MES-vs-ERP-System-Integration-Concept

ERP vs. MES: Still a Standoff?

Is an ERP as a standalone solution enough to get manufacturers Industry 4.0-ready, without using a MES or another operations management solution? Can an ERP system replace a MES in a digital transformation project, and still provide the same benefits? Is a MES really needed if an ERP addresses all or most of the functions that a MES does? 

These questions above have been asked for decades now! The age-old dilemma, whether an ERP is the right substitute for a MES, still exists. Today, we will address this ERP vs. MES case and explain why there needs to be an ERP with a MES use case, rather than versus a MES, to experience the full array of benefits an Industry 4.0 implementation has to offer.

What’s the Difference?

First, it is important to understand the basic difference between an ERP and a MES. For this we need to understand what an ERP and a MES were designed to achieve when they initially came into being. This will also help to understand how these software applications have transformed and grown over the years into the present-day applications they are. The ERP or Enterprise Resource Planning application was developed to better manage the business process flow and execute the business functions of an organization within the software application itself. The array of functions covered by the ERP is wide, and ranges from order processing to material management and from labor management to accounting. The key factor to understand here is that the application was designed to have an acute business process focus. The ERP’s main role becomes the effective management of business process-level transactions and reporting of milestones relevant to the proper execution of the order lifecycle or, more broadly, the supply chain that surrounds the order.

ERP Functions
Figure 1 ERP Functions (Source: quora.com)

The MES or Manufacturing Execution System on the other hand was designed to execute the production flow, which means a keen focus on the process functions and related data collection and reporting. The MES, while sharing certain functions with the ERP (material management, labor management, manufacturing, planning and scheduling among others) focuses on the effectiveness of the manufacturing process itself to ensure that the production process performs at an optimum level from a quality, utilization (material, equipment, manpower), product performance and compliance perspective.   

The ERP and MES applications were designed initially to address completely different aspects of business; one focused on production and the other on business. Even where the functions overlapped, the functionality which the applications supported was quite different. For example, the ERP, when it comes to labor management, might focus more on the payroll and attendance side for computing the cost of labor, where the MES might provide insight on the training and certification of operators and workers, either allowing or restricting access to certain equipment based on their current qualifications.

Similarly, the ERP is the application where sales orders are created and sometimes the work orders for manufacturing are generated and passed to the plant for execution. The MES is the application actually breaking down the work order into smaller, definable, measurable tasks and aids the execution of the work order as it moves through the production process.

While both applications address similar functions, the way in which they do so are quite different. The MES takes a more granular approach to managing the manufacturing process and aims to capture all transactions on the shop floor, which when aggregated and consolidated, becomes the input for the ERP.

ISA-95 functional hierarchy of levels of manufacturing decision making
Figure 2 ISA-95 functional hierarchy of levels of manufacturing decision making.(Source: mesa.org)

The model defines levels of the business process and the role of IT applications at each level. The MES is considered the ‘Operations Management’ layer, while the ERP the ‘Business Planning & Logistics’ layer, which better defines their focus and functional outputs.

  • Level 0 is the production process itself
  • Level 1  is the sensors/IoT
  • Level 2 is the production control/visualization layer (‘real time’ systems)
  • Level 3 is the MES (near-real time)
  • Level 4 is the ERP (with latency)

The benefits of a model such as ISA-95 are that it visually shows the demarcation between the functional layers. It provides perspective on the timeframes of the transactions at each level, which vary dramatically based on the focus of the application (business versus operations management). As you can see, the levels 0-3 operate on real-time or near-real-time which defines how the data flows into the application and also how it is processed and sent to other applications or systems for use.

The MES edges a more real-time scenario. One look at the model and it becomes quite easy to understand that it does not advocate an ERP vs. MES approach; rather it stresses on an MES with ERP approach, which means that if integrated, the applications provide a larger base for improvement from a business process standpoint, as opposed to when they are used to substitute for each other.

Similarly, in 2004 the Manufacturing Enterprise Solution Association (MESA) came up with a C-MES or Collaborative-MES model:

Collaborative-MES (c-MES) model
Figure 3 Collaborative-MES model (Source: mesa.org)

The C-MES model enhanced the role of a MES from the core 11 business functions first defined in 1997:

  1. Operations/Detailed Sequencing
  2. Dispatching production units
  3. Product tracking and genealogy
  4. Labor Management
  5. Quality Management
  6. Maintenance Management
  7. Resource allocation and status
  8. Document control
  9. Performance Analysis
  10. Process Management
  11. Data Collection and Acquisition

The model with C-MES was expanded to include Supply Chain and Asset Optimization, which is achieved through integration with the ERP and other business applications at the business process level, and with automation and control applications at the manufacturing shop floor level. Unlike the ISA-95 model which concentrates on the information architecture and hardware systems, the MESA model focuses on the overall business process, and how business strategy, when refined to business and manufacturing operations, requires the IT applications of an organization to integrate and act as sources of information for each other. This allows the business itself to operate smoothly and with high level of efficiency, leading to maximum profitability.

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Collaboration for Industry 4.0

Both the ISA-95 and MESA models emphasize the integration of the ERP and MES to form a collaborative business process, where IT applications cooperate, co-exist and complement each other rather than compete. That’s what is needed even more so from an Industry 4.0 perspective. The new industrial revolution relies heavily on big data analytics, the Industrial Internet of Things and other modern technologies such as AR, AI, APS, Additive Manufacturing and Cloud computing. These all require IT applications to be ready and able to process copious amounts of data, while communicating with other IT applications over the internet or other networks, and be able to manifest the full potential of the technologies through their functionality and interoperation.

A modern MES, which has evolved from the core area of process execution, has been designed to take center stage in the Industry 4.0 scenario.  It enables not only the necessary integration with business process level applications like ERP, SCM, CRM and WMS, but it has the capability of capturing millions of shop floor level transactions happening simultaneously across multiple plants and process stages. The MES collects and processes these transactions while creating refined information, patterns and trends, which can be reported to business process level applications.

The modern MES, while sharing functions with the modern ERP, works at a far more granular level, with capabilities (as detailed in the MESA diagrams) are far different from that of the ERP, and unless an ERP has an MES module built in or integrated to allow for such functionalities, the ERP alone can’t meet the requirements placed by Industry 4.0 from a digital transformation perspective.

Today’s modern MES applications also offer a data platform, which forms the very basis of an Industry 4.0 implementation. The technologies of AR, AI-enabled machine learning and APS also reside on the MES application itself. This basically means that an ERP lacks the basic infrastructure needed to justify the use cases which are otherwise easily tackled by the MES.

It does not mean or infer that the MES can be a substitute for an ERP. It is critical to understand that Industry 4.0 relies on the richness of the different IT applications to integrate and enable digital transformation. MES is at the core of enabling this transformation. 

The Bottom Line

Our goal has been to clarify on two points:

  • The question should never be ERP vs. the MES. They are not substitutes for each other; they are both needed to integrate and collaborate to achieve an Industry 4.0 ecosystem across the value chain.
  •  Secondly, that if an organization’s core activity is in manufacturing, it needs a MES (suitable to their industry segment). The MES brings the ability to leverage most of the technologies which together form the basis of Industry 4.0. The MES selected must obviously be capable of integration with IT applications at various levels, but beyond the basic integration, be an ideal vehicle for digital transformation.

So next time you are faced with the dilemma of whether your ERP can be your MES, reflect back on this article, and remember that they are both important and serve specific but different roles in the overall business process. While some of the functions they deal with overall, the way in which an ERP addresses a specific function, such as labor or material management, is functionally different from the performance and output of a MES.

Finally, when these applications are integrated, their interoperability can lead to more informed, better decision making, operational performance and the resultant process improvements, which are enhanced versus their standalone status.       

One final thought. If we’ve convinced you that you need an MES to supplement your ERP, there are many resources you can turn to from both a strategy and execution perspective. Certainly, MESA can provide white papers on use cases, implementation and integration strategies.  We at Critical Manufacturing have also built a robust partner network, to assist you in the overall selection, rationalization and installation process.   The net result—you’re not in this alone. The industry infrastructure provides you the support, rationalization and execution resources to achieve your Industry 4.0/Digital Transformation dreams!

Jeff Richardson
JeffRichardson@criticalmanufacturing.com

Industry Solution Director at Critical Manufacturing

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