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ENTERPRISE RESOURCE PLANNING
ENTERPRISE
RESOURCE PLANNING:
A TRIO OF RESOURCES
Cindy P. Stevens
Enterprise resource planning (ERP) systems offer a better way to help manage and improve
plant and business processes. As processing plants turn increasingly to ERP to run operations, they must use a trio of technology resources to control ERP systems. This trio of
resources — standards, ERP software such as SAP, and middleware or third-party software —
is integrating the plant floor to the business floor to make ERP a success.
A
CINDY P. STEVENS
is currently an
assistant professor at
Wentworth Institute of
Technology, Boston,
Massachusetts, for the
Management of
Technology (BMT)
program. She holds an
M.A. in Technical and
Professional
Communication from
East Carolina
University in
Greenville, North
Carolina, and a Ph.D.
in Technology
Management
specializing in Digital
Communications from
Indiana State
University. She can be
reached at
stevensc@wit.edu.
CCORDING TO DON TAPSCOTT, IN HIS
text Digital Economy, the “new digital
economy” has changed every human, every organization, and every society on a
global scale.Whether individuals or entire institutions realize it or not, change due to technology has occurred and will continue to occur.
Technological advancement has changed how
we interact with one another; how we do business and problem-solve; how and where we
find information, work, and educate ourselves;
and finally how we manage individuals, groups,
organizations, the government, and even academic schools and institutions. The impact of
technological innovation and change has farreaching hand. Digital communication technologies take away the middleman. Further, managers must learn to deal with technological
advancement and change by preparing for the
future, embracing new technologies, and understanding the need to structure technologytraining programs. The ramification of technological advancement and change is definitely
seen in the impact technology is having on operations management within process industries. Roles are changing for process engineers
and, due to just-in-time resource planning, manufacturing, automation, and other plant industries find themselves in need of gaining control
over all operational processes (both enterprise
and plant).
I N F O R M A T I O N
S Y S T E M S
S U M M E R
As processing plants turn more toward advanced technologies to control operations, the
need to control the technology from multiple
directions becomes of utmost priority. These
directions include managing, planning, and organizing process control from every possible
angle. These angles include, but are not limited
to, the hardware and software structures, redundancy strategies, connections, alarms, inventory control, fault control, security, human
interfaces, human resources, communication,
planning, inventory, and even sales. In addition, as plants turn more toward advanced
technologies, the need to easily upgrade and
expand, without replacing, is also very important. Enterprise resource planning (ERP) systems may offer a better way to help manage
and improve performance in these areas. By attempting to integrate all angles via ERP efforts,
plants can begin to manage more effectively
the upstream and downstream supply chain
connected to manufacturing, automation, or
other operational production. In addition, by
incorporating the Instrumentation, Systems,
and Automation Society’s (ISA) S95/SP95 (or
old S88) standards into ERP efforts, the separateness of enterprise and control ultimately
may become “enterprise control.” That is, pooling the resources for ERP and ISA standards
may help to manage, plan, and organize most
plant initiatives.
M A N A G E M E N T
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61
ENTERPRISE RESOURCE PLANNING
EXHIBIT 1 Digital Communication Technology Model
Technologies
Organization
Society
Hardware/
Software
Hardware/
Software
Resources
Resources
Innovations
Innovations
Human
Support
Diffusion
To understand how ERP can help, ERP
should first be defined and then some historical information will help lay the foundation
from where ERP has been to where it is heading. In addition, because ERP is based on digital
communication technologies and because
adoption of these newly advanced technologies greatly affects plant operations, a brief discussion will lay the foundation for the need to
gain that control all the way around. In addition, most companies are realizing that ERP
means much more than implementing a software program. Instead, ERP means laying out a
very careful plan for integrating the plant floor
with the business floor via a trio of resources:
standards, ERP software (such as SAP), and finally middleware or third-party software. This
trio is meant to integrate the people, the processes, and information within a company or
across a company (or companies).This integration creates a real-time environment for communication and collaboration, and ultimately
empowers people to work more efficiently. Although an intensive and coordinated project,
detailed planning initiatives are needed to successfully set up an ERP trio. Once implemented,
a plant’s previous heterogeneous information
technology (IT) resources ultimately become a
seamless homogeneous environment.
DIGITAL COMMUNICATION
TECHNOLOGY
Today’s ERP systems utilize information technology open systems to integrate processes
within an organization.These processes can include basics business processes, such as human resource management or inventory, and
62
I N F O R M A T I O N
S Y S T E M S
S U M M E R
plant processes, such as batch recipe authoring
and control, exception recording, or producing event data. ERP relies on digital (or converted data) communication technologies to
control these business and plant processes
mentioned. Digital, communication, and technology are three very simple words when defined separately. Digital is data, information,
images, or media represented by a series of bits
in 1s or 0s that can be sent via digital networks.
Communication is an exchange of verbal or
nonverbal interaction between two or more individuals (or machines), whereby the input
may or may not have an effective output. Human communication (face to face or electronically) involves interpersonal messages
delivered either verbally or nonverbally
through speech, body language, written English, or symbolic messages. Machine communication can be the same exchange or can
simply be programming communication via a
digital mode. Finally, in simple terms, technology can be defined as all the hardware and software that make up a computer system, a
network, and the list can go on.
When the three terms are combined — digital communication technology — the phrase
now becomes an intricate, all-inclusive, and
sometimes complicated entanglement of characteristics that takes on new meaning and includes not only the entire realm of technology
(hardware and software), but also the people
or organization responsible for the design and
use of the technology. Regarding operationaldriven companies, digital communication technologies umbrella three distinct areas: transaction processing, decision supporting, and
processing automation.To understand the phenomenon of organizational adoption of new IT
technologies in plant operations, organizations
must understand that they are not only adopting a new automated processes, but instead
they are adopting an integrated and complicated system. Exhibit 1 represents this system,
along with the human element controlling it.
As you can see in the model, the human is
at the bottom supporting everything, and then
from the bottom left begins the innovative level. Next is all the resources, such as the time
and money it takes for development, and then
all the hardware and software that makes up
the technology. At the top level is the digital
communication technology (the communicative product, the data module, the control
room panel, or the video interface, etc.), the organization using it, and then the organizational
society (which could include the internal plant
M A N A G E M E N T
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ENTERPRISE RESOURCE PLANNING
I
n plant
operations,
digital
communication
technologies
may represent
the ability to
automate or
process faster,
but they also
produce
challenges for
organizations.
operators, the plant managers, or other key
stakeholders, such as ISA members and other
standard affiliates). Once the technology goes
through the diffusion process, down the right
side from top to bottom is all the hardware and
software that must be planned, purchased, and
adopted in the organization to use the technology; the resources to manage, use, deliver, and
control it; and finally new innovation to improve upon it.The square model does not really
end, as the system represents the need to continually strive to improve upon the technology
(remember — improve upon the whole system).
In plant operations, digital communication
technologies, such as the model presented in
Exhibit 1, may represent the ability to automate or process faster, but they also produce
challenges for organizations. These challenges
include things such as producing an overwhelming amount of data and information,
changing business conditions, acceptance of
new technologies, meeting training needs,
managing data production, finding qualified IT
professionals, and ultimately meshing together
process control strategies with business plan
objectives.This is where ERP can help.
UNDERSTANDING ERP
The intent of ERP is to eventually gain complete control over all organizational (business
and plant) processes via information technology systems, such as the one represented in
Exhibit 1. ERP is about linking every single separate business, department, or plant process together. ERP is about achieving end-to-end
connectivity by making various systems compatible with one another. ERP is also about using this newly formed integration for decisionmaking processes, as well. This integration is
meant to link, connect, and integrate transaction-processing, decision supporting, and processing control automation. On top of it all, it
is the digital IT technology that enables ERP.
Schemenner,9 in his article entitled “Operations Management,” states that “one cannot set
and forget without risking premature obsolescence.” That is, industrial organizations have to
embrace and adopt new digital IT change such
as represented in the Exhibit 1 model, or according to Schemenner, “resist complication”
and therefore risk “obsolescence.”Thus, organizations should embrace ERP. To fully understand ERP, one must think of it as a tool that
integrates all departments and all functions
within one plant or across multiple plants —
I N F O R M A T I O N
S Y S T E M S
S U M M E R
including the business departments and the
plant floor facilities — into a seamless system.
The ultimate attempt or long-range attempt is
to tie all these departments and functions into
a single computer system.
ERP was first phrased by the Gartner Group
of Stamford, Connecticut. Before the Gartner
Group and before the phrase ERP, there was
material requirements planning (MRP), and
then manufacturing resource planning (MRP
II). MRP relied on using a manufacturing production schedule to figure out what supplied
materials were needed and when they were
needed. MRP II alleviated some of MRP’s problems, such as determining resource constraints, capacity planning, and control
functions. In addition, there was a separate
supply-chain management area called distribution resource planning (DRP). DRP’s reference
is to the management of inventory for the supply chain.
ERP extends both MRP and MRP II, and
DRP in multiple ways. First, all of these elements (materials, manufacturing, and distribution planning) are included in ERP. Second, ERP
also includes analytical function ability, such as
simulation, rapid modeling, and factory flow
virtual modeling. In addition, ERP’s resources
may also provide production planning/process
industries (PPPI) with the following (among
other) functionalities:
?
?
?
?
?
?
?
?
?
?
?
?
?
Logistics planning
Standardizing manufacturing processes
Standardizing human resource information
Financial support and activity-based accounting
Connecting to the factory floor
Resource planning
Enterprise decision support
Data communication
Data access, control, and synthesizing
Collaboration
Analytic process (reporting, modeling, process analysis)
Process controls
Rapid Recipe Deployment
The integration of process control and ERP
is, in this author’s opinion, the most important
functionality out of the list presented. If plant
floor processes cannot be linked to business
processes such as planning, analyzing, and
standardizing, then ERP would not be as beneficial. That is, in addition to using ERP for producing sales orders, viewing inventory,
managing human resources, and the like, ERP
only has true value if connection can be made
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ENTERPRISE RESOURCE PLANNING
addition, S95 covers planning of day-to-day activities to ensure the supply chain is met.1
EXHIBIT 2 The Trio of ERP
SP95
Standards
ERP
Software
Middleware
between the plant floor and the enterprise
floor. According to Kappelhoff6 in his article
“Integration of ERP to the Final Control Elements,” merging plant/business processes (enterprise
resource
planning)
can
be
accomplished by a combination of utilizing
standardization, setting up a system such as
SAP, and making use of middleware. Most agree
that this trio, shown in Exhibit 2, is necessary
for successful ERP integration, and several operational organizations have been successful in
making use of this trio for ERP.
It is the trio as shown in Exhibit 2 that connects the entire organization together, including both plant floor operations and business
enterprise operations.
ISA FITS
First, newly developed standards set forth by
the ISA organization, that evolved from older
standards have helped pave the path for effective ERP integration. This evolution is due to
vendors adopting ISA standards for their software and companies choosing those vendors
that have adopted the standards. ISA’s older
standard S88 includes models (or modules) for
common terminology and definitions. For example, S88 includes common terms and definitions for batch processing recipes and
processing segments for things like “flow
meters to a boiler system or reactor kettle.” In
addition, S88 keeps all code separate for running equipment in a modular type environment. (The modules have been adapted into
ERP software vendors, which will be explained
later.) ISA’s S95 (earliest) and SP95 (latest)
greatly extend S88, by incorporating real-time
operations. These real-time processes include
scheduling, maintenance, and inventory management. The S95 standard includes common
terms and definitions for information flow from
plant floor processes to business processes. In
64
I N F O R M A T I O N
S Y S T E M S
S U M M E R
ISA’s SP95 further extends S95 to incorporate a
direct link between enterprise and control integration. SP95’s goal is to directly define the interface between control systems and
enterprise systems. For example, SP95 contains a set of standards to link MRP to ERP and
DRP to ERP. These standards are set up in a
modular way so that vendors can voluntarily incorporate them into their ERP software to represent the functions, the physical equipment,
the information, and the process controls (this
is summarized later). Ultimately, the goals for
SP95 include:
? Abstractly define enterprise models for control functions and business functions
? Establish common terminology that describes
control functions and business functions
? Define digital information exchange between
control functions and business functions
It is the connection between the plant floor
control functions and the business functions
where ISA’s SP95 plays a major role in ERP. In
the end, ISA hopes to have established, via
SP95 standards, the following acceptance of
application standards (Discrete, Continuous,
and Batch), Extensible Markup Language
(XML), definitions of object attributes, and to
close in on real-time data via transactions-based
business systems.
ERP Software
The second part of the trio for ERP includes
making use of vendor ERP software, such as
SAP, which has adopted ISA and other open industry standards. Because vendors were able to
be a part of the ISA committee (and other standards committees) for standards development,
they helped to write the standards in a modular
base. Companies such as SAP have developed
software that includes these modules, and are
represented in separated modular solutions.
SAP was founded in 1972 and began with
SAP R/1 Solutions software. SAP R/2 Solutions
was launched in 1979 and SAP R/3 in 1992. An
Internet-based version of SAP R/3 version 3.1
was released in 1996. The latest version is
called mySAP.com, released in 1999, and emphasizes an E-business platform of modular solutions. Previous versions of SAP required
mainframe computers and other technologies
controlled at the plant.With mySAP, SAP and its
M A N A G E M E N T
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ENTERPRISE RESOURCE PLANNING
partners will implement, manage, and operate
all the needed software and hardware if necessary (SAP.com). The SAP solutions for E-business include the following models:
T
he
exchange
solution offers
a collaborative
platform
across
multiple
software
systems,
allowing
multiple
organizations
to buy and sell
products.
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Industry solutions
Exchanges
Solutions for small/medium business
Business intelligence
Enterprise portals
Financials
Supply-chain management
Human resources
Customer relationship management
Mobile business
Supplier relationship management
Hosted solutions
Project life-cycle management
Technology
Middleware
Companies can pick and choose any or all
solutions to make up their ERP system. For example, SAP’s supply-chain management solution contains communication links, planning,
and execution. In addition, the supply-chain resource links suppliers and plant operators to
the design process life cycle. Overall, the supply-chain management SAP solution enables access to inbound/outbound scheduling, available
to promise checks, storage information, demand
quotas, critical stock levels, and more.
Another example of mySAP.com solutions is
the technology solution. By incorporating industry standards to ensure openness, this solution helps to plan scalable technology/network
architectures for and between business and
plant floor operations. The mySAP.com business intelligence solution offers a suite of software that includes business performance
measurement, virtual-based planning environments, an information warehouse, and a
knowledge management architecture. The human resources module provides resources pertaining to all HR management and includes a
virtual team planning environment. The financials module supports financial data interpretation, financial analysis tools, and captures
online transactions. One last example is the exchange SAP solution.The exchange solution offers a collaborative platform across multiple
software systems, allowing multiple organizations to buy and sell products.
SAP solutions helps to bring the interconnectivity needed for ERP. By forging together
one or more of the solutions provided by ERP
companies such as SAP, the interface between
enterprise and plant floor begins to merge together into a controllable ERP strategy. However,
I N F O R M A T I O N
S Y S T E M S
S U M M E R
for ERP to be a complete success, the final element of the trio must be included: middleware
(or third party).That is, the standards set precedence, and the SAP solutions based on industry
standards software helps makes the connection and communication between plant floor

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