Enterprise resource planning (ERP) has been a growth area for industry, as a number of factors have coincided to drive the business computing market. The need for year 2000 compatible systems, EMU, tighter supply-chain integration and customer-driven processes are causing ERP to evolve to meet the needs of globally dispersed organisations.
The first round of ERP implementation is coming to a close, as most of the industries which have traditionally used planning systems now use some advanced computerised planning system. Companies can now start exploiting the information within their systems and extending resource planning into other parts of the business, as formerly back-office activities extend to the customer.
Internet-style computing, which favours dispersed applications working together over networks, lies behind many system developments. Advances in computing infrastructure (hardware, networks and databases) mean data can now be shared more easily, over longer distances and at higher speeds.
‘ERP systems are very successful at integrating internal functions such as manufacturing, finance and human resources,’ says Gilles Serpry, director of ERP activities and alliances at Cap Gemini. ‘However, they cover at most 40 50% of companies’ requirements and the focus is now moving rapidly to customer-facing functions, such as logistics, sales and marketing. Resource planning systems will be the backbones to which additional packages will be added to address these new areas. A new generation of supply-chain management systems is now coming onto the market with this approach.’
The backbone concept is pushing resource planning vendors towards more open systems, so other vendors can supply modules for integration. This will lead to systems which can be implemented more quickly and which will be better tailored to the needs of the firm. A pharmaceuticals manufacturer can choose the systems best suited to its markets and business needs, as can a car manufacturer. With different requirements, it is easier to pick ‘best-of-breed’ components and integrate them than to make one product to suit all businesses.
One area where specialist systems are being used is in supply chain management, where there are big operational savings to be made. ERP is also being extended to the customer as part of the sale and delivery process.
‘Customers are becoming much more demanding,’ says Mark Smayle, vice-president for European marketing for Industri-Matematik International. IMI makes supply chain management software, which includes System ESS, for order fulfilment and execution.
‘They don’t want to have a supplier tell them how a product is to be delivered; rather the supplier needs to be able to do what the customer asks,’ says Smayle. ‘Suppliers have to have the flexibility to accommodate pricing variations and promotions, and must maintain control, right down to customer or order-line level. Suppliers have to be able to invoice as the customer specifies, and trade using any order format, including paper, EDI or other means. The system then has to synchronise all business operations and to do that it needs total supply chain visibility, so that the order can be placed in real time for most efficient fulfilment.’
Other aspects of a business can be improved with specialised computer systems that use that backbone.
Analyst Cambashi describes its view of future resource planning as optimisation of processes and resources. ‘Looking beyond ERP we can see that companies are now organised into chains that supply the final customer,’ says Mike Evans, Cambashi’s founder. ‘The real requirement is to improve performance in terms of price, service and product for the final customer.’
Performance can be enhanced by improving plant maintenance, using an intelligent maintenance manager to adjust schedules based on production demands. Non-essential maintenance can be deferred to optimise production runs, and scheduling of production can be organised to maximise productivity. Some process companies have already linked their resource planning and maintenance systems to sensors for real-time data collection, using this to get better plant performance and for synchronising production and planning.
Industries will focus on improving the processes most important for successful operation. In pharmaceuticals and process industries, efficient use of plant has high priority. In the motor industry it is new product introduction, in electronics the product cycle time, and for fast moving goods the distribution channel.
The strategy for component use is important not only for getting the best resource planning solution, but also for offering flexibility. Organisations must be able to adjust to changes, such as acquisitions and demergers. Standardisation of interfaces between different systems makes it possible for data from one ERP system to be used operationally in another. New systems have this flexibility and will be dynamically reconfigurable. They will also be built for fast implementation.
User interfaces are expected to improve too, with more use of graphics where appropriate. ‘In the factory, many operators already use touch-screens and graphic interfaces,’ says Gregor Petri, product marketing manager for Marcam Solutions.
‘This is common practice in process industries, our specialist area. For instance, when you touch a silo icon followed by a truck icon, the pumps start to empty the silo. Current ERP systems are text-based, but as they move into more specialised areas they need to be easier to use. Protean, our process solution, uses icons and mouse control; people find it easier to use. In a recent implementation 700 people were trained in six hours with a local trainer.’
The resource planning software industry has consolidated and created flexible systems. Technology is in place to make it easier to implement partnerships the chosen way forward for businesses and the systems that support them. Package-based systems with plug-in components for standard and specialised functions will extend the scope of ERP into more areas, from raw material suppliers to the customer. It can now help businesses improve their operations by exploiting the knowledge they hold, rather than just recording it.