Module 5

Manufacturing Execution System (MES) &

Enterprise Resource Planning (ERP)

Prof. Nisy Elsa Mathew 1

What is MES?
• A manufacturing execution system (MES) is a comprehensive, dynamic
software system that
• Monitors
• Tracks
• Documents and
• Controls the process of manufacturing goods from raw materials
to finished products.
• Providing a functional layer between enterprise resource planning
(ERP) and process control systems, an MES gives decision-makers the
data they need to make the plant floor more efficient and optimize
production.

Prof. Nisy Elsa Mathew 2

Benefits of MES
• Improved quality control: As quality control information is transmitted in real time,
companies with an MES can immediately halt production as soon as issues are identified.
This reduces waste, scrap, overages, and re-work.

• Increased uptime: An MES generates realistic production schedules by balancing

personnel, material, and equipment resources. It integrates scheduling and maintenance to
maximize product flow and asset utilization – increasing uptime and improving overall
equipment effectiveness (OEE).

• Reduced inventory: A manufacturing execution system updates inventory records with new
production, scrap, and non-conforming material so that your purchasing, shipping, and
scheduling departments know exactly what material is on hand at all times. This reduces justin-
case inventory and work-in-progress (WIP) inventory – saving money on manufacturing,
transportation, storage, and inventory monitoring.
Prof. Nisy Elsa Mathew 3
Benefits of MES
• Paperless shop floor: Eliminating paperwork means there is less chance for human error. It also
means that the data recorded from the shop floor is immediately available to decision-makers
across all integrated systems, to inform real-time decision-making.

• Improved product tracking and genealogy: An MES follows the entire production cycle from
beginning to end, grouping final parts or batches with the corresponding manufacturing data.
This data allows for improved regulatory compliance for manufacturers that must conform to
government or industry regulations.

Prof. Nisy Elsa Mathew 4

Features of MES
• Resource allocation and status: Use real-time data to track and analyze the status of
resources, including machines, materials, and labor, to make allocation adjustments.
• Operations/detailed scheduling: Optimize performance by scheduling, timing, and
sequencing activities based on priorities and resource capacity.

• Dispatching production units: Manage production data flow in real time to easily make
quick, calculated adjustments in production dispatching.

• Document control: Manage and distribute documents – including work instructions,

drawings, standard operating procedures, batch records, and more – so they’re
accessible and editable.

• Data collection and acquisition: Track and collect real-time data about processes,
materials, and operations and use it to make better decisions and increase efficiency.
Prof. Nisy Elsa Mathew 5
Features of MES
• Labor management: Track worker schedules, qualifications, and authorizations to optimize labor
management with less investment of time and resources from management.
• Quality management: Track quality deviations and exceptions for improved quality control
management and documentation.
• Process management: Manage the entire production process from order release to finished goods.
Gain insight into bottlenecks and points that affect quality while creating full production
traceability.
• Maintenance management: Use data from your MES to identify potential equipment issues before
they happen and adjust equipment, tool, and machine maintenance schedules to reduce downtime
and increase efficiency.
• Product tracking and genealogy: Track the progress of your products and their genealogy for
informed decision-making. Having the data of a product’s full history is extremely useful for
manufacturers who must comply with government or industry regulations.
• Performance analysis: Compare results and goals to identify strengths and weaknesses in the
overall process and use that data to make systems more efficient.
•
Prof. Nisy Elsa Mathew 6
MES & ERP
• In today’s manufacturing environment, it’s not a case of MES versus ERP; together
MES and ERP bring operational clarity that neither system can provide on its own.

• ERP focuses on creating and managing plant schedules including production,

material use, delivery, and shipping – as well as gathering information about your
business.
• Manufacturing execution systems, on the other hand, focus on managing and
monitoring manufacturing operations and reporting on production line activities in
real time.

Prof. Nisy Elsa Mathew 7

MES & ERP
• Together, an ERP and an MES create an integrated ecosystem, offering a holistic
view of finance, procurement, supply chain management, manufacturing logistics,
and more.
• Combining that information increases agility and provides robust data that
improves forecasting on everything from sales to asset utilization to manufacturing
management.
• ERP systems give you the data to determine what products to manufacture, while
an MES integrates ERP data with plant floor information to determine how to
produce those products with less waste and more product.

Prof. Nisy Elsa Mathew 8

What is ERP?
• What is ERP?
• Components of ERP
• Benefits of ERP
• Challenges in ERP Implementation

Prof. Nisy Elsa Mathew 9

What is ERP?
• ERP stands for Enterprise Resource Planning,
• ERP is a category of business software that automates business
processes and provides insights and internal controls, drawing on a
central database that collects inputs from departments including
accounting, manufacturing, supply chain management, sales,
marketing and human resources (HR).
• ERP systems collect and organize key business information and help
organizations run lean, efficient operations, even as they expand.

Prof. Nisy Elsa Mathew 10

What is ERP?
• ERP systems centralize data, provide cross-departmental visibility,
enable efficient analysis, resolve data conflicts, and drive process
improvements.
• That translates to cost savings and better productivity as people
spend less time digging for needed data.

Prof. Nisy Elsa Mathew 11

Components of ERP?

Prof. Nisy Elsa Mathew 12

Core Modules of ERP
1. Financial Management: A finance module, the foundation of every ERP system, manages
the general ledger and all financial data. It tracks every transaction, including accounts
payable (AP) and accounts receivable (AR), and handles reconciliations and financial
reporting.

2. Human Resource Management (HRM): A human resources management (HRM) or human

capital management (HCM) module is like a workforce management module. It keeps
employee records with detailed information, like available PTO and performance reviews,
and can tease workforce trends in various departments or demographics.

3. Supply Chain Management: Supply chain management modules enable companies to

oversee the flow of goods from suppliers through manufacturing and into customers'
hands. Keep production running smoothly by ensuring all materials are available and in
the correct locations and accurately schedule machinery and labor resources.

4. Customer Relationship Management (CRM): CRM is a popular module for businesses in

various industries. It tracks all client communications, assists with lead management,
and can enhance customer service and boost sales.

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Additional Modules of ERP
5. Manufacturing: Manufacturing can be complicated, and this module helps
companies coordinate all the steps to make products. The module can
ensure production meets demand and monitor the number of in-progress
and finished items.

6. Inventory Management: An inventory management module shows current

inventory levels down to the SKU level and updates those numbers in real
time. It also measures key inventory-related metrics. Any products-based
company needs this module to optimize stock on hand based on current
and forecasted demand.

7. Project Management: Services businesses often utilize a professional

services automation (PSA) or project management module to plan and
track projects, including the time and resources spent on them. It can
simplify client billing and encourage collaboration among staff members
working on a project.

Prof. Nisy Elsa Mathew 14

Additional Modules of ERP
8. Ecommerce: An ecommerce module allows retailers and brands to manage their
online stores' back and front ends. With this application, they can change the
site's look and feel and add and update product pages.

9. Marketing Automation: This module manages marketing efforts across all digital
channels — email, web, and social — and enables organizations to optimize and
personalize their messaging. A marketing automation tool can boost leads, sales,
and customer loyalty.

10. Procurement: The procurement module manages raw materials or finished goods
purchasing. It can automate requests for quotes and purchase orders and
minimize overbuying and underbuying when linked to demand planning.

11. Order Management: This application monitors and prioritizes customer orders
from all channels as they come in and tracks their progress through delivery. An
order management module can speed up fulfillment and delivery times and
improve the customer experience.
Prof. Nisy Elsa Mathew 15
Additional Modules of ERP
12. Warehouse Management: A warehouse management module directs
activities like receiving, picking, packing and shipping. It can save time and
cost in the warehouse by identifying more efficient ways to execute these
tasks.

13. Workforce Management: A workforce management (WFM) module keeps

track of attendance and hours worked; some can also manage payroll. This
tool can record absenteeism and productivity by department, team, and
individual employees.

Prof. Nisy Elsa Mathew 16

Benefits of Implementing ERP

Prof. Nisy Elsa Mathew 17

Benefits of Implementing ERP
1. Cost Savings
The biggest value proposition of ERP systems is that they can save your organization money in
several ways. By automating many simple, repetitive tasks, you minimize errors and the need to
add employees at the same rate as business growth. Cross-company visibility makes it easier to spot
inefficiencies that drive up costs and leads to better deployment of all resources, from labor to
inventory to equipment. And with cloud ERP, companies may quickly see incremental value from the
software, over and above what they’re spending.

2. Workflow Visibility
With all workflows and information in one place, employees with access to the system can see the
status of projects and the performance of different business functions relevant to their jobs. This
visibility may be particularly valuable to managers and leaders, and it’s far faster and easier than
searching for the right documents and constantly asking colleagues for updates.

Prof. Nisy Elsa Mathew 18

Benefits of Implementing ERP
3. Reporting and Analytics
Data is useful only if companies can analyze and understand it; an ERP helps with that. Leading
solutions have impressive reporting and analytics tools that allow users to track KPIs and display any
metrics or comparisons they can dream up. Since an ERP is all-encompassing, it can help a business
understand how a change or problem with a process in one department affects the rest of the
company.
4. Centralized Data
Because ERPs can access real-time data across the company, these systems can uncover impactful
trends and provide extensive business insights. This leads to better decision-making by
organizational leaders who now have easy access to all relevant data.
5. Regulatory Compliance
Financial reporting standards and governmental and industry-specific data security regulations
change frequently, and an ERP can help your company stay safe and compliant. An ERP provides an
audit trail by tracking the lifecycle of each transaction, including adherence to required approval
workflows. Businesses may also reduce the chance of errors and related compliance snafus with
automation. ERP software provides financial reports that comply with standards and regulations,
and SaaS applications are well-equipped to help companies with PCI-DSS compliance.
Prof. Nisy Elsa Mathew 19
Benefits of Implementing ERP
6. Risk Management through Mobility
ERP technology reduces risk in a few ways. Granular access control and defined approval workflows can
strengthen financial controls and reduce fraud. Additionally, more accurate data prevents mistakes that
could lead to lost sales or fines. And finally, the ability to see the status of the entire operation enables
employees to quickly handle risks posed by business disruptions.

7. Data Security
ERP providers understand that your system houses critical, sensitive data and take necessary steps to
ensure it is secure. This diligence is more important than ever as the volume and scale of cyberattacks
increase. Vendor-managed cloud ERP software, particularly, uses cutting-edge security protocols to
ensure your company doesn’t fall victim to a damaging attack.

8. Increased Productivity
Employees are most effective when they work together. ERP solutions make it easy to share information
— like purchase orders, contracts, and customer-support records — among teams. It knocks down walls
between departments by giving employees appropriate access to real-time data on related business
functions.
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Benefits of Implementing ERP
9. Scalability
The right ERP system will be scalable and flexible enough to meet your company’s needs today and
for the foreseeable future. Cloud systems adapt to minor and major operational changes even as
the amount of data the organization captures and the demand for access increase.
10. Flexibility
While ERP software helps businesses follow best practices, it also offers the flexibility to support
unique processes and objectives. The system allows administrators to build company-specific
workflows and create automatic reports important to different departments and executives. An ERP
enhances your organization’s innovation and creativity.
11. Customer Service and Partner Management
An ERP can strengthen a company’s partner and customer relationships. It can provide insights on
suppliers, shipping carriers and service providers, with the cloud enabling even better, more
convenient information exchange. Regarding customers, the solution can track survey responses,
support tickets, returns and more so the organization can focus on customer satisfaction.

Prof. Nisy Elsa Mathew 21

Benefits of Implementing ERP
12. Forecasting
Finance and FP&A departments are pressured to develop accurate forecasts in response to evolving
conditions. Such dynamic financial forecasting empowers organizations to quickly adjust plans
based on real-time data and new insights. Seamless synchronization between your ERP and
planning and budgeting systems empowers finance teams to easily seed actuals and information in
daily planning and forecasts, eliminating the need for departments to coordinate and consolidate
offline.

Prof. Nisy Elsa Mathew 22

Challenges in ERP Implementation
1. Budget Considerations
Because they were expensive to purchase, implement and maintain, early ERP systems were accessible only to
large companies. However, that hasn’t been the case for two-plus decades. While ERPs still require time and
financial investment, the technology has become much more affordable thanks to both SaaS systems that
charge a recurring fee and more solutions designed for small and midsize businesses entering the market. For
instance, organizations can use tools to calculate estimated savings after one and three years to determine
when returns will surpass costs.
2. Employee Training
Like any new tech, ERP has a learning curve. Anyone who will use the software — ideally, most or all of your
employees — requires some training. Although there may be resistance at first, that should fade away as
people realize how much the technology will help them. Newer systems that receive frequent updates are
more intuitive and user-friendly, reducing training requirements and increasing adoption.
3. Data Conversion and Migration Challenges
When moving to a new ERP, you may need to convert some data into a format compatible with the new
platform. This can lead to unexpected costs and delays, so review your databases, and work with your IT team
or an integration partner to identify potential data compatibility issues early on. Then, you can factor
conversion efforts into the ERP implementation plan.
Prof. Nisy Elsa Mathew 23
Challenges in ERP Implementation
4. Resistance to Change
An ERP system is loaded with features that can be daunting to your workforce. However, the software available
today is far easier to use than legacy systems because vendors have focused on improving the user experience.
Additionally, employees need access to only the modules and dashboards required for their jobs, which can
make them more approachable. Thorough training should temper concerns about complexity.
5. Dedicated IT Resources
In the past, maintenance was a large expense that deterred lower-revenue businesses from adopting ERP. Not
only did a company need an IT staff to handle patches, security and required system upgrades, it often had to
pay the vendor or a third-party service provider for its expertise. This is less of a concern with a SaaS system
because the provider takes care of all maintenance and regularly moves all customers to the latest version —
and it’s all built into the subscription price. Companies concerned about maintenance should thoroughly vet a
potential supplier to ensure it offers a true vendor-managed SaaS system.
6. Doesn’t Solve Process and Policy Issues
If you have error-prone or inefficient processes, an ERP won’t necessarily fix them, even though it may increase
accuracy. It can, however, uncover problems in your operations and help you brainstorm better ways to do
business. The same goes for policies that hold the organization back — it’s up to you to adjust those and then
configure the system to support better ways of doing business.
Prof. Nisy Elsa Mathew 24
ERP Deployment Options

1. On-Premises ERP
2. Cloud-Based ERP
Hosted Cloud Solution
True Cloud Solution
3. Hybrid ERP
4. Open-Source ERP

Prof. Nisy Elsa Mathew 25

On-Premises ERP
With an on-premises system, the business runs the software on its
servers and is responsible for security, maintenance, upgrades, and
other fixes.
Maintenance usually requires in-house IT staffs with the required
expertise.
For many years, on-premises ERP was the only option. Still, the
popularity of this deployment model has declined rapidly in recent
years, and market-watcher IDC predicts continued declines.

Prof. Nisy Elsa Mathew 26

Cloud-Based ERP
• These ERP runs on remote servers managed by a third party. Users typically
access a cloud ERP through a web browser, giving them greater flexibility —
they can dig into information and reports from anywhere with an internet
connection. There are multiple deployment options for cloud ERP, including
hosted cloud and true cloud.

1. Hosted Cloud Solution: A company purchases a license but runs it on remote servers
managed by a third party. The servers and other hardware are often rented from the
hosting company. Your data is stored in a private cloud as a separate instance of the
ERP used by just one company. Your infrastructure is not shared with other
organizations, so this is sometimes called single tenant. This setup can give the client
greater control over the software and allow for more customizations, but it also
creates more work for the business. Think of it as a middle ground between on-
premises and true cloud software.

Prof. Nisy Elsa Mathew 27

Cloud-Based ERP
2. True Cloud Solution: A true cloud deployment allows companies to pay a fee for
access to servers and software they do not have to manage. SaaS ERP solutions are a
popular version of a true cloud solution, as the vendor handles everything on the back
end, including patches and upgrades. True cloud is also known as multi-tenant
because multiple businesses use the same software instance and hardware. This
reduces the need for an in-house IT team and ensures that the company always has
the software's most up-to-date, secure version.

Prof. Nisy Elsa Mathew 28

Hybrid ERP
• Hybrid ERP combines elements of on-premises and cloud
deployments.
• One hybrid approach is two-tier ERP, where a corporation keeps its
on-premises ERP in place at headquarters but employs cloud systems
for subsidiaries or certain regional offices.
• These cloud solutions are then integrated with the on-premises
system.
• Other companies may use cloud solutions for certain business needs
while using their on-premises systems for other functions.
• Either way, the cloud systems must be linked to the on-premises
platform to ensure a steady flow of information — often easier said
than done.
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Open-Source ERP
• Like other open-source applications, open-source ERP is an inexpensive,
sometimes free, alternative suitable for some companies.
• Many open-source ERP providers allow businesses to download their
software for free and only charge a low annual fee if the customer wants
cloud access.
• These solutions have improved, with more modern web-based interfaces
and a growing number of modules, but companies need to understand
what they’re taking on with an open-source ERP.
• Support from the provider will be minimal, and configurations and system
improvements tend to fall on the client.
• That means you need technical staff with a deep knowledge of developing
and configuring the software.
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References
https://www.sap.com/india/products/scm/execution-mes/what-is-
mes.html

https://www.netsuite.com/portal/resource/articles/erp/what-is-
erp.shtml

Prof. Nisy Elsa Mathew 31