Making sense of manufacturing acronyms
Working through the alphabet soup of software and technology
The enterprise software space has hundreds of three-letter acronyms—from MRP and ERP to MOM and MES—that represent technologies that help make managing business processes easier.
Is your MOM an MES? Confused? It’s hard not to be. The enterprise software space is littered with hundreds of three-letter acronyms (TLAs) representing technologies that help make managing specific (and some not-so-specific) business processes easier. Often these acronyms require more explanation, and you’re left trying to understand if they truly match your business needs. Let’s take a look at some of the most common acronyms and how they address your company’s manufacturing needs.
From MRP to ERP
Calculating raw material requirements for a specific quantity of products can be a challenge. Add to that managing multiple orders for multiple quantities of multiple products, and now your work is even more complicated.
Manufacturers often use material requirements planning, or MRP, to manage this task. An MRP system calculates and predicts the quantities of each required raw material, component, or ingredient. Moreover, an MRP system can recommend a purchase timeframe to ensure that the required inventory is available for production in time for delivery to meet the customer’s expectations. Manufacturing companies use an MRP system to minimize inventory on hand, eliminate excess materials, and align invested capital with customer orders.
As manufacturing became more complex, the acronym evolved into MRP II, or manufacturing resource planning, which takes into account all of the resources required to produce a planned production quantity including people, machines, and even finances.
Over time MRP evolved into a much broader concept called enterprise resource planning, or ERP. The advent of modern databases enabled ERP to broaden planning capabilities beyond manufacturing, with ERP now being used by companies in diverse industries to collect, store, manage, and interpret data from many business activities.
Companies rely on the functions of complex transactional databases to manage billions of dollars of internal, business-to-business, and business-to-consumer transactions in multiple currencies. Functions for a typical ERP system include:
- Human resources
- Product planning
- Supplier management
- Product or service delivery and logistics
- Marketing and sales
- Inventory management
- Production manufacturing
- Finances and accounting
In the 1990s ERP began to grow beyond the simple “planning” of MRP (although MRP is still considered part of ERP) to become the operational hub for companies. Other enterprise “subsystems” have grown in parallel with and are complementary to ERP, including supply chain management (SCM), human capital management (HCM), and customer relationship management (CRM). Most ERP vendors have incorporated these functions into their product suites as separate modules, while a select few have fully integrated them. Indeed, ERP has become the system of record for a broad set of functions to manage virtually any business.
Manufacturing Execution Systems
As ERP became the system of record to manage the business, specific manufacturing tools emerged to manage day-to-day production. A manufacturing execution system, or MES, was created to help production personnel execute the plan developed in the ERP system. MES enables manufacturers to schedule jobs, coordinate delivery of the required material to work centers, and monitor actual production performance against the target goal. MES generally includes capabilities for managing quality as well.
A related category called manufacturing operations management (MOM) then emerged out of a desire to characterize a capability broader than the production control system. While there is no single, clear-cut definition, MOM effectively encompasses MES along with the management capabilities to interface with ERP, though the differences are still hotly debated (both terms were coined by competing analysts). Many references will refer to them as one, often as MES/MOM. Many ERP systems provide pieces of the MOM function or perhaps include an MES module, but they often have not been able to provide the specific functionality production leaders require.
As part of the influx of MES, companies invested in more automation to increase speeds and feeds and to combine production operations into automated production lines. This was needed to address the challenges of both improving throughput and addressing ever-increasing customer quality demands. This resulted in much more data that could be used for statistical process control (SPC) and for monitoring tolerances trending out of the specification.
But as automation and the use of robotics grew, so did the number of systems needed to communicate with these machines. What emerged was a category called supervisory control and data acquisition, or SCADA, which works with programmable logic controllers, or PLCs. These plant floor systems monitor high-speed activity and communicate results quickly.
And because human operators need to view those results, the human-machine interface, or HMI, was born. HMIs became the control panel for operators to monitor various aspects of production and to interact with equipment, such as commanding machines to speed up, slow down, or even shut off should there be an issue.
This alphabet soup of acronyms has become very complex even for fairly simple products. And depending on the level of productivity and control needed, it is common for companies to purchase different packages from different software vendors for each function and attempt to make them work together. This becomes problematic because they need to constantly upgrade software to stay current, adding cost, time, and downtime risk.
What’s worse is that with multiple software products, companies need to manage these upgrade schedules for each one. This also adds complications to IT efforts as different software packages use different communication protocols and data formats that must be translated and coordinated to work together. The software industry has developed many standards to ease this complexity, but the solutions themselves lack standardization, so nearly every implementation ends up being unique.
Not wanting to be left out of the acronym race, the Manufacturing Enterprise Solutions Association (MESA) and the International Society of Automation (ISA) developed the ISA 95 specification to formalize the definition of what functions belong at what level of manufacturing (see figure). ISA 95 has become the baseline to clarify not only what happens at each level, but what information is required to be communicated between them. This has been instrumental in enabling integrators to build repeatable connections among the myriad systems in the manufacturing space.
You might think that a market so rife with mature categories would be full of off-the-shelf products for manufacturers to choose from. Unfortunately, the manufacturing software market is still quite fragmented, and manufacturers are left with the burden of navigating through different software in an attempt to find the combination that best fits their needs.
To the Cloud
The advent of cloud computing has introduced some interesting advancements in the confusing “middle ground” between plant floor execution systems and top-floor business planning. One is manufacturing cloud ERP platforms, delivered as SaaS, or software as a service. SaaS is designed to eliminate the need to own and upgrade software and servers to keep up with ever-changing technology. This fits the needs of manufacturers that want to focus on their core production competency rather than non-value-added IT activities, such as loading software and managing software versions and licenses.
A modern manufacturing cloud ERP system also provides a platform ready for future innovation ushered in by the Industrial Internet of Things (IIoT). As plant floor and enterprise technologies evolve and become available, rapid integration of those tools and processes across the company provides immediate value and return on investment. The cloud is the fastest and most efficient way to provide users with the tools they need and the connectivity required to take advantage of the IIoT.
As described earlier, running a production facility is only part of managing a manufacturing business, so cloud-based manufacturing ERP systems include complete ERP capabilities to support business work flows like order-to-cash and procure-to-pay. They include MES/MOM functionality to control the plan-to-produce process as well as integration with product life cycle management (PLM) and computer-aided design (CAD) to streamline the design-to-make process.
The best cloud ERP systems connect directly to PLCs at the SCADA level for bidirectional communication of data at “the manufacturing moment.” Because everything works from a single, central database supporting one version of the truth, processes are much leaner, while time-consuming, error-prone data re-entry between systems is eliminated.
So if you’re confused by the alphabet soup of disparate, siloed enterprise software applications, look to the cloud. You’ll find integrated software designed to eliminate the pain points and bottlenecks of disconnected, legacy manufacturing business systems, which makes managing your business as simple as ABC.
The FABRICATOR is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971.