MES vs. ERP: Do I Need Both In My Factory?

As factories lean into digital transformation, they need to not only grow their tech stack but also choose software systems that will seamlessly integrate and operate as a connected network. Understanding what manufacturing software is available, what each one does, and what the right ones are for your factory requires some research and evaluation. In this blog, we will define, compare, and examine the benefits of integrating two common software systems for assembly manufacturing: MES and ERP.

What is an MES?

A Manufacturing Execution System (MES) is a software that lives on the production side of the factory. It is used to monitor and control manufacturing processes - such as assembly operations - and provide real-time data on production to track materials, labor, and equipment performance.

While MES software has historically been used to manage and relay manufacturing processes to operators on the shop floor, modern MES solutions are more flexible, agile, and scalable than legacy systems, which date back to the 1990s. Today’s systems, like PICO, focus on error-proofing manual assembly processes by combining digital work instructions with smart tool integrations. This functional combination is a key ingredient in implementing the poka-yoke method of preventing errors before they happen, and paves the way for automated data collection, real-time analytics, and backwards traceability that help manufacturers improve efficiency and quality.

➡️Take an interactive tour of PICO to learn about features like digital work instructions, tool integrations, and data analytics.

What is an ERP?

An Enterprise Resource Planning (ERP) system lives on the business side of the factory. How it is used varies depending on the company, but manufacturers typically rely on their ERP to manage inventory, work orders, and shipping logistics, as well as tracking materials and purchase requisitions. They can also connect to financial, operations, and sales data.

The ERP often serves as the central platform for data shared by other business applications, therefore making it a powerful tool that pieces all of a company’s functional departments together. Most likely, you’re already operating an ERP system at your factory to manage various operations.

What are the main differences between MES and ERP software systems?

Although both software systems fall under the category of “digital tools” aimed at streamlining operations and improving efficiency, they are designed to achieve these goals in different ways and in different areas of your business. Here are two key differences:

• The types of data collected and managed: While both your MES and ERP will serve as data repositories, the type of data and the way the data is used and analyzed will differ. The MES collects high-quality data and metadata from the actions happening on your shop floor. For example, not only will it record a torque result from a fastening action, but it will contextualize that data to the operator who performed the work, his assigned workstation, the tool he used, and the process he followed. An ERP, on the other hand, takes a more strategic, holistic view of all production data from the shop floor and contextualizes it to work orders and inventory.
• The applicable business function: The MES is critical for managing manufacturing processes and tracking quality, while the ERP integrates various business functions beyond production. For instance, work orders are typically generated and housed in the ERP, along with inventory and bill of materials (BOM) relating to those work orders. These work orders will dictate how much product needs to be produced and which materials are available to use. The MES, in this example, would identify the processes and tools required to complete this work.

Watch this demo of how PICO tracks, references, and validates BOM and backflushes inventory for completed work orders into your integrated ERP system.

Now that we understand the fundamental differences between MES and ERP systems, let’s explore how these systems can work together and what the benefits of integrating them are in an assembly manufacturing environment.

The benefits of integrating MES and ERP systems

When used in tandem, MES and ERP software complement each other to enhance overall operational efficiency and productivity. MES software provides real-time production data, which can be integrated with ERP software to facilitate data flow across the organization. The benefits of integrating MES and ERP software include:

1. Enhanced data integrity: Integrating MES and ERP systems automates the transfer of data and removes the need for manual data or knowledge sharing, eliminating the potential for miscommunication or errors in reporting.
2. Faster decision-making: Data is shared faster through a network of connected systems, resulting in faster decision-making and reduced response time to production issues.
3. Improved efficiency: Access to a more diverse and detailed dataset produced by the MES means more insightful analytics can be performed in the ERP, improving efficiency not only in production, but other areas of the business, as well.
4. Reduced operational expenses: The MES reflects exactly what is happening on the shop floor in real time, and this knowledge, coupled with sales and financial data from the ERP, can help engineers and business leaders identify bottlenecks and quality issues to better allocate resources, time, and budget.
5. Simplified tech stack: The ERP and MES are two of the most powerful manufacturing software tools out there, and connecting the two allows the ERP to serve as a “single source of truth” for your MES, meaning you only have to share data with one system in order to maintain production.

Final thoughts

Manufacturers of all sizes benefit from integrating MES and ERP software to gain a comprehensive view of operations from the shop floor to the executive level. The successful implementation of MES and ERP software in assembly manufacturing hinges on aligning these tools with the organization's goals, processes, and resources to drive continuous improvement and sustainable growth. 

PICO seamlessly integrates with leading ERP systems such as Odoo, Infor, NetSuite, Plex, and SAP. Book a demo to learn more about how your factory can benefit from integrating MES and ERP systems.