Thomas R. Cutler
President & CEO
TR Cutler Inc.
Ft. Lauderdale, Fla.
"Ask most design engineers what an ERP system means to them and you are likely to hear 'nothing' or 'more work,'" suggests Roger Meloy of Encompix Inc., an Engineer to Order (ETO) Enterprise Resource Planning (ERP) software maker based in Cincinnati.
One reason for the perception: Most ERP systems are not integrated with CAD. That's because traditional ERP systems were developed for repetitive, make-to-stock manufacturers where there is a clear demarcation between design and production.
In this environment design engineers create a product in CAD. After testing and prototyping, the item goes to engineers who tailor it for mass production and create a bill of materials (BOM). The BOM is based solely on how an item is to be manufactured, not on its design, all of which takes place in ERP software. The design engineer throughout the process has little or no interaction with the ERP system. Once a design is frozen there is little interaction between the design and production departments.
Typical ERP systems are geared to such repetitive environments. Here, it's not uncommon for staff to manually rekey parts lists and BOMs into ERP systems, though some systems pass a parts list from CAD to ERP via a flat file.
In ETO firms the role of design engineer is very different. Such companies build products specifically for individual customers. Design and manufacturing departments work together more closely. In many cases product design continues through production (design in process), incorporating several engineering changes along the way. These changes may be driven by the customer or by the manufacturer, necessitating a seamless flow of data between engineering and production.
Integrated CAD-ERP software lets ETO companies pass data both ways and handle engineering changes in both systems. Without it, designers are having to constantly rekey data from CAD to ERP software, which wastes valuable engineering time or requires additional staff.
Another area where repetitive and ETO approaches depart is how engineering interacts with purchasing. In a repetitive environment, once components are identified the buyer is responsible for getting the best price. Blanket orders are common as the name of the game is repeat purchases of large volumes. ETOs, on the other hand, may purchase items only one time for a particular job. Typically the engineer will specify the item and its manufacturer, bypassing the ERP system altogether. Makers of ERP systems that collaborate with Product Life Cycle (PLM) vendors can address these needs.
Adrian Mitrea, project manager for dozens of ETO-ERP implementations says, "Single, integrated systems streamline processes and foster better communication between departments. People can see the whole process and understand how their work affects downstream operations."
Late last year after a three-month implementation, Sharonville, Ohio, manufacturer Enerfab Inc. went live with an ETO-ERP system. "Eliminating duplicate data entry has cut our purchasing time in half," says Enerfab IT Director, Dave Lutz.
Tulsa, Okla.-based construction firm Matrix Service Co., installed an ETO-ERP system two years ago. Matrix is already seeing the benefits, according to the company's Business Unit Controller, Vicki Reese. "The BOM is imported directly from Engineering, eliminating the manual review of drawings before preparing purchase orders," says Reese. "This information then flows throughout the system to receiving and accounts payable, eliminating double entry."
The ETO Institute, which establishes tools and guidelines to help ETO organizations examine these types of issues, says that CAD-ERP integration is key to making it all work. In their view, attempting to integrate CAD tools with standard (repetitive) manufacturing ERP systems will invariably create a division between engineering and manufacturing.
TR Cutler Inc. (www.trcutler.com) is a manufacturing marketing firm.