IT APPLICATIONS IN PRODUCTION PLANNING AND

CONTROL

A Survey of Medium Sized Business in German-speaking Europe

Jakob Lewandowski, Matthias Buhl and Burkhard Kittl

Institute for Production Engineering, Vienna University of Technology, Karlsplatz 13, 1040 Vienna, Austria

Keywords: Enterprise Resource Planning (ERP), IT survey, Manufacturing Execution System (MES), Medium-sized

business, Production Planning and Control.

Abstract: This paper addresses the use of IT-applications for production planning and control of medium-sized

businesses in German-speaking Europe. The article summarises challenges today and expectations for the

future. In particular, the kind of IT systems in use, experiences and satisfaction with IT support were key

questions of the study. Basis of the research was a telephone survey with 150 IT managers of representative

medium-sized enterprises in production, trade and service sectors.

1 INTRODUCTION

Production and therewith combined planning and

controlling of resources are the core of every

company in the manufacturing industry. Although

most of the factories enforce development and

adaptation of the technological processes, the

capabilities of IT applications for organizing and

handling the production process are still

underestimated. Many troubles are arising out of

linguistic barriers between suppliers/consultants and

users. There is no obligatory nomenclature and the

latest endeavours for standardisation are rarely used

or even known by many users. This fact leads to

misconceived coherences and in the worst case to

prejudices regarding the qualities of IT systems.

Moreover, medium-sized enterprises don’t have

sufficient IT resources compared to bigger

companies. For this segment the cost-benefit ratio of

automating workflows in the production planning

and control level often is not in evidence.

Furthermore the mid-sized business is confronted

with an unclear diversity of software applications for

the production area.

The topic of IT applications in production

planning and control has kept many developers and

scientists busy for decades but it is more than ever

relevant, because there is still no satisfying solution

for bridging the divide between the shop floor and

management. Even the great efforts of leading

business-software companies in the last years have

only brought minor improvement. Getting a better

insight into the use of and the opinions about IT

solutions in the industry was the impulse to start a

survey to collect useful information for further

research projects.

2 APPROACH

The study consists of face-to-face and telephone

interviews.

The subject of production planning and control is

quite complex, so intensive preparation for the face-

to-face interviews was indispensable. Almost half of

the project time was spend on literature studies as

well as developing and evaluating the questionnaire.

In the qualitative face-to-face interviews with

twenty-two representative enterprises, the authors

wanted to explore how comfortable the interview

partners feel concerning terms and definitions in this

topic. In order to get a proper data base additional

telephone interviews with 150 IT managers were

carried out. The point of interest was defined as

systems in “Business Planning and Logistics” (layer

4) and the “Manufacturing Operations and Control”

(layer 3) according to the ANSI/ISA-95 standard

(Instrument Society of America, 2000).

285

Lewandowski J., Buhl M. and Kittl B. (2008).

IT APPLICATIONS IN PRODUCTION PLANNING AND CONTROL - A Survey of Medium Sized Business in Ger man-speaking Europe.

In Proceedings of the International Conference on e-Business, pages 285-291

DOI: 10.5220/0001905702850291

 SciTePress

2.1 Objectives

The basic objectives of the survey carried out in

German-speaking regions were:

 Finding out the problems enterprises have in

the area of production planning and control.

 Identifying and locating the use of IT

solutions.

 Pin-pointing the prejudices and expectations

concerning IT systems

 Assessing the experiences and best practices

with enterprise resource planning (ERP) and

manufacturing execution systems (MES).

2.2 Target Group

While the European German-speaking market is

dominated by small to medium sized enterprises, the

businesses size chosen for the survey ranged from

50 to 500 employees. The majority of the companies

belonged to the continuous or discrete producing

industry, but the trade and service sector was

allowed also.

2.3 Survey Model

As a basis for the survey a theoretical framework

was used. It combined the tasks and functions of the

“Aachener model for production and control”

(Schuh, 2006) with the structure of the ANSI-ISA95

standard (Instrument Society of America, 2000). In

addition, a cross-check with further American and

European literature like MESA (MESA, 1997) or the

VDI-report (VDI, 2006) combined the particular

advantages of each model. The functional hierarchy

of the ANSI/ISA-95 standard is exposed in Figure 1.

The survey model consisted of three main parts.

The first one gave a hierarchical structured overview

of the functions in the production and control of the

manufacturing industry. In the second part the

functions of order processing were drawn in a task

related flow-chart. The third part is a checklist

referencing functions and processes for the face-to-

face interviews in order to allow free conversation

and obtain structured and comparable information at

the same time.

3 RESULTS

The analysis of the collected data occurred on the

basis of several key questions. First of all, what kind

IT systems do medium-sized enterprises use at the

moment? Furthermore how satisfied are the

companies with their applications? Positive and

negative experiences and expectations essentially

depend on the idea the enterprises have of concepts

like enterprise resource planning or manufacturing

execution systems. For this reason it was important

to find out how conclusive these concepts are for

companies. Another critical issue was to ascertain

the challenges entrepreneurs are facing in the

production area. Above all, how far should processes

be automated respectively is it really desirable to

have every process supported by an IT system in

order to stay on a competitive basis?

Figure 1: Functional hierarchy (Instrument Society of

America, 2000).

3.1 Business Planning and Logistics

The first part of the results is primarily addressing

Layer 4 of the ANSI/ISA-95 standard (“Business

Planning and Logistics”). This is usually the domain

of enterprise resource planning systems. To get a

general idea of what kind of applications are in use,

Table 1 reveals the size of enterprises as well as the

type of ERP-system. The categories are standard

software offered by global vendors, as well as

standard software sold by regional vendors and

individual software. The most remarkable point is

that more than 50% of companies still have

individual ERP-software in use, either as a stand-

alone system or as an additional solution.

Concerning the age of the IT systems an

important finding was that more than 20% of the

analysed ERP-systems were older than 10 years.

Due to this fact and the fact that the average age of

the ERP-systems in use is approximately eight years

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Figure 2: Companies where business processes run parallel to ERP-System (n=150, telephonic interviews).

the issue of individual software becomes more

coherent.

Table 1: ERP-systems in use (n=150, telephone

interviews).

Employees

<100 101-250 251-500 Total

Standard software global vendors

In use 60,5% 61,8% 87,5% 68,0%

Rollout 2,6% 2,9% 0,0% 2,0%

Planned 1,4% 0,0% 0,0% 0,7%

Nonexistent 35,5% 35,3% 12,5% 29,3%

Standard software regional vendors

In use 30,3% 35,3% 20,0% 28,6%

Nonexistent 69,7% 64,7% 80,0% 71,3%

Individual software

In use 63,2% 52,9% 42,5% 55,3%

Rollout 5,3 5,9% 0,0% 4,0%

Nonexistent 31,5 41,2% 57,5% 40,7%

A moderate enhancement was determined relating to

the rollout time of ERP-systems. Compared with

studies in the last decade, the time period decreased.

Concerning the fields of application like material

management or production planning, there was no

significant difference between standard and

individual software. Material management,

procurement, sales as well as controlling and

accounting were implemented by most of the

companies. Rare domains were production planning

and quality management. The reason for this is the

diversity of the manufacturing processes, even

within an industry sector.

A conspicuous connection was detected between

the type of ERP-system and the management of

business processes. There were considerably less IT

supported business processes running parallel to the

ERP-system in companies using software by global

vendors. It seems obvious that ERP-systems of

leading vendors are employed more efficiently.

Table 2 contains a summary of the criterions

leading to the decision for a certain ERP-system.

The gist is that companies belonging to a concern or

group usually have no bearing on decisions because

most of these are predetermined. The second and

third most relevant motives were flexibility and

sectoral advantages. The fact that both consultancy

and license fees are rated below three percent

indicates that these costs are ranked as a non-

determining factor regarding the total cost of

ownership.

The information relating to how comfortable the

medium-sized enterprises are with their IT systems

can be regarded as inconspicuous, but even so

significant. The data content of Table 3 gives an

overview of the three groups of ERP-systems.

There was no difference in the degree of

functional coverage as well as satisfaction between

IT APPLICATIONS IN PRODUCTION PLANNING AND CONTROL - A Survey of Medium Sized Business in

German-speaking Europe

287

companies with standard or individual software in

use. The user driven margin that individual systems

naturally should have is not recognizable.

Table 2: Criterions for selecting an ERP-System (n=150,

telephone interviews).

Employees

<100 101-

250

251-

500

Total

Concern-

directive

23,7% 32,4% 37,5% 29,3%

alternatives

to specific

ERP

6,6% 0,0% 7,5% 5,3%

Unknown

reasons

4,0% 5,98% 2,5% 4,0%

Consultancy

fees

2,6% 0,0% 2,5% 2,0%

Size of

vendor

0,00% 5,9% 12,5% 4,7%

Global

application

of the

specific ERP

10,5% 5,9% 7,5% 8,7%

System

security

5,3% 5,9% 17,5% 8,7%

Vendor

support

1,3% 2,9% 0,00% 1,3%

License fees 2,6% 0,0% 2,5% 2,0%

Sectoral

advantage

19,7% 32,3% 12,5% 20,7%

Flexibility 13,1% 8,8% 20,0% 14,0%

N/a 18,4% 11,8% 0,0% 12,0%

Changing attitudes to IT support and the

adaptation of business processes were detected. In

the medium-sized businesses more than 27% of the

companies using software by global vendors are

outsourcing their IT support. Worthy of mention is

that the smaller the amount of employees of a

company is the more likely IT support is outsourced.

Asked for satisfaction with external IT support in

general the average evaluation number was 1,82

(1=excellent, 5=insufficient).

The way medium-sized enterprises saw

expectations and requirements in the near future

often depended on the management. In general,

companies agreed to the statement: “The more

business’ processes are automated the bigger the

benefit for the company”. Furthermore, companies

are poised to align business processes to save costs

for customizing the IT system. These two findings

were emanating from the telephone interviews as

well as from the face-to-face-interviews. The

awareness of corporate responsibility for a

successful IT implementation is obvious, the

capability and benefits of ERP-systems are

established. Basically there was a high degree of

trust in ERP-systems.

Table 3: Functional coverage of and satisfaction with

ERP-systems (n=150, telephone interviews).

Standard

software /

global

vendors

Standard

software /

sectoral

vendors

Individual

software

Degree of functional coverage

Procurement

/ Material

Management

91,3% 90,9% 91,0%

Sales/

Distribution/

Service

91,3% 90,4% 88,5%

Production-/

Project

planning

90,3% 92,0% 92,0%

Controlling 93,5% 90,9% 91,8%

Quality

Management

91,6% 91,6% 87,0%

Human

Resources

92,7% 85,1% 90,4%

Satisfaction (1=very satisfying, 5=unsatisfied)

Procurement

/ Material

Management

1,8 1,5 1,8

Sales/

Distribution/

Service

1,8 1,6 1,9

Production-/

Project

planning

1,7 1,8 1,9

Controlling 17 1,7 1,7

Quality

Management

1,8 1,7 1,9

Human

Resources

1,8 1,7 1,8

This confidence was reflected in the fact that

calculating the return on investment very often is no

issue to companies. They attach great importance to

the factors, which are impossible to measure (e.g.

transparency, communication, etc).

The expectations in the ERP-system itself rise

after an adaptation phase, so long-term support is

very important for the companies as well as the

vendors. In most cases the area of material

management indicates improvement very quickly.

Users are noticing the limits of the ERP-systems in

the area of manufacturing. Reported reasons are the

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Figure 3: Requirements for IT software in the production area (n=22, face-to-face interviews).

inflexible structure of the ERP-systems, the

unsatisfying reporting capabilities and unsolved

problems with machine and control interfaces. In the

face-to-face interviews it was found out that IT

trainings often are not mandatory in order to reduce

costs during the implementing phase. At least some

of the companies came to the conclusion that these

retrenchments have negative effects on the system

operation.

Finally the most important, because most often

mentioned demands on IT software from the survey

are summarised in Figure . The first four positions in

the bar chart are demands for one integrated system,

simple usability, central data management and

flexible interfaces. Additional needs were assured

vendor support, as well as monitoring and displaying

the production process.

In many companies management demands more

key performance indicators, this naturally militates

in favour of integrated IT system. As a closing

insight, companies know that there is still potential

within the ERP-sector, thus it is not remarkable that

the IT budgets stay equal or will increase within the

next 5 years.

3.2 Manufacturing Operations and

Control

Compared to the layer of business planning and

logistics, the IT systems used for the shop floor

show a lower level of integration respectively are

not existent. Whereas almost each business (97%)

uses ERP-software and the majority even works with

an integrated standard software tool (more than

80%), the situation of MES-software presents itself

absolutely different.

The number of enterprises, which have a totally

integrated IT System is limited to approximately

10%. Most of the questioned companies apply IT

systems just for certain activities in their shop floor.

They use a combination of standard software tools

like quality- or scheduling-software (approx. 40%),

individually developed software (30%) and MS

Office products (30%). About 20% of the enterprises

run the production area even without any IT system.

Remarkable is the fact that IT systems in use are

quite old. More than half of the companies quote to

work with software which is older than ten years.

Moreover there has not been any rollout of an IT

system at the questioned companies in layer 3 since

2005, and the satisfaction with the existing IT

applications is quite positive (with an average of 1,4

using 1 as very satisfying and 5 as unsatisfying). The

companies polled in the face-to-face interviews

IT APPLICATIONS IN PRODUCTION PLANNING AND CONTROL - A Survey of Medium Sized Business in

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289

didn’t think it’s necessary to exchange their current

IT systems in the shop floor. Some of them had

already started IT projects in the shop floor, which

were cancelled later due to the confusing situation of

available IT solutions and vendors on the market or

not evident cost-benefit ratio.

A few enterprises try to fill the gap between the

layer of business planning and logistics and the

manufacturing operations and control by extending

their existing ERP-system. But the majority thinks

that the ERP-system is not flexible enough to cope

with their requirements in the shop floor, which are:

 Clustering and analysing existent data.

 Decentralising know-how

 The need for traceability.

 The reduction of partial solutions and

interfaces.

 Increased transparency.

The general requirements for IT software in the

production area are shown in Figure . The main

points deal with system integration and data

management.

A lot of enterprises were not sure about the cost-

benefit of an integrated MES solution, because there

are only a few running reference systems. This could

be the reason, why the integration of standard MES

software is a low priority subject in many

companies.

The possibility of expanding the ERP-software

was more often considered by companies which are

not so familiar with MES yet. Furthermore the

number of employees is an indicator whether an

enterprise is thinking about this alternative. The

smaller a business is, the more it tries to avoid a

second integrated system next to ERP. Usually the

manpower of mid-sized businesses for

implementation and service of a second IT system is

insufficient. On the other hand there were a

significant number of companies, who didn’t believe

that an extension of an integrated ERP system into

the shop floor is possible. They pointed out that an

ERP system is not able to cope with the

requirements of the shop floor. In particular

flexibility and planning intervals were mentioned.

Gathering and clustering data from the shop floor

is a main topic in almost every enterprise. Most of

the data is transferred in the direction from layer

three to four. The opposite direction regarding order

data is often realized by manual instructions or

documents. Only few companies, who have already

dealt intensely with the subject of MES, demand a

bidirectional information flow.

Although most of the enterprises don’t have an

IT system for detailed scheduling, it is seen as a

critical business process for the ability to respond to

the market.

Another topic in the shop floor was traceability.

Many companies are confronted with this subject

due to legal obligations or product claims. In many

cases the functionalities of ERP-solutions in this

regard are not satisfying and systems without IT

support are in use.

A lot of enterprises use specialised IT systems

for particular functionalities in their production. The

interfaces between these systems are a main, but

unsolved problem. Attempts to solve this problem

with Manufacturing Execution Systems were

stopped, because the offered systems were not able

to integrate the existing IT applications or

programmable controllers satisfyingly.

Many enterprises were aware of the fact that the

implementation of new systems has to go together

with reengineering the processes.

Further chances of development were assigned to

maintenance. This MES function turned out to be an

exception, especially in the face-to-face interviews.

More than 50% of end-users claimed that

maintenance is a very important element but only a

percentage under 10% declared to use a standard-

software for planning and controlling the

maintenance processes at all.

Compared to a study of Trovarit (Trovarit, 2004)

the awareness level of MES has not changed

significantly. More than half of the companies have

not heard about MES yet. In particular enterprises

with less than 350 employees usually don’t know

this term. Furthermore there is a relation between the

date of rollout of the ERP system and the know-how

of MES. Only companies, who had applied their

ERP system more than 10 years ago, have dealt

intensely with the topic, or even used an MES

software.

4 CONCLUSIONS

In general the potential for further development in

the field of production planning and -control is

estimated very high. Almost each of the questioned

companies quoted to struggle with one or more

functions of this area. Up to the rough planning the

enterprise resource planning systems got well

established within the last decade. It emerged that

when moving from planning to the control of the

production process that the bigger part of the

medium-sized enterprisers places emphasis on

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individual software or “no software” solutions.

Although there are many old systems in use the

companies are highly satisfied and prefer solutions

decoupled from the ERP-system. In particular the

segments quality assurance and staff work time

logging are concerned.

Based on the findings of this study, one may

generally conclude that for the majority of the

medium-sized companies in the production industry

the term MES is largely unknown. Even if some

enterprises are familiar with the definition of MES

they are not able to distinguish the functional

environments of a manufacturing execution system.

The most criticised items headed by this group are

the complexity of the MES-market, as well as the

unfeasible commitments from software vendors.

Also remarkable for the authors was that no

enterprise polled in the face-to-face interviews had

implemented a new software-system within the last

three years. The statement of uncertainty relating to

new software was considerable. Companies doubt

that implementation of new MES will bring more

benefits. The case that positive references are

missing has to be mentioned additionally at this

point.

Production enterprises, having long lasting

experience with ERP-system are more willing to

evaluate functions in the area of MES. Their know-

how in implementing and maintaining this standard-

software system is instrumental in realising new IT

systems.

In general there is an unexplainable gap between

the demands and the willingness to invest in the

shop floor. In other words enterprises agreed to the

advantages of an automated workflow but almost

none of the polled companies has an automated

workflow established or is willing to provide the

required resources.

Users that exhaust the functional limits of ERP-

system in the production area are increasingly

claiming for more flexibility and more transparency,

attributes very often expected from MES software.

In the first instance the fixed framework and the not

available real-time data are criticised, a standardised

bi-directional interface between ERP and control

layer does not exist. A high potential is attributed to

this unsolved section.

Looking into the future there is an irrepealable

tendency to integrated systems. The majority of the

medium-sized businesses prefer one fully integrated

IT system as personal resources are regularly

undersized. This fact offers a chance for ERP-

systems. There is still an enormous potential for the

development of ERP-systems in particular

concerning interfaces. These systems have to

provide more and better connectivity in order to

allow easy integration of satellite systems. All in all,

companies are quite happy with their ERP-systems.

In the sector of MES the request for one fully

integrated IT system is more likely to meet the idea

of an integration framework. Moreover enterprises

are reluctant to substitute successful partial software

solutions by a totally integrated MES. Together with

the problem of low IT resources the step of

exchanging the whole software landscape in the

shop floor seems to be too risky for medium sized

companies. But the integration of capsuled MES

functions into a framework with the opportunity of

step by step extension is a worthwhile alternative.

Another benefit of an integration framework is that

MES functionalities like maintenance can easily use

existing functionality of the ERP system.

Information about the production process or

machine parameters are usually collected by several

systems in the shop floor and the ERP. The job of

the integrating framework is to allocate and analyse

the information in order to provide it to a planning

tool.

5 FUTURE RESEARCH

In a test facility different MES scenarios will be

simulated. In one scenario it is planned to cover the

functionalities of an MES by using an off-the-shelf

MES product. In another scenario we are going to

use an IT framework such as xMII for the

integration of dedicated software tools like

scheduler, shop floor data acquisition or tool

management.

REFERENCES

Instrument Society of America, 2000. ANSI/ISA–

95.00.01–2000, Enterprise-Control System

Integration, Part 1: Models and Terminology, North

Carolina.

MESA International, 1997. MESA White Paper #06: MES

Explained: A High Level Vision, Pittsburgh.

Schuh, G., 2006. Produktionsplanung und –steuerung,

Grundlagen, Gestaltung und Konzepte, Springer,

Berlin Heidelberg, 3rd Edition.

Trovarit AG, 2004. MES-Echtzeit in der Fertigung?!,

Aachen.

VDI Berichte 5600, 2006. Manufacturing Execution

Systems - Fertigungsmanagementsysteme, Blatt 1,

Beuth Verlag, Berlin, First draft.

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