COMBINING MODIFIED DIAMOND MODEL AND SYSTEM IMPLEMENTATION STAGE TO EXPLORE THE ERP AND MES SYSTEM INTEGRATION CRITICAL FACTORS

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1 COMBINING MODIFIED DIAMOND MODEL AND SYSTEM IMPLEMENTATION STAGE TO EXPLORE THE ERP AND MES SYSTEM INTEGRATION CRITICAL FACTORS Wei-Chih Hsu 1, Chao-Fang Su 2, Wang Huai i 3 1 Dept. Computer and Communication Engineering, National Kaohsiung First University Science and Technology, weichih@nkfust.edu.tw 2 Graduate Institute Industrial Technology, National Kaohsiung First University Science and Technology, u @nkfust.edu.tw 3 IGA Computer Technology CO.,LTD Abstract. Systems integration has become important more and more, because the system integration not only improving system performance, but also help companies to a variety resources for the overall planning and application, and management enterprises in a more real time. The three key points in the manufacturing business process are "business led"," production first ", "Financial as the most important". The system to control the production process is the MES system, but many MES systems and ERP manufacturing system is separating. However, the information between the two systems is closely related to the two systems. To gain higher performance, many manufacturers have carry out integration work the ERP systems and MES systems. Out study combines modified diamond model and the analysis models the system implementation scheduling stage to explore the ERP system and MES system integration Critical Factors by Delphi technique questionnaire and AHP(analytical hierarchy process). This research covers the Critical and Critical Risk factors. Research contributions in addition to verify the correctness the modified diamond model also includes: (1) Obtaining the critical and the methods to achieve them. (2) Obtaining the critical risk factors and the methods to lower them. (3) Exploring each success dimensions in term the relative importance weights. (4) Exploring each risk dimensions in terms the relative importance weights. Hope that this research is helpful to the implementation ERP systems and MES Integration. Keywords: ERP system, MES system, Delphi Technique, Path analysis for System, Diamond Model, Critical Factors, AHP (analytic hierarchy process). Research Background and Research Motive In recent years, enterprises are expecting to seamlessly integrate all the data and information. ERP(Enterprise Resource Planning) and MES(manufacturing execution systems)are two core stware computer integrated manufacturing system(cims). Although both MES and ERP can function very well, the separation the two will make the information exchange between MES and ERP extremely difficult [1]. For this reason, we should efforts to integrate ERP systems and MES systems. Patrick C. L. et al (2010) found in the study implementing ERP system in the textile and garment industries that the implementation ERP system had a very high failure rate. Even well-known companies (such as Nike) failed after spending a lot 56

2 investments [3]. The failure the integration ERP system and MES system will cause great losses to the enterprise. Hence, comprehensive and systematic evaluation is absolutely necessary before implementation and integration. Up to now, studies by scholars on the development a single ERP system or a single MES system has covered its and risk factors. Regarding the topic the integration the ERP system and the MES system, most the scholars focused on the implementation method. For example: Mertins, K. et al (2008) used the adaptive simulation models to discuss factory scheduling, and the integration the ERP system and the MES system; Liu, W et al(2002) lay the details the integration the ERP system and the MES system in the integration model structure and the elaborations on the system integration mechanism while explaining the different data types and discussing two implementation topics including the integration data as well as the data transmission frequency. No scholar has discussed the critical and critical risk factors the integration the ERP system and the MES system, the method to achieve each critical success factor, the method to lower critical risk factor. No scholar has discussed the each success dimensions between the relative importance weight. No scholar has discussed the each risk dimensions between the relative importance weight. The critical dimensions importance weights, will help the system work towards the integration process more. Research Purposes The purpose this study was as follows: (1) A Critical each, and the method to achieve each critical success factor. (2) A Critical risk factors each, and the method to lower critical risk factor.(3) The use AHP (analytical hierarchy process) to explore the each sucess dimensions between the relative importance weight. (4) The use AHP (analytical hierarchy process) to explore the each risk dimensions between the relative importance weight. Literature Review A. Research model proposed in this study. In this study, reference to our articles published in the seminar proposed research model. That research model will become an article the research model in this study. The seminar was The First National Conference on Web Intelligence and Applications. The articles name is ERP system and MES system Integration Critical Factors and Benefit Analysis Model (Chao-Fang, S. et al, 2011). This study was as shown in Figure 1. In the " factor " has five dimensions. The five dimensions the model is to modify the model after the diamond. The five dimensions is Timing, Organization, Task, Technological, Agent. 57

3 Fig. 1 Research model proposed in this study B. Discussion on the AHP(analytic hierarchy process) questionnaire. AHP is the Abbreviated analytic hierarchy process. The University Pittsburgh pressor Thomas Saaty in the 1971 years publication the weight solution method[10]. AHP is mainly used in uncertain cases with multiple evaluation criteria and decision-making problems, it is a combination qualitative and quantitative analysis multi-objective decision analysis methods. The method uses the characteristics the behavioral sciences, will give decision-makers to judge the experience to quantify, is the target structure complex and a lack intelligence information in the case, a system commonly used analytical methods, systems analysis and thus become one the methods mathematical model. The basic computing element project through the process pairwise comparison, to obtain the various factors relative weight between the project and export priority method. Suppose the n factors existing projects, you need to be n (n -1) / 2 compared in pairs, the comparison is made to indicate the scale the project. That is Hereby become the comparison matrix C shown in the following: C. Discussion on the Delphi technique questionnaire. In general, Delphi technique was to get reliable viewpoints from an expert panel by a series closely related questionnaire and the control the feedbacks [7]. In case some issues, the use Delphi Method was applied, for example, (1) issues that were not suitable for precise analysis technique but can benefit from the collective subjective judgment (2) issues requested judgment to test the wide or complex issues 58

4 and had no sufficient literature for reference while such issues may request experience or expertise different backgrounds to clarify (3) a number people may need to effectively interact and exchange face to face, (4) frequent team meetings were not possible due to time and cost considerations, (5) should attach importance to participants heterogeneity to ensure the effectiveness the results [7]. Delphi Method, had some basic features, for example, was involved with the communication process a group, the composition the expert panel and the number stages the questionnaire[7]. In addition, we suggested the Delphi method with three standards as the basic features, namely, anonymity, repeated words, control feedback and the feed back the statistical groups [8]. D. Critical ERP system and MES system implementation. Critical success factors implementing the ERP system is very much, such as: Commitment and support the top management; Clear objectives; Change management; User education and training; Business process reengineering; Consultants; Effective communication; Technology infrastructure; Project management [4]. Critical implementing the MES system is very much, such as: Management objective and strategy; Management support; The capabilities and experience the implementation team; Pre-planning and integration; Supporting supplier selection; User support. [3]. E. Critical risk factors ERP system and MES system implementation. Critical success factors implementing the ERP system and MES system is very much, Hsieh (2006) proposed on implementing the ERP system a number risk factors and factors to avoid failure as well as propositions turning point. His risk factors include: Ineffective leadership; Hidden issues the organization; Inexperienced employees; Timing business cycle implementation; Cohesiveness poor economy. Chao(2008) discussed the risk factors MES system implementation, such as: Data risk; Risk system application; Business management risk; Infrastructure risks; Project management risk; Human resources risk. Research Design A. Questionnaire Survey and Questionnaire Recovery. In this study, the same reference to ERP system and MES system Integration Critical Factors and Benefit Analysis Model this article questionnaire design methods. Questionnaire in two parts: (1) Survey Critical factors each, and the method to achieve or lower each critical factor by Delphi Technique. (2)Survey the each sucess dimensions and each risk dimensions between the relative importance weight by AHP. The following are examples several item survey questions(table 1 and Table 2). Questionnaires on a total seven people as. Fill out a questionnaire twice repeated. Get the same answer each question asked on the item. 59

5 Table 1 Critical factors and the methods to achieve or lower each critical factor : team with clear objectives and effective incentive methods Factor Clear objectives the project propositions implementation team, the greater success (detailed chance system integration; the greater descriptions chance success system integration ) with incentive methods combined with objectives strongly agree agree ordinary disagree strongly disagree risk factors : Decision-making and public policy mistakes will lead to ERP systems and MES systems integration failure. Methods to avoid risk factors Strengthen the company's internal discussion all relevant units, and employ consultants with industry experience, to help guide the systematic planning, and supporting strong measures to build foreign outsourcing, systems integration will reduce the risk failure. strongly agree agree ordinary disagree strongly disagree comparison Factor Table 2 Success and risk dimensions in terms the relative importance weight Most important Least important Same important Most important Least important comparison Factor factors implementation factors implementation factors implementation factors implementation factors B. Questionnaire recovery and Statistics. After finishing the questionnaire and statistics are summarized as follows, Table 3, Table 4, Table 5: 60

6 Table 3 Critical and the methods to achieve each critical success factor success factors factors- Organizationa factors- Agent factors- Technological factors-task Targeted and effective ways to motivate the executive team Management's objectives and strategic factors Business Process Reengineering Information Integration Information technology operations Competitive advantage Support high executives IT vendor support capabilities Communication between the various sectoral Competitive environment faced by companies competing assessment Training User Training Consultant's ability for support Precise information on the immediate effect IT Compatibility Ability to integrate information systems Import system cost Investment in human Project implementation team goals more clearly, the greater the chance success system integration. Combined with effective ways to motivate the target system, the greater the chance successful integration. Different goals and strategies will affect the management system will integrate and attitudes. Business process reengineering the effect better, the greater the chance success system integration. In order to enhance enterprises will update and integration information systems to integrated systems. In order to enhance business operations will be information technology and system integration. In order to enhance competitive advantage and ability manage will be integrate business systems. Enterprises in system integration, high-level decision-makers need to have long-term support and participation can improve the success rate system integration. System vendors has the experience, and for the understanding enterprises in which the industry can only improve the chances a successful system integration. Enterprises in the system integration process, the group with the department is required to have sufficient communication, system integration can improve the chances success. Enterprise Ruoyi first to see the other results with industry practice, will enhance the system integration will or determination. System integration process, the more the implementation education and training content, and materials more clearly, will help to improve user acceptance system integration. For project members, with the relevant user in the system integration each stage were appropriate and fully implemented education and training, will help to improve the success system integration. Consultants can be the experience other companies made the system more integrated, case studies will help to integrate different systems to make the right choice. To integrate the two systems accurate information as possible with immediate effect, the greater the chance success system integration. In system integration, consider the compatibility existing systems and not due to stware hardware difference is too large and likely to cause confusion in the system, there may have to pay inconvenient to use, and maintenance difficulties follow-up costs. Operating system to provide easy user interface and reports, to improve user acceptance, and therefore improve the success rate for system integration. In system integration projects in progress, if found the original budget or the inadequate use inputs related resources, companies are willing to increase funding or increase investment related resources, can improve the success rate the system. Enterprise system integration, if sufficient human and stronger cohesion among the members, the system can improve the chances success. 61

7 factors- Timing Investment in time The establishment appropriate project members Said that the company needs implementation point business cycle implementation time in Off-season period The combined system itself is the whole maturity Enterprise system integration, if sufficient time and to set and implement the project progress and meet regularly to review progress and quality, can improve the success rate the system. Systems integration project team, project manager, or whether the ability each member, as well as consultancy experience in related industries, the ability to have sufficient competence, so the system can improve the chances success. Enterprise system integration, there are clear discussion the integration the needs each department, allowing the user group and clear. Enterprise system integration time, the right to import the selected point business cycle, can increase the chance a successful for system integration. Enterprise system integration time, time is the economic downturn, the workload each unit in the f-season users can have more time to participate in system integration projects, systems integration to improve the chances success. To integrate the two mutually independent systems, each its systems are first all a considerable maturity, can improve the success rate system integration. - Risk factors factors- Organizationa Risk factors factors- Agent Risk factors factors- Technological Risk factors Table 4 Critical risk factors and the methods to lower critical risk factor Decision-making and public policy mistakes will lead to ERP systems and MES systems Ineffective leadership crisis will lead to ERP systems and MES systems Organizational crisis Hidden problems will lead to the ERP systems and MES systems coordination between the organization Poor will lead to ERP systems and MES systems The meeting inefficient will lead to ERP systems and MES systems Learn from the lack valuable industry experience easily lead to ERP systems and MES systems Staff Technical bad the crisis will lead to ERP systems and MES systems integration failure. Knowledge barriers will lead to ERP systems and MES systems Inconsistent with the transmission data format will lead to the ERP system disorders and MES systems Old habits risk will lead to the ERP systems and MES systems Incorrect or inconsistent data risk will lead to the ERP systems and MES systems Poor infrastructure will lead to the risk for ERP systems and MES systems integration failure. Enterprise managers do not understand IT technology, IT engineers not deep understanding business processes, will lead to the ERP system and MES systems factors- Old workflow obstacles, will lead to the ERP system and MES systems 62

8 Task Risk factors factors- Timing Risk factors Workload the season, unable to concentrate on system integration project work will lead to ERP systems and MES systems Table 5 Success and Risk dimensions in terms the relative importance weights Success dimensions the relative Risk dimensions the relative importance Dimensions Name importance weights weights Importance the Importance the Importance the ratio Importance the ratio sequence sequence dimensions Organization dimensions Agent dimensions Task dimensions Technological dimensions Timing dimensions Research Contributions and Conclusions It is a confirmed from table.5, the Organizational dimensions are all critical factors (success factors and risk factor). That is, they are the most important. Therefore, implementing the ERP systems and MES systems integration, we should pay special attention to all the critical factors ( and risk factor) organizational dimensions. The Timing dimensions are all critical factors ( and risk factor), which are the second most important. Adding the Timing dimension to the diamond model is necessary, and this verified our proposed modified diamond model. In addition, for the Technological dimensions, their weight ratios success factors are greater than that the risk factors. Our study has the following contribution: (1) Confirming the modification to the modified diamond model. (2) Proposing all critical success factors and the methods to achieve each critical success factor. (3) Proposing all critical risk factors and the methods to lower critical risk factor.(4) Using the AHP (analytical hierarchy process) to explore each success dimensions in terms the relative importance weight. (5) Using the AHP (analytical hierarchy process) to explore each risk dimensions in terms the relative importance weight. Hope that this study has been beneficial for the enterprise to implement ERP systems and MES systems integration. References [1] Yang Xinyu and Li Hao, Study on key technologies MES/ERP integration based on JCA, 2010 International Conference on Networking and Digital Society, pp , [2] Patrick C.L. Hui, Kidith Tse, Tsan-Ming Choi, and Na Liu, Enterprise Resource Planning Systems for the Textiles and Clothing Industry, T.C. Edwin Cheng and T.-M. Choi (eds.), Innovative Quick Response Programs in Logistics and Supply Chain Management, International 63

9 Handbooks on Information Systems, DOI / Berlin Heidelberg 2010, pp , [3] Liao, N.C., A Discussion on the Success Factors Implementing MES in Semi-conductor Packaging Industry, Proc IEEE International Conference on e-business Engineering, pp , October [4] Khodakaram Salimifard, Mehran Ebrahimi and Mohammad Ali Abbaszadeh, Investigating Critical Success Factors in ERP Projects, Advanced Management Science (ICAMS), 2010 IEEE International Conference on Issue Date: 9-11 July 2010, pp , [5] Chao, C.C., A Study on the Response Measures to the Risks Implementing MES in Petrochemical Industry,, e-works manufacturing informatization gateway, Nov. 21, [6] Kai Mertins, Markus Rabe and Pavel Gocev, Integration Factory Planning and ERP/MES Systems: Adaptive Simulation Models, IFIP International Federation for Information Processing, pp , [7] Norshita bt Mat Nayan, Halimah Badioze Zaman and Tengku Mohammad Tengku Sembuk, Defining information system failure in Malaysia: Results from Delphi, Information Technology (ITSim), 2010 International Symposium in, Vol.3, pp , [8] Norsiah Abdul Hamid, Halimah Badioze Zaman, Defining Malaysian Knowledge Society: Results from the Delphi Technique, Communications in Computer and Information Science, 1, Vol. 49, pp , [9] Hsieh, T.H., A Discussion on Motivation, Key Success Factors and Failure-avoidance Factors Implementing ERP: a case study Taiwan s traditional industries, Hsiuping Journal, VOL.13, pp , [10] Shiuh-Shyong, Chen., KEY FACTORS STUDY OF APPLYING RFID IN LOGISTICS, Master s degree thesis, Thesis for Master Science Department Mechanical Engineering Tatung University, TaipeiCounty, [11] Saaty T. L., The Analytic Hierarchy Process, McGraw -Hill, New York, [12] Chao-Fang, S and Wei-Chih, su, ERP system and MES system Integration Critical Factors and Benefit Analysis Model, The First National Conference on Web Intelligence and Applications. Kaohsiung: Academic,