Tying the Shop Floor to the ERP System

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1 Tying the Shop Floor to the ERP System At a Glance: This paper describes the evolution of IT strategies and the advantages of using an ERP system focused on linking shop floor and top floor operations. ERP systems shed light on manufacturing processes, enabling improved decision-making. A case study highlights how ERP from the Plex Manufacturing Cloud dramatically decreases training expenses, freight costs, and scrap, while enabling business growth without additional resources.

2 WHITE PAPER 2 ERP and the Shop Floor Enterprise Resource Planning (ERP) on the shop 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 shop floor to the top floor is key to reducing costs, streamlining operations and improving customer satisfaction. Integrated ERP on the shop floor brings manufacturers improved quality, increased production throughput, less scrap, and many more benefits. A History of IT Strategy In the years leading 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 shop 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 shop 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.

3 WHITE PAPER 3 Primary Drivers for ERP on the Shop 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 shop floor is integrated with the top floor for a real-time snapshot of traceability and machine output. Plex brings manufacturers improved quality, increased production throughput, and less scrap. Tony Kaczmarek, president of Kors Engineering, has seen dramatic transformations occur when ERP ties the shop floor to the top floor. Integrated ERP systems make plant floor activities more visible to all employees. In fact, Kors Engineering has found that most companies learn more about their systems the first day they bring their equipment online than they ve known after decades of operation. Plex Cloud ERP has the industry s most comprehensive quality management and supply chain management functionalities. It has the capabilities needed by manufacturers to manage problem controls, cost recoveries, traceability, statistical process controls, issues management, and more. Its compliance monitoring functionality has additional features that enable comprehensive internal and supplier auditing.

4 WHITE PAPER 4 Plex Cloud ERP in Action ERP on the shop 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 Plex Cloud ERP, 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 Plex Cloud ERP. Ralco started its implementation with the Plex Cloud ERP 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 Plex Cloud ERP were available from a consistent interface. Premium freight costs were down by 20 percent in the first year. Scrap rates declined by 60 percent.

5 WHITE PAPER 5 50% 20% TRAINING COSTS PREMIUM FREIGHT COSTS 60% SCRAP RATES 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. Shop-Floor Benefits Plex Cloud ERP is easy to use. Any person working on the shop 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. We easily match receipts to our internal purchase orders, and match purchase orders to invoices saving $100 per PO processed. Once the shop-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.

6 WHITE PAPER 6 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 Plex Cloud ERP 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 Plex Cloud ERP is a system that integrates all manufacturing processes, from the shop 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. There is a community of Plex users eager to share specifics about how their choice of system has paid off and helped them maintain a competitive edge and allowed them to thrive in a competitive environment. About Plex Plex is the Manufacturing Cloud, delivering industry-leading ERP and manufacturing automation to more than 350 companies across industries including aerospace and defense, food and beverage and motor vehicles. Plex pioneered Cloud solutions for the shop floor, connecting suppliers, machines, people, systems and customers with capabilities that are easy to configure, deliver continuous innovation, and reduce IT costs. With insight that starts on the production line, Plex helps companies see and understand every aspect of their business ecosystem, enabling them to lead in an ever-changing market.

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