ERP in manufacturing

ERP stands for enterprise resource planning. In a machine shop such a system keeps the customer orders, the item records and bills of materials, the routings, the stock, the purchasing, the booked hours and the invoicing. It is the administrative backbone: it knows what has been ordered, what is in stock and what has been booked.

What it means for the calculation

The ERP supplies the numbers a calculation leans on: the material price from the last purchase, the hourly rate per work centre, last time's routing and the hours booked on the previous order. What it usually does not do is judge a part's requirements or predict the machining time; that stays human work in work preparation. So a calculation is rarely better than the rates and routings inside it, and keeping those records current is a cost of its own.

Where this comes up

As the shop's central system, where the quotation, the production order, the purchase order and the invoice all hang together.

Common mistakes

Assuming a rate is still right because it is in the system; rates go stale as machines, wages or energy prices change. Also thinking that a system which tracks orders therefore also drives the shop floor: that is what an MES does.

Is ERP the same as MES?

No, ERP manages orders and administration; MES drives and records execution on the floor.

Does an ERP work out the machining time?

Usually not; it stores the time work preparation puts into it.

Why does the post-calculation differ from what the system predicted?

Because the stored times and rates are assumptions that can drift away from reality.