Improving the flow of information

ERP systems revolutionize data sharing between asset care and management

For a moment, imagine a perfect flow of information from a plant's maintenance or asset care department upwards to top management and finance officers.

In this scenario, maintenance engineers in a plant have a direct link from the shop floor to an integrated, company-wide computer system. Sitting at their desktop computers, they enter maintenance data into their system. Then, by pressing a key, they instantly save the data to the system that automatically updates the corporate database.

At the same time, relevant data are transported immediately to a set group of managers and financial officers. The result: no delays, no confusion, fewer mistakes. All parties have access to the information they need in real-time. Management can work with the data right away, while maintenance employees can move on to their next task.

Sound like a pipe dream? Unfortunately, in many plants, it is just that. Throughout the world, most plants do not have an integrated computer system that links all levels of a company. Instead, plants are saddled with stand-alone systems that often are not even networked throughout the shop floor.

Consequently, communication between the maintenance department and the headquarters office often consists of a jumble of phone calls, faxes, and printed sheets. If maintenance and management actually use the same software--a big if--they may be able to share computer diskettes with one another. However, even then, recipients must wait for the diskettes to arrive, then must wade through the data to find the portions they need.

Clearly, this improvised, catch-as-catch-can system of information sharing is highly inefficient. At best, it often leads to delays in receiving and processing vital data. At worst, it results in inaccurate or missing information as data are lost, incomplete, unresponsive, or never received from maintenance in the first place.

ERP to the rescue
However, some plants are vastly improving the flow of information by implementing enterprise resource planning, or ERP systems. ERP systems--integrated bundles of software deployed throughout the enterprise--connect the factory floor to other company departments and warehouses. These connections can be made regardless of location: whether across a state, a country, or the world. Some ERP systems can even tie companies to their customers and suppliers.

This integration enables immediate communication and the instant sharing of data between the maintenance and finance departments or the executive suite. In fact, information can be shared by any two points on the network, as long as users are authorized to access the network and the data. Consequently, information no longer gets lost between departments and immediate data transmission is assured.

Let the following example illustrate how an ERP system operates. A customer calls in an order to a customer service representative for 10 widgets. By accessing the logistics portion of an enterprise resource planning system, the representative takes the customer order. The representative then immediately checks with the out-of-state warehouse, that also is integrated and on-line to
see if 10 widgets are in stock and ready for shipping.

Still on the same phone call, the representative informs the customer that only five widgets are available
for shipping.

The customer service representative--by tapping a few keys on the computer--then arranges for the warehouse to ship the five in-stock widgets. Next, the rep checks the production schedule on the shop floor and places an electronic order with the factory for the manufacture of five more widgets. The order simultaneously is sent to the company's finance and accounting departments. By following an on-line recipe, the factory then produces the widgets. After production is complete, the factory manager informs shipping that the widgets are ready to leave the factory. The manager then notifies accounting of the shipment, and an invoice is immediately generated and mailed. Meanwhile, the warehouse--or even the company's suppliers--receives notification that more widget components should be delivered to the factory.

Through this integrated approach, information flows smoothly to all parties needed to take the order, manufacture the product, and bill the customer. As a result, the customer receives the order quickly and the chances of delay or miscommunication are vastly decreased. Consequently, a company's competitiveness is enhanced, costs are minimized, and efficiency and productivity
are boosted.

Data flow from plant to headquarters
Where does a company's maintenance or asset care department fit into this integrated production regimen? In numerous places, actually.

For instance, maintenance may get involved in the preparation of machinery for the manufacture of the five widgets. Or, the department may have to perform post-production maintenance. If the machinery is constantly in use, the role of the maintenance department will be ongoing.

Regardless, only a small portion of data generated at the shop floor will be of interest to officers in the management and financial ranks. The same is true for information flowing down from management to the maintenance department. After all, an ERP system produces a vast quantity of information as a product is ordered, produced, and shipped. Any one department can be involved only in a limited portion of the process and subject only to a finite quantity of the data.

Below are some key types of data that ideally will make its way between the maintenance department and management/financial officers.

Materials consumption: A company's finance department will be interested in the materials consumption of the maintenance department. By receiving this data from maintenance in real-time, finance personnel will be able to assess quickly whether the department is within budget or if adjustments need to be made. In addition, finance personnel will be able to analyze the materials consumption of the maintenance department to see if consumption is in line with projections and with historical trends.

Information on equipment quality: Both finance and top management will want to know how well the company's investment in its physical plant is performing. This data will include information on the quality of both the machinery being maintained and the tools used to maintain it. With this information at their fingertips, finance and management personnel will know at once if equipment and tools are meeting their performance specifications. Working with plant and maintenance personnel, they can help nip performance problems in the bud and can plan better for the replacement of expensive machinery, which often requires years of financial planning and capital expenditures. Furthermore, better communication
between maintenance and finance and management personnel leads to fewer surprises when equipment does not meet performance standards or even fails.

Budgeting data: As a fiscal year nears its end, every department in a company wants to know what its budget will be for the next year. The maintenance department is no exception. A system helps ensure the smooth flow of budgeting information from the top down. The system also allows vital data to flow up from maintenance to finance and management as the budget is being prepared. This functionality is perhaps even more important than top-down budget notification as the provision of accurate, timely and concise data helps the maintenance department make a better case for its budget needs. Companies also find that an integrated nature and financial functionality leads to a more efficient budgeting process. For instance, finance will receive data electronically from maintenance in a prescribed, organized manner that is simple to format on-line and incorporate into a draft budget. In fact, companies can collect their financial information electronically from all points in the company and then easily consolidate the data into a single general ledger. Not only does this ability simplify the annual budget process. It also often leads to significant reductions in time spent on the month-end closing process.

Supply information: The finance department may be interested in receiving ongoing, detailed supply
information from the maintenance department. This data enables finance to closely track orders, receipt of goods and expenditures, thereby ensuring that maintenance continues to receive the highest quality products from suppliers for the lowest possible cost. In addition, such information allows management to implement an extended supply chain, a cost-savings move made possible by an ERP solution. With an extended supply chain, suppliers interface with a customer's ERP system, through which they receive orders and submit invoices electronically. With a more sophisticated supply chain, suppliers can even track a customer's supply needs electronically, then fulfill them automatically and continuously, without the customer ever needing to submit an order.

Maintenance schedules: As corporations continue to reorganize and streamline, management is analyzing the processes of every department, and is encouraging a continual process of reform. In this spirit, management is requesting far more information than ever before, including detailed maintenance schedules and the results of the maintenance regimen. With an ERP system, maintenance supplies this data easily, and management can be assured that steps are being taken to ensure the highest quality preservation of the plant's physical assets.

Personnel schedules and management: Likewise, senior management is demanding detailed data on the use of maintenance personnel. At many corporations, re-engineering never stops, and the quest for higher levels of productivity is paramount. With data in hand, management can continually assess how maintenance employees are distributed and managed. This analysis spots both areas that need improvement and practices that lead to efficient operations and should be repeated throughout the company.

Indeed, a solution provides a plethora of vital information from maintenance to management and finance, as well as from headquarters to the plant. Even better, this information is available immediately upon entry. Therefore, managers don't have to generate paper reports at month-end, or wait for them to be generated. With exposure to data immediately, decisions can be made right away before a problem gets any larger or becomes institutionalized. Moreover, management and finance can formulate their own queries on-line, freeing up maintenance personnel for more productive work and enabling headquarters workers to get at the data they really want.

The challenges of ERP
The installation of any new system undoubtedly will create challenges for employees, as the company implements operational change. Below are several key issues that must be addressed before maintenance and management and finance employees will be able to receive the substantial benefits of company-wide systems integration and information-sharing.

Information must be pared down and presented logically. As stated previously, an ERP system can generate an enormous amount of information. Obviously, not all of the data that originates in the maintenance department will be of use to management or finance. Therefore, a company must ensure that a solution is compatible with reliable and robust middleware, which is a mix of hardware and software installed between financial and process systems. Middleware enables finance and management to receive only the data they want and in the format they desire. By customizing the middleware to fit a company's particular needs, the information presented to users will be of maximum value to them.

The resistance of maintenance employees must be overcome. ERP systems--because they have the potential to affect so many workers and often require substantial change in work processes--sometimes lead to employee grumbling and even outright resistance. To encourage employee cooperation, companies should involve workers very early in the planning process and give them a stake in a successful implementation. For instance, a select group of maintenance engineers should even be involved in selection of the ERP system and encouraged to share information with fellow workers throughout the installation. Moreover, users should be thoroughly trained before the system goes live. Much resistance can be blamed on the frustrations of workers with inadequate training who cannot use a new system immediately.

The resistance of management must be overcome. Like maintenance, management often mounts similar resistance and can benefit from the suggestions listed above. However, the full support of management is perhaps even more vital, as a successful implementation requires the full backing of top-level management, who must defend the project even during rough patches.

Maintenance employees must readjust to a changed relationship with finance and management. This challenge is arguably the toughest to conquer. With non-integrated systems, the maintenance department often has control of its own data, schedules, processes and supplier relationships. By integrating systems and standardizing processes, finance and management will have far greater insight into the practices and the data of the maintenance department. Moreover, headquarters will be able to assess and compare productivity across all plants. As a result, decision-making may become more centralized and workers may balk at the increased involvement of management. Again, a company's best defense is involving maintenance engineers very early in the implementation process and convincing them that the efficiency and productivity gains of an ERP system ultimately benefits both the company and its workers.

Connecting the shop floor
Increasingly, an information link between maintenance and the finance and management departments is vital. Unfortunately, many companies have yet to make that essential connection. However, as companies continue to search for ways to cut costs and streamline operations, they undoubtedly will view the sharing of information across the company as mandatory. An ERP system ensures such company-wide integration, enabling mission-critical data to move smoothly between all company departments, including between the plant and headquarters.