Integrating an ERP system with a third-party application has become easier, thanks to the prevalence of ERP middleware, service-oriented architecture (SOA) and Web services. Often, a manufacturer can get by with ERP integration “lite,” in which the applications share data but do not truly connect.
There are still times, however, when a full-blown integration is warranted. Such “deep” ERP integration can be a source of competitive advantage, according to Joshua Greenbaum, principal at Enterprise Application Consulting in Berkeley, Calif. “That is true where you integrate two things that are not easy to integrate, and by doing so, you create a unique product or service,” he said.
That was the case with S&C Electric Co., a Chicago-based maker of switching and protection products for electric power transmission and distribution.
In 2008, the 2,400-employee company was looking to connect its ERP and product lifecycle management (PLM) systems.
The integration would create a real-time fusion of engineering and production processes, enabling better collaboration and more agile product design. “Other manufacturers have integration between engineering and ERP, but fundamentally it is limited to sending the data at a particular point in time when the checks and balances have been completed,” said Alec Gil, manager of engineering systems at S&C. “That was not good enough for us.”
Bridging the ERP PLM integration gap
According to Gil, S&C had long experienced a disconnect between engineering and operations, chiefly from the difficulty of converting CAD data into a manufacturing Bill of Materials (BOM). During the product design process, engineers need to consult with operations personnel (procurement and production, for example), for design feasibility and validation.
“Traditionally, we had done this manually -- and badly,” Gil said. “These two different worlds need to be kept in balance. Engineering continues and BOM creation continues, done by different people. At some point there has to be some reconciliation between the two worlds.” At the heart of the integration is the need for better transfer of engineering change orders (ECOs) to operational staff.
At S&C, the PLM system manages product development and the design portfolio while the ERP system manages finance, procurement, order management, forecasting, logistics, and inventory management. Designers and engineers work primarily in CAD applications. S&C needed to create a tighter relationship between design documents (produced primarily in CAD) and their corresponding product structure: a complete BOM, according to Gil.
“The BOM may not be complete at the point where operations needs to do something about it,” he said. “Procurement needs to get involved. In the meantime, engineering continues, so you not only have to have a system that transports your engineering system information, but you have to be able to do it on demand and numerous times over. Once the preliminary BOM was extracted from the design data, there needed to be an interface between engineering and the operations personnel who handle the BOM."
The ERP system is not necessarily a simple application for creative people to use, Gil said, so he wanted the engineering team to be able to stay within the PLM software rather than having to manually enter data into the ERP. The integration would enable automatic transfer of engineering data to the ERP system.
The solution was to use the PLM vendor’s middleware platform for the integration. Based on an SOA, the gateway includes an adapter that translates data from the PLM system and an ERP adapter on a third-party integration server to translate ERP data. S&C used internal resources as well as help from the ERP and PLM vendors. An integration of this magnitude took time. “We started thinking about the integration components a few years before we went live,” Gil said. The actual integration work took about a year and a half.
The investment was well justified, he said. S&C has established cohesive, standardized design practices, so now data defined in the early design phase is propagated through all stages of a product’s lifecycle to optimize efficiency. Operations and Engineering are collaborating with ease, speeding time to market and improving agility. The project has played a key role in the manufacturer’s success: S&C has logged nearly double-digit revenue increases during the downturn.