Manufacturing Processes Put to the Test

The demand for optimizing production in China is currently concentrating on familiar topics, with the focus on reducing throughput time, improving working processes, and reducing logistics costs. However, in order to optimize production as a whole, all individual processes and activities need to be considered and resources managed. In the medium term, therefore, integrating production into overall planning in the ERP system will also grow in importance in China. There are three possible scenarios for implementing MES and possible integration into ERP:

1. Central template

Companies deploy a central SAP system and a centrally developed template for implementation in China. The benefits include a uniform reporting structure, international transparency of processes, up-to-date master data, and a standardized and correspondingly cost-effective IT infrastructure. There is a degree of transfer of expertise to the Chinese branches in order to professionalize the market there.
A configuration such as this, however, requires adaptations to take account of the special features of Chinese financial management or reporting standards, for example. The sales tax system, for instance, needs to be linked into the SAP system. Additionally, the solutions need to be localized into Chinese and they require adaptations for customs issues (bonded warehouse) and a translation of the template.

2. New installation

Customers that do not roll out a central template introduce SAP locally and perform implementation on site. This is a suitable approach for joint-venture companies, for instance, which enjoy a certain degree of freedom. In this case, integration is at the consolidation level – any integration of MES into ERP is stand-alone.

3. Local connection

A further scenario of integrating ERP and MES is to map the branches as company codes in the parent company’s central system. In this case, the ERP system would be linked with the local MES solution in China, for instance if the plants there were already using a well-established MES solution. This solution also enables them to continue working if the parent company’s MES system goes down. A further advantage is the value of the local MES system if the branch is sold off, for example.

Demand for consultation

IT implementations are a complex matter. Alongside the supplier companies, IT service providers also play an important part. The quality of their consultation will determine how quickly ERP and MES achieve blanket coverage in China. The important thing here is to approach the topic in the correct manner. IT service providers must demonstrate that they can provide constant improvements and support, that their company is a long-term and reliable partner, and that they are sensitive to Chinese cultural circumstances. For this reason, the SAP Business Partner Freudenberg IT (F-IT) not only employs German staff at its branch in Suzhou, which opened at the beginning of this year, but first and foremost Chinese employees. The medium-term goal is for customers to be managed and supported solely by local management teams.

Summary: The future within reach

While the use of ERP software is already established in China, MES is still in its infancy. An upswing is foreseeable if companies realize that the connection between the planning and controlling of company resources and production can deliver a strategic competitive advantage. Integrated solutions enable companies to increase their efficiency, productivity, and transparency of production. This will result in more stability and quality in production.