The acronyms of manufacturing software. What are they and what do they mean?
Throughout the years, manufacturing companies would throw around enough acronyms that it could make my head spin—ERP, MRP, MES... The questions everyone asks is what do these acronyms stand for and what do they mean? Let’s start with the basics.
Enterprise Resource Planning (ERP) is an application, or a set of integrated applications, that gives companies the ability to manage the “important parts” of the business. An ERP is said to handle the company from end-to-end with areas like purchasing, accounting, human resources, sales, marketing, planning and more. At a high level an ERP can provide the information necessary to make decisions for the complete business, however if you ask many of the users of an ERP, they may tell you it doesn’t help with the day-to-day planning part of the business. This is what leads me to the MRP.
Material Requirements Planning (MRP) is the know-all and tell-all for manufacturing including the inventory, planning and scheduling details. The MRP can drive the manufacturing schedule based upon the material that is currently available or the inventory that needs to be purchased. Working with many companies and different software packages throughout the years, you will see this handled in different ways based upon the sales forecast and inventory methodology of a company.
Many planners work with the goal of just-in-time (JIT) inventory purchasing model. Within the ERP the sales are entered and the MRP does the work to calculate required material needed, material purchasing requirements, manufacturing expected run date and estimated completion date. However, one may forget that planning doesn’t only mean manufacturing planning, but also the ability to do shipment planning based upon the MRP crunching numbers from lead times, routing queue or manufacturing times, and ship queue times. While the MRP does great providing the information at a high level, companies may choose to look at a more detailed level using a MES.
Manufacturing Execution System (MES) or Shop Floor is a computerized solution on the manufacturing floor to process raw material to finished goods in real-time. The capabilities of an MES vary based upon the software application and the manufacturing industry of your company. Working with various MES applications, my favorite function is that it connects to the machine and monitors the shop floor transactions in real-time. The machine data combined with the inventory transactions provide invaluable data.
In addition to the real-time tracking, the MES gives companies the ability to capture inventory genealogy, traceability, work in progress (WIP) through the manufacturing as the occur. There is no longer a question of how much WIP inventory is in the manufacturing process or if the finished good inventory is ready to be shipped. The MES allows the MRP to have more accurate and instant information through the entire process.
Many companies choose to have the ERP handle the financials and the MRP to have visibility of materials, but in order to get full visibility throughout each department, including the MES will provide the most return on investment. The details the MES provides will help each department make the best decision for the company, leading to higher productivity, more efficient time and material usage and overall, profits.