Connecting the Plant Floor to the ERP System

April 1, 2016
High-performing manufacturers have found that full integration of real-time operational data collected from the plant floor to the top floor is key to reducing costs, streamlining operations and improving customer satisfaction.

Enterprise Resource Planning (ERP) on the plant floor is as critical to the viability of the enterprise as any component in the execution of manufacturing.

High-performing manufacturers have found that full integration of real-time operational data collected from the plant floor to the top floor is key to reducing costs, streamlining operations and improving customer satisfaction.

Integrated ERP on the plant floor brings manufacturers improved quality, increased production throughout, less scrap, and many more benefits.

A History of IT Strategy

In the years leading up to 2000, many manufacturers focused on preparing for a potentially disruptive transition in IT functions at the turn of the century. Most IT leaders’ strategic focus was on making sure that internal systems would continue to function, and operations would not come to a screeching halt, on Y2K.

After 2000, many enterprises began deploying on-site ERP systems that were rooted in accounting and HR functions. For these applications, the manufacturing processes are an afterthought. The systems were designed with an activity which starts on the top floor and filters down to the plant floor, which is where, in the manufacturers’ world, the rubber meets the road.

It soon became apparent that if the manufacturing process wasn’t efficient, it didn’t matter how well the top floor functioned. It wasn’t until after companies successfully traversed the dawning of the 21st century that they realized the best ERP solutions actually start on the plant floor and are refined and improved there before accounting and HR functions are introduced. Today, tying the machines on the plant floor to management on the top floor for a real-time glimpse of manufacturing status isn’t just convenient, it’s critical for a company seeking to remain viable in a competitive market.

Primary Drivers for ERP on the Plant Floor

Thanks to today’s ERP systems, companies apply the same lean quality improvements to data, a highly valued product, as they apply to the rest of the products they manufacture. This includes the highest levels of data quality, accuracy, delivery and storage. Incorrect, untimely, or unavailable data about your plant floor can be more dangerous than no data at all. Real-time data helps expose plant floor deficiencies and anomalies of OEE, quality and traceability.

Allowing an ERP system to effectively automate a process not only results in a nearly perfect production process, it also frees an operator to focus on other, value-added activities. When additional data is captured, the plant floor is integrated with the top floor for a real-time snapshot of traceability and machine output.

The Plex Manufacturing Cloud in Action

An ERP solution on the plant floor brings many opportunities for improvement. Better quality, increased production throughput, and reduced scrap are a few of the many benefits.

Ralco Industries was one of the first companies to implement the Plex Manufacturing Cloud, the industry’s leading cloud ERP solution for manufacturers.

“Our inventory accuracy was, at one time, only about 50 percent,” says Jim Piper, president of Ralco Industries. “We were conducting grueling physical inventories every month, and they would be off by the next week. We never knew if we had enough parts to build a set-up. Every time we did a set-up, we followed different steps and processes. Each worker had his/her own method. This resulted in lost time, inconsistent product quality, scrap, expedited shipments, and more issues. We knew we had to fix our system.”

A diligent search for an ERP provider that could meet its stringent requirements brought Ralco to Plex Systems, provider of a cloud-based ERP solution built for manufacturers.

Ralco started its implementation with the Plex Manufacturing Cloud’s Purchasing function. “It was great,” says Piper. “We found we could now easily match receipts to our internal purchase orders and match purchase orders to invoices. We had more control and security over purchase orders and actually reduced the number of POs. The improved efficiency saved us about $100 per purchase order processed.”

Results for Ralco were immediate and significant:

  • Training costs were reduced by more than 50 percent because all functions in the Plex Manufacturing Cloud were available from a consistent interface
  • Premium freight costs were down by 20 percent in the first year
  • Scrap rates declined by 60 percent

“We’ve significantly grown our business in a down economy, which says a lot,” said Piper. We couldn’t have done that without Plex. We wanted to differentiate ourselves from our competition, and we’ve done that.”

Plant-Floor Benefits

Plex is easy to use. Any person working on the plant floor can leverage the ERP system to set up and run his/her machine. This knowledge empowers management and helps drive informed decision-making to fix deficiencies in manufacturing processes.

Plex enables “machine recipes.” Settings for specific parts are automatically entered for tolerances, speed and other critical requirements which enable a controlled strategy for production. The system can ensure that no machine operation is underway until settings are met.

Traceability from station to station allows management to tie into environmental systems and hydraulics, and manage energy systems.

Once the plant-floor machines are online, it’s easy to focus resources, eliminate waste, improve quality and work more efficiently. Today, there is no reason to be unaware of what is transpiring on the plant floor, regardless of where you are.

Global Implications for the Single Source of the Truth

The world is getting smaller and your enterprise isn’t only across the street or in the neighboring state. It may be on the other side of the globe. Plex allows companies to review all manufacturing entities through the same lens, allowing the easy distillation of data using common data points.

Global companies quickly deploy the Plex Manufacturing Cloud with new acquisitions so they can easily compare results in different facilities and strategically determine product design and order fulfillment.

They also extend Plex to their suppliers. Because the system is integrated, suppliers can directly ship products to OEMs on behalf of the producer. Using the Plex EDI function, they can send advanced shipping notices (ASNs), submit electronic notifications, create POs and initiate shipping. Customers receive the ASNs before the products arrive.

ERP Success

The Plex Manufacturing Cloud is a system that integrates all manufacturing processes, from the plant floor to the top floor, to make certain all facilities, regardless of location, work together to synchronize and maximize the efficiency of the manufacturing processes.

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