Making sense of IT in manufacturing
If you’re not “that IT guy”, it can be a daunting task to make sense of all the IT jargon and terms used in the manufacturing industry. It may even feel like your company is losing sight on the core business of producing goods. That’s not the case: IT makes producing goods easier and more efficient. We’ll take an overview of IT in manufacturing so next time in the meeting with your IT colleagues, you’ll know exactly what they are talking about.
The three must have software systems when you are operating in the manufacturing industry are ERP, PLM and CRM:
ERP for efficiency
For manufacturing you need machines, which are driven and controlled by software. Machines need raw materials, components or parts to produce finished goods. The availability, ordering, delivery and usage are all orchestrated by software called Enterprise Resource Planning, ERP in short. With ERP you plan the resources so your machines are constantly in production. ERP is ideal for mass production. It covers logistics and financial administration. In general technology was identified by business executives as the most important external force shaping businesses. In particular, CFOs reported spending 50% or more of their time on strategic aspects of their business as their role continues to evolve to include IT management, operations, and business strategy responsibilities.
Most used terms in combination with ERP:
- Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRP II) were the basis for ERP. ERP emerged when capacity planning activity and routing became part of MRP.
- Agile manufacturing aims at quick turnaround of small batch lots at a competitive cost. Uses IT in machine control, production planning and decision making.
- Just in time (JIT) is a strategy to monitor inventory levels to reduce inventory costs.
- Software as a Service (SaaS) is a software licensing and delivery model. The software, often ERP, is on subscription basis, centrally hosted and delivered via internet. Also known as “on-demand-software”. Cloud Computing means that your IT is available through an internet connection: the computing infrastructure, data storage and network services. SaaS is for users, Cloud for the IT department.
PLM for complex products
The client nowadays likes mass products less and wants more customization. For consumers (B2C) that could be seats with more leg space in an airplane, for companies (B2B) that could be a specific part for a propulsion unit for example. A wider range in products and options makes for an increase in product information and product data, like test reports, certificates, quality control reports etcetera. During the lifecycle of a product there can be several changes in this product data, because of changing client needs, production or delivery problems or changing regulation. To manage all this data and make it available in the whole company to work more efficiently, you use Product Lifecycle Management (PLM). PLM helps with all the intangible processes around your products: intellectual property (IP), innovation and product data management.
Most used terms in combination with PLM:
- To create physical designs of products Computer Aided Design (CAD) software is used. ECAD software is used for electronic systems such as printed circuit boards (PCBs) and integrated circuits (ICs) and MCAD software is used for mechanical systems. Computer-aided manufacturing software (CAM) takes CAD designs as input and outputs manufacturing instructions.
- Electronic Design Automation (EDA) is software used to develop integrated circuits and systems.
- A Bill Of Materials (BOM) is the list of parts or items that make up a product assembly. The Engineering bill of materials (EBOM) is a BOM organized according to a CAD or EDA tool and engineers’ preferences and processes. The Multi-level or Manufacturing BOM (MBOM) captures how multiple sub-assemblies come together to produce a final product.
- To manage and publish product data you use Product Data Management (PDM). Not to be mistaken with Product Information Management (PIM), which manages the information required to market and sell the products.
- Beginning Of Life (BOL), Middle of Life (MOL) and End Of Life (EOL) refers to the lifecycle of the product. BOL focusses on product development and design processes. MOL includes collaboration with suppliers, warranty management and PIM. EOL looks at the disposing, discontinuing and recycling of the product.
CRM for happy clients
The market is client oriented. Selling and marketing your products becomes more and more challenging, as the contact with clients since 1991 with the Internet has expanded to a large number of channels, including email, social media. Before your account manager actually speaks with a business buyer, he has already completed 57 percent of the purchase process, looking up product information online, reading comparisons and analyzes and possibly trying out demo’s. More than ever, we live in a more digitalized and interconnected world, companies need to reinvent themselves every day in order to stay relevant, whether it’s B2B or B2C. The software to track all the contacts and improve the relationship with clients in order to move toward a customer intimacy and a “tribe” kind of relationship is called Client Relationship Management software (CRM).
Most used terms in combination with CRM:
- Business Intelligence (BI) combines techniques and tools to acquire and transform raw data into meaningful data for business analysis. When BI is combined with operational strategic planning functionality the result is referred to as Enterprise Performance Management (EPM).
- Social CRM is CRM fostered by communication with clients through social networking sites, such as Twitter and Facebook.
- Customer engagement is the means by which a company creates a relationship with its customer base.
- Customer journey is a visual mapping of the different stages clients go through in interacting with a company.
By no means is this a complete list of course. If you are looking to make the next steps in your IT to future your manufacturing business, we are happy to help you.
EY, The DNA of the CFO, 2010.