More and more of today’s manufacturing companies are becoming reliant on ERP (Enterprise Resource Planning) systems to coordinate and control their operational activities. On the face of it there are very attractive reasons for going down the ERP route. Benefits include a single system to support rather than several small and different systems; a single applications architecture with limited interfaces; and access to management information unavailable across a mix of applications. In principle more integration should mean lower costs.
The investment to implement such ERP systems in terms of direct cost and personnel time is significant, often running into hundreds of thousands or even millions of dollars. The real costs and impacts are understandably not played up by the ERP Vendors and ERP implementation effort is always greater than expected. It is unheard of for an organization to have implemented ERP ahead of schedule and under budget.
Once operational, most companies appear to be reasonably content with their ERP on the surface. However bubbling under is the concern over what has become known as ‘unaccountable losses’. Mention this taboo phrase to any corporate finance director and it sends a shiver down their spine. These losses usually arise from the inability of the system to access and use essential factory floor data in real-time.
The food industry is a classic example where lack of accurate real-time data is a serious problem. In such fast moving ever-changing environments keeping the finger on the pulse is critical. Consider a company manufacturing their products from pre-defined recipes. ERP systems normally work on preset targets for the batches and all their calculations assume that during the process these targets are met – precisely. Under normal circumstances they have no real-time data to contradict otherwise. For instance, if a recipe make-up calls for a target weight of say 100 lb for a particular ingredient, the system assumes that 100 lb is used; the stock is downgraded by this amount and costings calculated accordingly. However, what happens if the amount used is outside the target as is typically the case? If the process relies on manual ingredient addition, more products rather than less is usually added.
This may or may not be critical to the product quality itself, but it is definitely detrimental to accurate stock management. In parallel, if a particular batch is scrapped through inaccurate additions, there may be no mechanism for bringing this to the attention of the ERP system. The first time management may be aware of these ‘target excursions’ is when stock checks are done and the inevitable stock inconsistencies come to light. By then it’s usually too late to carry out any meaningful analysis to find out what went wrong and the ‘unaccountable losses’ become ‘expensive reality’.
SG Systems has recognized this shortcoming and their V5 software suite, in conjunction with their Stainless Steel workstations, already has a proven track record in bridging the gap between the factory floor and ERP. Acting as a thin client server to programs such as SAP, Oracle, Syspro (and many more) their solution brings a measure – control – improve ethos to the overall process- from goods-in to product shipping. V5 is the result of extensive research together with many years of practical experience and as SG Sytems explains: “In many ERP applications we investigate, it is as though there is a thick fog permeating across the factory floor keeping critical data away from the ERP system.
Unfortunately, most ERP vendors don’t fully appreciate or understand the practical issues of key processes such as weighing, especially in fast moving processing environments. Of all measured parameters on the factory floor, weighing provides the most useful and crucial data throughout the process. and yet in practice we find it is significantly under-utilized. Real time data is essential and V5 ensures such data is instantly available to the ERP system so that it can react to actual information rather than targets. V5 brings true integration that continually fine tunes operational equipment efficiency. The ‘improve’ factor in V5 allows processes to be optimized exactly where and when it’s needed, making full use of dynamic data. This approach is highly effective in improving productivity, optimizing raw material usage and minimizing wastage – all important, if not obvious, factors in ensuring ongoing profitability and, above all, customer satisfaction. Traceability in line with legislation is an integral part of the V5 concept.”
SG Systems LLC
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SG Systems Europe Ltd
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