Extend the Value of ERP

Integration with manufacturing operations promises substantial benefits.

By Fred Reever, CISUG, and Frank Kochendoerfer, SAP

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During the past 15+ years chemical companies have broadly adopted Enterprise Resource Planning (ERP) systems and made them their “transactional hubs.” Such systems have shown tremendous business benefits by improving the efficiency of financial transactions and reporting and by enhancing the execution of the customer order cycle. However, the benefits to the manufacturing arena are less defined and a correlation of ERP benefits to manufacturing hasn’t been evident.

This lack of correlation shouldn’t be a surprise, inasmuch as most of the critical manufacturing operations occur outside of the ERP system. The key to achieving manufacturing excellence is integrating these disconnected systems, these “islands of data and information,” to each other and the ERP transactional hub. For peak efficiency and performance, everyone in the organization must have timely access to the data and information as well as the capability to collaborate and communicate across the organization and the entire supply chain.

Creating this integrated/collaborative environment isn’t easy. It requires dealing with many different data sources, data formats, data management issues, etc. ERP vendors and other system providers have made some attempts to create this integrated environment. However, most of these efforts merely represented extensions of existing product portfolios and didn’t focus on the total manufacturing environment.

Industry Initiative
As part of an effort driven by the Chemical Information Technology Council of the American Chemistry Council (ACC), Arlington, Va., the Chemical Industry SAP Users Group (CISUG) was formed in 2005 to focus on how to get more value out of existing investment in SAP and how to ensure that future SAP capabilities addressed critical industry issues. The Americas’ SAP Users’ Group assumed responsibility for CISUG in January 2008 and made it a special interest group, which opened up participation to hundreds of other chemical companies (90+% of the industry) currently running SAP. (For more information about CISUG, visit www.asug.com.)

The CISUG team, which is led by manufacturing, engineering and information technology specialists from ACC member companies and includes representatives from SAP and other suppliers, quickly identified manufacturing excellence as one of the key areas of opportunity. This group also recognized that chemical companies face similar manufacturing issues and problems. It quickly concluded that creating a shared industry vision for the manufacturing environment of the future and working together to “encourage” SAP and the other manufacturing systems providers to deliver needed technologies were crucial. CISUG took a proactive role to ensure that the suppliers know what the industry wants and to avoid duplication of effort and costs and the constant push by vendors to use the “latest and greatest” software.

The first step was to create a vision of the chemical manufacturing environment of the future and to qualitatively and quantitatively define the business benefits this could provide. The team envisioned an integrated/collaborative environment that would bring together manufacturing execution systems, process control systems, predictive control algorithms, legacy and proprietary production systems, environmental, health and safety systems, etc., with SAP and other business and financial management systems. It would give everyone in the organization access in real time or near real time to data and information needed to do their jobs, and provide the ability to collaborate and communicate with everyone in their value chain, including customers and suppliers — to greatly enhance the speed and quality of decision-making. The team envisioned this as “the accessibility, visibility and action ability to manage and analyze all of the data and information available to enable better and quicker decisions to have a positive impact on the bottom line.”

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