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Manufacturing ERP Systems Don’t Do What You Think They Do

Manufacturing ERP Systems Don’t Do What You Think They Do

I talk about manufacturing software a lot. I have spent decades building, developing, and working on the ground level with manufacturing software. Unfortunately, a lot of what is marketed to manufacturers is smoke and mirrors.

Manufacturing ERP systems are usually one of the first software systems that manufacturers will adapt. They are viewed as a staple.

I think that manufacturers often believe that an ERP system will make them more data-driven, but that often isn’t the case.

…And if your data isn’t great, to begin with, I’m not sure a manufacturing ERP system is going to do anything to fix that. In fact, it might make it worse.

Most manufacturers also need a manufacturing analytics solution. It’s a different tool with a different goal. So do you need both? Absolutely.

So, where do you start? Do you still need an ERP system? How do you get more data-driven if not through using your ERP system?

What is ERP – Enterprise Resource Planning?

Before we go down the rabbit hole of manufacturing software, let’s first talk about what an ERP system actually is and does. Here is the definition from SAP’s website.

“Think about all the core processes needed to run a company: finance, HR, manufacturing, supply chain, services, procurement, and others. At its most basic level, ERP integrates these processes into a single system.

But new ERP systems are anything but basic. They provide intelligence, visibility, analytics, and efficiency across every aspect of a business. Using the latest technologies, ERP systems facilitate the flow of real-time information across departments and ecosystems, so businesses can make data-driven decisions and manage performance – live.”

Basically, ERP is designed to integrate every business process into one system.

Most people who use ERP systems agree that it does this, and if done properly, it can create a lot of valuable visibility within an organization. 

Like I mentioned at the top of this post, ERP software is plumbing. Once your company reaches a certain size you have to have it, period.

ERP is designed to plan for the future and keep track of history. It helps create quotes and orders, it plans purchasing, inventory, and production, and in the end, it is all accounted for in the financial modules.

All ERPs that focus on manufacturing have a way to collect data from the plant floor either as a core module or as an add-on MES solution. These add-ons are designed to feed the core ERP system and help it keep track at a high level of what is happening in the plant.

“I already have an ERP system to run my entire company, why isn’t that enough?”

I have heard this question more than a few times when discussing manufacturing analytics with companies that approached me after speaking on these topics at conferences and events.

In the simplest of terms, your ERP system is great for planning for the future by evaluating what has happened in the past. What it doesn’t capture, however, is what is happening on the floor right now.

Your real-time data reflects the most valuable insights into your factory floor. This is what helps you see how things are actually running and what allows you to back and see real trends over time.

This is how you stop things before they have a chance to negatively impact the bottom line.

This has nothing to do with planning and everything to do with collecting the right data at the right time and reacting to it in a timely manner.

The goal of any manufacturing analytics application is to increase capacity and throughput. Essentially, it’s helping manufacturers do more with the same resources.

It does this by using machine and operator data to find and eliminate inefficiencies in manufacturing processes.

ERP and MES were not designed to do any of that.

But… but… but…

We already have an MES system.

We already have an ERP.

We use our ERP or MES for that.

While it is true that there is some overlapping functionality between manufacturing analytics, ERP (Enterprise Resource Planning), and MES (Manufacturing Execution Systems), they are distinctly different tools designed for different jobs.

Delayed Reporting is Costing You 

Most ERP systems on the market have the ability to provide you with an incredible amount of raw information and data regarding your manufacturing process.

The problem with this information is that is not acted upon in a timely manner. Often reports are created for the entire day at the end of the shift or the following morning. There aren’t automatic or real-time reports.

This means that pivotal information about downtime, scrap, or system/user errors doesn’t make it to the floor managers until the next time a report is run. Which, for many manufacturers could be days or even weeks.

When there are issues found in these reports, it is not typically addressed within an actionable time frame; it becomes an after-thought or something that will be addressed at the next managers meeting. 

Adapting to Disruptions Immediately

Your analytics need to be able to report and adapt to what is happening immediately. If the concern within a certain department has been product loss, viewing information on the machines at the moment can tell managers what has actually been produced and compare it to an hourly target with easy to decipher gauges or graphs (rather than spreadsheets or raw numbers).

You’re not going to get this out of your ERP system.

If the numbers are low, the reason for the downtime can be immediately evaluated. Is it that the machines were not running as fast as normal (hinting there’s a potential breakdown heading your way?) Or was it that they just weren’t running when they should be?

Can your ERP system send an alert to management when a switchover is taking more time than it should? Can you track waste?

Narrowing down the exact reasoning that a product was trashed is a vital part of creating a truly efficient manufacturing process. Was the sanitizing water hot enough? If not, was that product wasted? How much and when?

When you have real-time analytics and reporting, you can see these instances as they happen, giving you time to create an immediate fix.

This is real money that is going to be lost if you don’t have this data. If you’re relying on ERP for it, it’s going to fall through the cracks.

You Need Context for Your Data

Most manufacturing companies are looking to increase their company’s capacity and throughput without spending more on machines or resources.

Simply put: manufacturers need to do more with what they already have. If this is something you’ve thought about more than once, you might want to think about your analytics more than your ERP.

Most ERP systems are notoriously described to be complex and expensive. They’re not typically set up for a manufacturing process which can complicate information that managers want to view.

ERP systems are given a ton of data without an easy way to read through it all to have it make sense.

Manufacturers need context. The context in this sense allows you to reduce the noise and meaningless data in order to have information that is ready for the calculations and dashboards that are displayed without any further processing.

When you can better navigate the data presented using contextual parameters like department, facility, shift time, product, team operator, or specific production line, you are able to improve the overall quality, uptime, and performance of your floor.

The advantage of having a manufacturing analytics platform, like Mingo, is that the overall value that you can’t find in your ERP; real-time analytics which allows for immediate corrective action and contextual, easy-to-evaluate data goes far beyond your ERP systems’ capabilities.

What is Manufacturing Analytics?

Ok, so what exactly is manufacturing analytics? I have written about manufacturing analytics many times. 

The goal of Mingo or any manufacturing analytics product is to increase capacity and throughput, doing more with the same resources. It does this by using machine and operator data to find and eliminate inefficiencies in the manufacturing process.

Manufacturing analytics systems should do 4 things well:

  1. Acquire data
  2. Clean & contextualize data
  3. Calculate manufacturing KPIs
  4. Produce role-based visualizations & dashboards 

It must be able to do all these things, well, to produce the end goal of Producing More with the Same Resources (labor and equipment).

What Can You Do with Analytics That You Can’t with ERP or MES Software?

This is pretty simple actually, both ERP and MES are designed to collect and process data in a certain way.

Neither one deals with unstructured, fast-moving data that is produced by manufacturing equipment.

ERP and MES software really want summarized data answering:

  • How much scrap did we have on this job?
  • How much did we produce on this shift?
  • What is the cycle time for this product?

This is fine at a high-level but when you are trying to improve efficiency, it is not enough detail.

For example, if you want to improve the cycle time of a product or machine, where do you start?

From your ERP or MES, you can pull a list of production records and see which ran slower or faster than the others. Now that you know this what do you do next?

You can talk to the operators or supervisors in that area. They likely won’t remember why one ran faster than the others.

Next time you run that product you can run a time study, find the inefficiencies make and make a plan to speed it up.

Then, you run reports in the ERP or MES to see if those improvements stuck.

This is a very different process with a manufacturing analytics system. Using Mingo, you have detailed records down to the second that tells you what the machine was doing. You can see setup times, changeovers, tool breaks, shortstops, lunches and everything else that happened on the machine.

You don’t have to run a time study because Mingo is running one every minute of every day. Manufacturing analytics is monitoring performance in real-time and can alert you when it falls below the standard. This allows you to fix the problem when it happens, not diagnose it after the fact.

An ERP System Was Just Not Designed to Do That

Honestly, manufacturing analytics will have a bigger impact on a manufacturing company than ERP or MES.

Remember, ERP is plumbing, any company of sufficient size needs it. But no one ever gets the expected efficiency gains out of an ERP. And, if they do get them, they are in the back office, accounting, purchasing, planning, etc. not on the factory floor.

My suggestion is that if you are growing fast, or having trouble fixing production issues, implement a true manufacturing analytics software solution that can help you manage and collect the right data in context.

Bryan Sapot
Bryan Sapot
Bryan Sapot is a lifelong entrepreneur, speaker, CEO, and founder of Mingo. With more than 24 years of experience in manufacturing technology, Bryan is known for his deep manufacturing industry insights. Throughout his career, he’s built products and started companies that leveraged technology to solve problems to make the lives of manufacturers easier. Follow Bryan on LinkedIn here.