March 1997, Volume 14, No. 3 A Reader's Guide to Manufacturing Buzzwords By Chip Robie

Leaders in organizations that know which systems to use can deftly maneuver through the swelling rivers of operations data with the agility of an expert kayaker -- able to extract appropriate information to make qualified strategic and operational decisions with greater speed and accuracy than their competitors. Those who don't will flounder or drown, looking for help without direction or knowledge in today's ever-expanding data oceans.

I'd like to make it a little easier for everyone with this simple primer on the various manufacturing acronyms. Once we understand what the tools are, then we can decide which ones make sense for our organizations, and begin the process of justification and implementation (or just use them in office communications, winking knowingly at the unenlightened).


MRP: Materials Requirement Planning.
The first phase in the development of MRPII, MRP uses the bill of material, inventory data and Master Production Schedule (MPS) to calculate materials requirements. MRP recommends when to release replenishment orders (e.g., purchase orders to vendors), and reschedules open orders when production scheduling dates do not match up with materials availability. Using an exploded bill of materials, time-phased MRP begins with scheduled production deliverables (using MPS) and works backward, calculating quantities of all components and materials needed and the date/time when they will be needed. Adjustments are made for inventory quantities on hand or on order.

MRP uses static lead time assumptions for vendor deliveries. MRP calculations are also used in make vs. buy decisions.


EDI: Electronic Data Interchange.
EDI is the electronic integration of data systems between two or more organizations using standardized formats. EDI allows computers to exchange electronic business documents on a 24-hour basis, bypassing paper processes and human data entry errors. Transfer of information requires only a fraction of the labor and drastically reduces lead times, creating flexibility within planning functions.


MRPII: Manufacturing Resources Planning.
MRPII is significant because it includes more of the manufacturing requirements needed to produce quality products quickly. The perspective grew from a micro to a macro process viewpoint -- incorporating feedback from strategic planning information, raw materials scheduling, production capacities and distribution requirements.

Many companies today successfully combine MRPII and EDI to effectively reduce order processing costs and lead times in today's high event density and global market environment. MRPII can be effectively combined with MES and SFC to create an enterprise information system.


MES: Manufacturing Execution System.
An MES schedules, dispatches, tracks, monitors and controls information on the factory floor while simultaneously allowing users to measure and report real-time performance. MES is essentially a system that tells workers on the plant floor how to build something (process in detail), then reports to an enterprise system in real time what was built, how it was built and when it was built.

In an intelligent enterprise resource planning (ERP) environment, MES is the bridge between the shop floor control system and ERP, ensuring synchronization of manufacturing flows and processes. MES system deliverables include cycle-time reduction, reduced scrap and WIP, improved on-time delivery, and improved asset utilization.


ERP: Enterprise Resource Planning.
ERP is the next-generation successor in the resource management continuum that began in the 1960s with MMS (Material Management Systems), followed by MRP and MRPII. ERP allows organizations to balance customer demands impacted by multiple interrelated items and multiple plant locations. ERP adds applications for financials, supply chain, and distribution and requirements planning for multiple sites. Production scenarios include make-to-stock, assemble-to-order, make-to-order and engineer-to-order.

ERP facilitates intelligent resource planning in the face of rapidly changing constraints such as materials availability, market readiness, plant capacities, personnel certification and business costs per location. ERP systems allow decision makers to champion an intelligent, agile and responsive organization in a global marketplace in the high event density of the 21st century.


SCADA: Supervisory Control And Data Acquisition.
SCADA systems are found in automated or semi-automated discrete, process and hybrid manufacturing environments. A SCADA system consists of one or more operator interfaces to manufacturing, material handling or process control equipment equipped with a PLC (Programmable Logic Controller). The PLC controls the process execution logic for the equipment on which it resides. By connecting the SCADA workstation, or HMI (Human-Machine

Interface) to the PLC, one or more pieces of equipment can be operated and monitored from a single HMI workstation.

The HMI allows operators and supervisors to control processes and monitor process performance parameters through a PC, using touch screens or pointing devices. The power of HMIs is the ability to centralize control of multiple machines and to gather and summarize process data not tracked by the equipment manufacturer. Furthermore, SCADA architecture networks the multiple HMIs together, allowing product, process or operational data for multiple machines to be ranked, summarized or linked to other information systems (such as shop floor control, or SFC, systems) for intelligent decision making.

Examples of SCADA information tracked include net production and utilization, net downtime and rejects, SPC performance, and summarized performance statistics by machine, module, line or area.


SFC: Shop Floor Control System.
SFC is a shop floor-level system designed to capture labor, time and material usage data at every step of the production process. Components of an SFC system include receiving, shipping and inventory transactions, time and attendance productivity measurement tools, and labor allocation by department/operation/order/employee, work order and work-in-process information. It also includes quality control measurements such as process and material yields per operation, and problem identification by cause, part number, work order or customer.

An SFC system provides production supervisors with real-time shop floor information and shares this data with MES and MRPII/ERP systems. This allows supervisors to monitor progress against a manufacturing schedule and gives production planners early notice if delays are anticipated. An SFC system facilitates direct labor and material job costing on a per-operation basis, captures scrap and rework data at the workstation level, and enhances customer service by knowing the status of every job.

SFC information is gathered through a variety of input devices, including smart cards (such as employee badges with magnetic strips or transponders) and RF (Radio Frequency) scanners, which share data with the SFC system by radio instead of network cabling.


EIS: Executive Information System.
EIS is designed to be a tool which collects data from multiple information systems across an organization, assembles them in a common format, and presents summarized data to the user. The targeted users of EIS are executives and operations management who will use the data to assess strategic and operational performance against short- and long-term corporate goals. An EIS allows management to provide feedback to area leaders on a broad variety of subjects.

The scope of EIS information includes actual and projected sales, manufacturing performance against scheduling, process utilization, quality and raw materials, and finished goods inventory levels. The EIS scope also includes reject levels by area, process, product, shipping performance against schedule, and a wide variety of other options configurable by the system vendor or organization's MIS department.

• Assess your systems and information needs.
• Identify and justify appropriate technology.
• Generate and evaluate systems and technology alternatives.
• Create a strategic deployment plan.
• Evolve a functional requirements specification.
• Prequalify appropriate technology partners/solution providers/vendors.
• Select the best performance/price fits.
• Perform detailed planning and develop acceptance testing.
• Execute a phased installation while protecting existing operations and customer service commitments.

With appropriate vision, strategy and implementation, you can build agility and responsiveness into your manufacturing organization to survive in the event density and data landslides that will characterize 21st century business. You'd better start planning and evaluating your systems and strategies now.