Chuck Stewart is Executive Vice-President of Engineer-to-Order (ETO) Enterprise Resource Planning (ERP) software Encompix based in Cincinnati, Ohio. Stewart said, “If you ask design engineers what an ERP system means to them, you are likely to hear something like “nothing” or “more work.”

 

To most design engineers, an ERP system is either irrelevant or it is perceived as something that requires additional time and effort, often providing little or no value. One reason for this perception is that most ERP systems are not integrated with the design engineer’s drawing tool.

 

Traditional ERP systems were developed for the repetitive, make-to-stock manufacturer, where there is a clear demarcation between design and production. In that environment the engineer designs the product in a CAD application. After testing and prototyping, the product is released to production, which is managed by the ERP system.

 

The design engineer has little or no interaction with the ERP system and works quite happily in a CAD environment. Following the work of the design engineer, a production engineer then creates a bill of materials (BOM), based on how it will be manufactured, not on how the product is designed.

 

In the Engineer-to-Order (ETO) world the role of the design engineer is very different. By its nature an ETO company builds a unique product designed to meet the specification of a single customer. The two worlds of design and manufacturing are closely linked. In many cased the design of the product continues through the product process (design-in-process), incorporating a multitude of engineering changes. These changes can be driven by the customer or by the manufacturer. In this environment a seamless flow of data between engineering and production is critical. An ETO company must integrate CAD and ERP.

 

In an ETO environment, engineering is involved all through the production process. In repetitive manufacturing, there is a design element where engineering creates the product design, then there is product engineering where they modify the design for mass production, but once the design is frozen then there is little interaction and the engineer goes back to designing a new improved version or a new product.

 

In the ETO world the engineer is involved all through the process and changes are a way of life. Now the typical ERP system is geared to supporting the repetitive environment; in most cases it is not a hardship to rekey the parts list and BOM information into the ERP system. Some systems pass a parts list from the CAD system to ERP via a flat file. But what is needed in an ETO company is more sophisticated integration. Passing data both ways and handling engineering changes in both systems.

 

The other major area of difference is how engineering interact with purchasing. In a repetitive environment once the purchased components are identified, the buyer is responsible for getting  the best price for volume purchases. Blanket orders are commonplace as the name of the game is repeat purchases of large volumes. In ETO many of the purchases are one-off buys of items that will never be purchased again. Typically the engineer will specify the item and manufacturer. It is the engineer that creates the demand for purchased material, not the MRP system.

 

There are ERP systems focused on ETO and working with specialist Product Life Cycle (PLM) vendors can address the needs of ETO companies. Without this integration ETO companies are faced with duplication of data, manual rekeying of data from CAD to ERP. This leads in either wasting valuable engineering time or employing additional clerical staff. Engineers are paid to design products not rekey data into a computer.

 

Adrian Mitrea, project manager for dozens of ETO ERP implementations, "There is a streamlining of our processes with better communication between departments. People can see the whole process and not just their piece. They now understand the effect their work has on downstream operations, and have the discipline to make things happen the right way. This is a direct result of having a single, integrated system."  

 

After a three-month implementation, ENERFAB went live with their Encompix ETO ERP system. Moving from a "green screen" system to the new system was a big change for the Sharonville, Ohio, firm.  According to Dave Lutz, IT Director, "We were very impressed with the inventory and purchasing functionality and by eliminating duplicate data entry we have cut our purchasing time by half." 

 

After a four and a half month implementation, Matrix Service went live with their new ETO ERP system with 20 users and 75 shop employees. According to Business Unit Controller Vicki Reese, Matrix is already experiencing significant benefits. "The BOM is imported directly from Engineering, eliminating the manual review of drawings before preparing the purchase order. This information then flows throughout the system to receiving and accounts payable, eliminating previous double entry."

 

The ETO Institute established tools and guidelines to help ETO organizations examine these types of issues and states that, “The key to the CAD ERP integration is an ETO ERP system.” Attempting to integrate CAD tools into a standard (repetitive) manufacturing ERP system will invariably send engineering and manufacturing back to their respective corners and create a division in the organization.