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How to define boundaries for Supply Chain Operations between EAM & ERP

Recently some of my Infosys colleagues attended MUWG (Maximo Utility Work Group) conference and while they shared their experience about the conference, they mentioned about one of the most discussed topics which was "how to define boundaries for supply chain operations between EAMs & ERPs".

Hence, I thought of sharing my learning from some of my previous Maximo implementations, where I implemented Maximo in following two scenarios:

(i) Maximo for supply chain operations alone, without asset management, and
(ii) Maximo for asset & work management integrated with ERP for supply chain

The supply chain operations considered here are only for MRO spares supply chain or indirect procurement, as relevant in asset management space.


In my view, following should be the main decision making criteria for this situation:

• One User: One system - A business user should not be using two different applications for the same business function. For example, a buyer creating a Purchase Order in EAM for some items and same buyer using ERP for other items should not be proposed. If the buyers are different for different items, then probably they can use different applications but then the organization needs to manage two different procurement applications and would not be able to leverage maximum benefits

• Business, not IT, driven decision - Business is generally the decision maker and should evaluate from business benefits point of view and not from IT cost point of view. Though IT cost is also important but that probably is a onetime initial cost and then some associated maintenance cost, later on. The benefits coming out of business driven decisions may not have short term benefits but would have significant long term benefits from overall usability point of view.

• Interlinked processes in same system - To avoid too much of data floating between EAM & ERP systems, keep similar processes in same systems. For example, from PO approval process to invoice generation process in one system. Some of the intermediate information can be duplicated in other systems like material receipts could be sent to EAM or ERP.

• Integration Complexities - Integration technologies have changed now enabling new levels of integrations. Complexities, risks & pains associated with integrating huge applications have reduced now. Most of the EAMs & ERPs provide APIs which help in integrating to other systems. SOA being the most modern approach, companies should leverage this advancement in technology to maximum possible level.

• Long term Solution - Think from best solution point of view and not from some initial cost point of view. For a robust long-lasting solution, initial cost may be high as there may be more integration points to be developed.


Generally most of the EAM systems have adapters with Tier-1 ERP systems which are flexible and can exchange almost all the information between EAM & ERP systems. Hence the decision should be made considering the best business sense. Leave integration & implementation complexity to your system integrator and focus on best business solution.

Comments

Interesting post.
The terms are absolute ERP, EAM, XYZ, SCM, MES …
Let us call it as Business systems.

As mentioned, integration is the key, and that is just not SOA alone! Let us make sure that the Business user is able to accomplish, what he is expecting from the system in an easy and efficient way.

Interesting points. This can be extended to any pair of enterprise applications- not necessarily EAM-ERP. But there are some practical challenges...
• Not sure how practical is “One user- One system” rule. For e.g. Typically MRO items (and other Non-production purchases) are catalogue driven (Shopping cart, Marketplace et al) whereas direct materials are mostly MRP/ planning system driven. Not sure how many applications can handle both, if the buyer responsible for both is same.
• I believe that the Business should state the ‘business requirements’ and stay clear of IT architecture. According to me most of the data redundancy and application overlap problems are happening because of some business group develops undue “liking” for one particular application - impeding the global optimization of system rationalization.

The demand for parts is fundamentally different in maintenance with EAM and production with ERP systems.

For maintenance, inventory is needed to respond to an equipment issue. Typically, this becomes a min/max inventory management approach with re-order points and EOQs based on unpredictable demand patterns. The inventory management functions in EAM systems are designed for this kind of environment.

With production, there is a sales forecast, BOMs which exploded into a purchasing plan. Plan versus actual demand is monitored and managed on an exception basis. ERP systems are designed for this kind of planning and purchasing.

The ERP suppliers who have EAM functionality have augmented their systems to support the demand patterns found for maintenance.

In choosing an approach, one must consider carefully the functionality to ensure it is consistent with maintenance and purchasing replacement/spare parts. Just because ERP can manage the supply chain for making product, does not mean it can also manage the supply chain for maintenance.

Compared to my comments on software functionality, other issues can have higher impact on EAM vs. ERP for inventory management. A couple are:
1) implementation of integration that supports business process automation rather than duplicate data entry with inconsistent results, and
2) support for a company’s specific business processes versus business process automation that may be less than helpful.

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