Is it Time for an ERP Intervention?

Quality less than predictable? OEE not where you’d like it? Maybe PLM can help deliver on ERP’s promises.

By Jon Gable, Adaptive Corporation

You and your team spent months implementing the shop’s ERP system. The costs were more than you care to discuss, and the balance sheet has yet to recover. Despite this, no one can argue that ERP has helped improve efficiency pretty much across the board; there’ve been far fewer material shortages, you now have greater visibility to practically everything, and the production floor has hit its on-time delivery target five months in a row. ERP is a no-brainer, no matter what size the shop.

The missing link

Still, something’s missing. There seems to be a disconnect between the front office and the engineering department, the shop floor, and the skilled people who operate the press brakes and laser cutters, the welders and waterjets and heavy stampers that are the heart of any sheet-metal fabrication company. Sure, ERP has provided insights into production inefficiencies and hidden job costs that no one expected, but it’s not helping you to do one very important thing: eliminate these roadblocks.

Have you considered a product lifecycle management (PLM) system? If you’re unfamiliar with the term, you can think of it as the yin to ERP’s yang. Where the latter is primarily focused on financial activity, order management, and material requirements planning, PLM is concerned with everything from product design and development to manufacturing and quality. It is a central repository for all forms of engineering and manufacturing data. It offers a comprehensive way to store, share, and manage bills of material (BOMs). Collaboration becomes much simpler with PLM, streamlined processes and workflows easier to develop, and for many shops, it’s the key to unlocking all that ERP promised but didn’t deliver.

I know what you’re thinking: aren’t PLM systems for companies that actually design products—namely, our customers? What business does a job shop like ours have investing in such specialized, high-end software? The only engineering data we have is our CAD files and NC programs, and we’ve since implemented a product data management (PDM) system for that. As for our BOMs, we manage them just fine in our ERP system, so tell me again: why should we invest in PLM?

Data vs. lifecycles

It’s true that a PDM system edges into PLM territory, in that it offers a centralized location for manufacturing-related files. It also provides robust version control of those files, with change tracking and tightly-controlled check-in and check-out of CAD data, BOMs and routings, work instructions, and other documentation. Because everything a tool designer or programmer needs is now in one place, it improves the efficiency of these and other human assets, eliminating concerns over missing files, or outdated revisions making it to the shop floor.

For a team of manufacturing engineers or group of CNC programmers, PDM is an excellent way to get all of their information organized and secure; try to incorporate sales and marketing information into your project, though, or pull in some quality metrics, and PDM quickly hits a wall.

Consider this simple analogy: where a bicycle will get you to the grocery store, a car accomplishes this everyday feat far more effectively. A car offers more storage space than a bike, greater safety and comfort, shorter travel times, and will also let you visit the hardware store, the hair salon, or the movie theatre across town. And everyone can ride together in a car, not pedal separately, discussing the day’s events as they travel. Bikes might be good for short distances and light loads, but no one would argue that cars have greater capabilities.

PDM software is like that bicycle. Granted, if the grocery store is across the street and all you’ll ever need there is a gallon of milk and loaf of bread, by all means stick with two wheels. But if you’re looking to grow the company and give its employees the best tools possible to do the job, you want a fast and flexible mode of transportation. That’s what PLM brings to the table. It improves data integrity, engineering and manufacturing efficiency, quoting and costing, regulatory compliance…the list goes on.

Matchmaker, matchmaker, find me a match

Still stuck on the “we don’t design anything” argument? If so, think about the following real-world example: when quoting a job, how easy is it to find similar jobs that you quoted or produced in the past? If the answer is “damned difficult,” you’re not alone. I posed the same question to the owner of a mid-sized fabricating shop recently, and when he admitted that the ability to identify “like parts” would be a huge timesaver—something that PLM does handily—we crunched a few numbers and found that even a 5% improvement in the company’s win-loss ratio would increase revenue by $5 million annually.

PLM not only bridges the gap between ERP and the rest of the shop’s software systems, but it has advanced search and indexing functions; between the two, it’s much easier to find parts with similar geometries and features. And once these “same as but slightly different” jobs are identified, you can take apart the watch. The quoting people can see what worked during the manufacturing process and what didn’t, and adjust their estimates accordingly. They can easily identify what tooling was used and whether it can be modified to fit the new job. If any quality problems occurred, they can see what was done to resolve them. Loser jobs are far less likely, while profitability goes up on the ones you do win.

Regardless of how many jobs you quote, however, PLM also serves to increase efficiencies on existing ones. Sorry to say, but that’s because many small to medium-sized shops have relatively unsophisticated engineering management capabilities. Work instructions are often nothing more than an Excel spreadsheet or PowerPoint file that’s been printed out and stuffed into the job folder. The same can be said for quality procedures, tooling lists, and setup sheets. Nothing’s linked to anything, and a revision change can mean countless hours chasing down and updating files; if just one slips through the cracks, it can spell disaster.

Similarly, the purchasing department can leverage PLM’s advanced search functionality to streamline the supply chain, looking for commonalities across all active jobs or projects. This creates opportunities for vendor consolidation and part-spend aggregation. They’ll also have greater visibility to the timing and content of upcoming engineering change requests, reducing the chance of filling the shelves with soon-to-be-obsolete inventory.

There’s more. Designers and product managers might use PLM to analyze form, fit, and function characteristics of various components in an effort to substitute different but equivalent, lower cost part numbers. The programming and scheduling departments can use it to optimize nests and reduce setup times. Quality control can use PLM for root cause analysis, or to dig more deeply into failure modes. The bottom line? Whatever the shop, whatever its size or specialty, PLM brings order to manufacturing chaos.

And just to wrap up the notion that machine shops and sheet metal fabricators don’t “design” anything, even the smallest shop designs and manufactures countless jigs and fixtures, molds and dies. Doesn’t it make sense to document everything about these investments, including how, why, where, and when they were made, thus increasing your ability to utilize each to its fullest? What about the process plans, the NC programs, and assembly procedures used to make them? Wouldn’t it be nice to finally gain control over the complete lifecycles of your manufacturing processes, as well as the supporting tools and equipment? At the risk of repeating myself, PLM is a gamechanger.

Cracking the nut

It should be clear by now that PLM can provide a single source of the truth for all things manufacturing. Data replication is a thing of the past with an ERP-integrated PLM system. Production costs are clearly visible to all and sundry. Engineering teams grow more efficient, reducing lead-times and wasted effort alike. Quality and corrective actions become easier to manage. Simply put, the most successful shops are those that maintain the same (or better) level of control over their data and processes as their customers; achieving it, however, requires a deeper end-to-end manufacturing solution, within which PLM can play a central role.

Still, a full-blown PLM implementation is a big nut to crack, and the return on investment (ROI) may take as long or longer than your ERP system. Worse, it can be more challenging to measure. With ERP, ROI is often reflected in a company’s income statements and balance sheets—depending on which modules have been implemented, one might see improvements in material spend, manufacturing productivity, and so on from their ERP system.

PLM is a bit more…squishy. Hard figures like win-loss ratios, cost of quality, and product lead-times—values that will likely improve with a properly-implemented PLM system— are easy enough to measure, but how do you quantify the efficiency levels of your engineering staff? Similarly challenging to identify are productivity losses due to missing or inaccurate data, duplicate part numbers, siloed information, and all the other time-wasters that PLM eliminates. This can make any ROI calculation more a leap of faith than an accounting exercise, although it’s still important to identify and measure key indicators wherever possible, and do so now, before you begin a PLM rollout.

And how exactly is that rollout accomplished? You’re in luck. Unlike the big bang, all-or nothing approach common with most ERP implementations, PLM systems are typically modular in nature, allowing companies to leverage only the parts of software they currently need. They can eat the elephant one bite at a time. This is especially important to smaller shops, where engineering resources are often limited; PLM lets you start small, and then build on your successes.

Reaching towards harmony

One good place to start is the part numbers. If you already have an ERP system in place, chances are good that you’ll get some pushback on this one, but the most logical place to house part records, followed by the BOMs, is within the PLM software. That’s because each of these critical data elements are intimately related to manufacturing and, as noted earlier, manufacturing is PLM’s wheelhouse. Getting started is no more difficult than establishing a data-entry procedure for the engineers to follow, and handing over the reins.

But hold on: our ERP system requires BOMs and part numbers for costing and MRP purposes, you say. That’s fine, no one ever said you wouldn’t need some level of integration between ERP and PLM—in fact, it’s a prerequisite. The point here is that PLM can take the lead. It ought to be the master; if these or other chunks of data are needed in the ERP database, the CAD/CAM system, the QMS (quality management system) or MES (manufacturing executions system) or CRM (customer relationship management) software, then a one-way link to those systems must be provided.

It’s not as difficult as it might sound. All modern software provides “hooks” to support integration with other systems. Your software provider or reseller can use these “application programming interfaces,” or APIs, to share whatever data you and your team feel is necessary to achieve data nirvana. What might be more challenging is retooling your company to fit into the PLM-based paradigm. Just as it was with the ERP rollout, this is an excellent time to review and streamline your internal business processes around your new software—something that should be done on a routine basis anyway.

The decision to move forward really comes down to one thing: where ERP and PLM each offer a certain amount of visibility and control to any manufacturing environment, linking the two together extends these capabilities even further. It’s like a good marriage, in that the sum is greater than the individual parts. And just like a marriage, it’s going to take some hard work at times, an open mind, and the unbridled participation from all involved, but the results will make it exceedingly worthwhile. So if you feel you need an ERP intervention, don’t lose sight of the important role that PLM can play in improving your overall operations.