, that type of thing," Welsh said. "But they're not quite yet in a position to really get that data in front of decision-makers in a concise fashion."

One of the biggest opportunities for ERP is to be able to get the data out to the business user -- the decision-maker on the shop floor or in logistics -- who is responsible for making decisions on a daily or hourly basis on how to react to different situations, according to Welsh.

Although ERP systems have made great strides toward making that information available or creating avenues or mechanisms for people to communicate more effectively, they still require somebody in the front office or a supervisor to interact, analyze and then communicate, he said.

"So that's a very manual process, and there's some time involved in that," Welsh said. "But the mechanism to get that information to the shop floor quickly, that's not really there yet today without significant human interaction."

The real key for the future is for that process to be automated so it happens quicker, it happens more reliably and it doesn't require a supervisor to be clocked in or even at the plant.

AI is crucial to digital manufacturing technologies

"I think that may fall under artificial intelligence, and there are certainly some predictive analytics that would fall into that same kind of category," Welsh said. "So [its] providing the decision-makers, e.g., the maintenance [staff], information ahead of time before a machine actually goes down."

Although most ERPs today do a pretty good job of enabling manufacturers to capture information historically and measure it, it's still a challenge for ERP systems to deal with all that data and capture it in a meaningful way.

"Most of our customers have some type of programmable logic controller on their equipment," Welsh said. "But only our more sophisticated customers are systematically collecting data from those machines that they're bringing into their ERP environments or reporting over or making decisions on."

Therefore, that whole bridge between the machine and the ERP is definitely an opportunity for improvement.

"There's a lot of talk about the internet of things [IoT], right? But when you're talking about a thing being a metal stamping press that was purchased 20 years ago, it's got a long way to go yet before it falls into the internet of things," Welsh said.

From an ERP standpoint, the vendors that have cloud figured out can do this today -- but it's just not being done, Welsh added

"I think that the higher hurdle are the devices, and getting those devices in sort of the framework between the device and the ERP solution -- getting those efficiently in sync in a cost-effective way," he said. "I think we're still four or five years out."

Data integration: A challenge and a strategy

Debbie Krupitzer, industrial internet of things practice lead for North America at Capgemini, agreed that to ensure a smooth transition to digital manufacturing, companies are looking at integration with ERP.

"Everybody is talking to us about data aggregation -- how to take the data from the sensors or from the [manufacturing execution system] or from the factory floor and push this back into the ERP piece," she said. "And what we're seeing is that the big ERP players, like SAP, are actually addressing this. They're creating platforms for the data aggregation pieces so they can parse that data back straight into the ERP based on business cases."

The big vendors are addressing the fact that they know that the big ERP implementations are over, according to Krupitzer. Now, it's all about APIs and building the APIs off the sensors and new technology platforms and how to push those back into the ERP.

"So, if you've already invested in a large ERP, what they're saying is that you don't have to reinvest in that -- go back on the APIs or the build outs from the sensor data and then push that back into the ERP," Krupitzer said. "It's more about integration. How you can take all of these new technology platforms, i.e., robotics and AR [augmented reality] and sensors and IoT, and how you can utilize that back into the ERP in a really fast and seamless way."

Nagi Prabhu, chief product officer at Icertis, a provider of contract management software in Bellevue, Wash., said that to determine if ERP systems are meeting the digital transformation needs of manufacturers, it's important to first figure out why digital manufacturing is happening in the first place.

Prabhu said digital manufacturing is the result of the digitization that is happening in the front end with the advancement of customer relationship management and configurators, as well as new services that are being offered by companies to customers that haven't been offered previously.

"The need for faster service, the need to do it more accurately and provide new services is what is driving this digitization," he said. "So the front end has gone through a lot of the digitization process, and that is driving a lot of the back-end digitization process."

Dave Morfas, director of product marketing at Plex Systems, a provider of cloud ERP for manufacturers based in Troy, Mich., said that if manufacturers want to transform their companies, they need to do three things: connect, control and unlock their people.

"What we mean is that, historically, there have been way too many disconnected systems, way too many disconnected processes, and it was way too difficult to get to the information they need to get to in their [ERP] system," he said. "ERP systems driven by manufacturers need to be able to be that connective tissue much better than they have in the past."

Manufacturers must also be able to control their systems better, which means they have to have better visibility into the comings and goings within their systems, including work in process inventory and traceability back and forth, according to Morfas.

In addition, they must have better real-time control on the shop floor, as well as control of quality, from anywhere on any device, i.e., seeing issues happening in real time and controlling them in real time.

Once ERP companies and manufacturers get that control, in Plex's case with cloud ERP, manufacturers have to have the people resources to manage this transformation, Morfas said.

"When you have a cloud ERP system that takes all the infrastructure and all the IT ... off the table, it enables you to take your best technical resources, that were occupied managing those, to do other things, to do data analytics, to do business process analysis, to make the system much more automated, much more controlled," he said.

Next Steps

Learn how digital manufacturing and product lifecycle management are connected

The evolving role of ERP in organizations' digital transformation strategies

Top 10 ERP trends of 2017 and beyond

This was last published in September 2017

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