While enterprise applications such as ERP and supply chain management have done much to drive manufacturing productivity -- mainly by automating manual processes -- they have also stood in the way of even greater productivity gains. That's because many of these applications have reflected the perspectives of specific functional organizations within the enterprise, and do not monitor and manage end-to-end processes such as order-to-cash.
So, for example, manufacturing execution systems haven't been well integrated with supply chain and fulfillment systems. Activities such as inbound material, production capacity, and order fulfillment -- which should be managed as a single, closed-loop process -- have, at most companies, been divided up into less-efficient processes managed by different organizations.
But that is all about to change, according to a report recently released by research firm Manufacturing Insights. The report, authored by Manufacturing Insights' Vice President of Research Robert Parker, posits that over the next five years manufacturing companies and software vendors will invest significant resources in the development of what Parker calls fulfillment execution systems (FES), which he describes as a merger of traditional supply chain, MES, and order fulfillment-system functionality. Parker predicts that over the next few years the building of FES systems will soak up as much as one-third of new software investment among manufacturing companies.
As described by Parker, an FES will be built on top of a service-oriented architecture and will link plant-level devices such as wireless sensors and RFID tags with workflows that will track costs, asset utilization, scheduling, product information, and quality. The FES will also include intelligence services for real-time reporting and a state-management layer that will, based on information streaming in from the plant floor and supply network, take corrective action when processes get out of whack.
All of this, Parker says, will "enable closely monitored, operationally streamlined supply perfectly matched to market demand."
Manufacturers wishing to implement an FES, Parker admits, will have to do so on their own. No single software vendor today covers all the FES territory. Categories likely to play a role, however, include: factory automation; M2M, including sensor networks and RFID; MES; lean; warehouse management; and manufacturing intelligence.
Ironically, although many manufacturers have attempted to cast their ERP applications in the role of an enterprise integration hub, Parker does not envision a central role for ERP in FES. Most ERP systems, he notes, have their roots in financial management, so, for example, they attempt to track inventory through a series of debit and credit transactions. As a system dedicated to streamlining manufacturing operations, however, the FES would bypass the financial transactions, linking directly to the stockroom to determine inventory levels.
"ERP will remain the system of record for financial data, but the FES will be the system of record for the state of operational conditions, facilitated by widespread use of M2M technology," predicts the report.