ERP

What is ERP?

ERP (Enterprise Resource Planning) is an integrated software platform that manages an organisation’s core processes, such as finance, purchasing, sales, inventory, production planning and human resources, in one shared database and one coherent system. In an industrial environment, ERP decides what must be produced, when and with which materials, while shop-floor systems decide how it is done. ERP sits at Level 4 of ISA-95 and the Purdue Model, making it the main IT system that connects to industrial automation through MES.

🧠 What does an ERP system do in industry?

An ERP system connects departments that would otherwise each keep their own records. A sales order, a purchase order, a stock movement and an invoice all refer to the same items, customers and suppliers in one database. As a result, the planner sees the same inventory as the sales team, and the controller sees immediately what costs a production order has incurred.

For the shop floor, three tasks matter most:

• Planning - translating demand (sales orders and forecasts) into production orders and purchasing requirements through MRP runs
• Master data - maintaining bills of materials (BOM), routings, item master data and specifications as the single source
• Accounting for production - receiving completion confirmations, material consumption and labour hours to update inventory, cost price and the financial ledger

That shared foundation delivers the familiar benefits: less manual work and double entry, transparency over production, inventory and deliveries, traceability of materials and batches (who did what, when and with which materials?) and better planning with less waste and downtime.

ERP works on a time scale of months, weeks, days and shifts. It is not a real-time system in the OT sense: what happens on a machine every second belongs in SCADA and the historian, not in ERP.

🕰️ How did ERP evolve?

ERP grew out of manufacturing itself. In the 1960s the first inventory control programs ran on mainframes. The 1970s brought MRP (Material Requirements Planning), which calculated from bills of materials and orders which materials were needed and when. In the 1980s this was extended into MRP II (Manufacturing Resource Planning), adding capacity planning and costing. In 1990 Gartner introduced the term Enterprise Resource Planning, because these systems by then also covered finance, HR and sales. Since then, the shift to cloud ERP has been the biggest change.

🔧 Which modules make up an ERP system?

Customer relationship management (CRM) is a separate or optional module with many vendors. Strong inventory management and supply chain functionality is often the deciding factor for manufacturers.

🏭 Which ERP vendors are there?

The market can roughly be divided into international suites and solutions for small and medium-sized enterprises (SMEs):

• SAP - SAP S/4HANA is the successor to SAP ECC 6.0; mainstream maintenance for ECC (enhancement packages 6–8) ends at the end of 2027, with optional extended maintenance until the end of 2030. For SMEs there is SAP Business One.
• Microsoft - Dynamics 365 Business Central (SMEs) and Dynamics 365 Finance and Dynamics 365 Supply Chain Management (larger organisations)
• Oracle - Oracle Fusion Cloud ERP and NetSuite
• Infor - strong in discrete manufacturing, including Infor LN and CloudSuite Industrial
• Dutch vendors - Exact (founded in 1984, based in Delft) with Exact Online and Exact Globe, and AFAS with a strong position in HR, payroll and finance

In addition there are industry-specific solutions, for example for food, pharmaceuticals (GMP) or engineer-to-order machine building.

🔄 What is the difference between ERP, MES and SCADA?

ERP, MES and SCADA complement each other at different ISA-95 levels. ERP plans, MES executes and records, SCADA and PLCs control the process.

The rule of thumb: ERP should not talk directly to SCADA, HMI or PLCs. An order flows from ERP to MES, and MES drives the line or the DCS.

🔧 How do you integrate ERP with MES according to ISA-95?

ISA-95 (internationally IEC 62264) defines the boundary between Level 4 and Level 3. Part 1 was published in 2000 as ANSI/ISA-95.00.01; IEC adopted it as IEC 62264-1 (2003, second edition 2013). Part 5 describes the transactions between the two levels using verbs such as GET, SHOW, PROCESS, ACKNOWLEDGE and SYNC.

Typical data flows:

• From ERP to MES - production orders, BOMs, routings, material master data
• From MES to ERP - completion confirmations, actual material consumption, rejects, batch and lot numbers, hours

There are three common technical routes:

1. B2MML - the royalty-free XML schemas from MESA International that implement the ISA-95 models; version 7 supports the 2018/2019 editions and includes a JSON variant for the first time
2. APIs and middleware - REST/OData APIs of the ERP, often through an integration platform or message broker
3. Vendor connectors - such as SAP Plant Connectivity, which links OPC UA servers and historians to SAP

In modern architectures, MES also publishes events through a message broker, which ERP integration can build on.

🔐 How do you secure the connection between ERP and OT?

The ERP connection is one of the main reasons production networks are linked to the office network, and therefore also a significant attack path. Good practice according to IEC 62443 and the Purdue Model:

• No direct connections - all traffic between Level 4 and Level 3 terminates in an IDMZ; a server in the IDMZ starts a new session to the other side
• Zones and conduits - ERP and MES in separate zones following the zones and conduits model, with a firewall that only allows the required ports
• Initiate from the inside out - preferably MES fetches orders or stages data in the IDMZ, rather than ERP opening connections into the OT network
• Minimal privileges - separate service accounts per interface with least privilege, and MFA for administrators
• Decoupled operation - MES must be able to buffer orders so production continues if ERP is unavailable
• Maintenance - patch management and monitoring of interface servers, even when ERP runs as SaaS

The 2021 attack on Colonial Pipeline shows why: ransomware only hit the IT network, including billing systems, yet the pipeline was shut down as a precaution. Organisations within the scope of NIS2 must include such dependencies in their risk assessment and continuity plans.

🎯 How do you approach an ERP implementation in a manufacturing company?

1. Processes first - map order-to-delivery and procure-to-pay before you choose software
2. Define the ERP and MES scope - use ISA-95 to decide which system owns which data, such as BOM, recipe and batch record
3. Standard over customisation - custom code makes upgrades expensive; this is now an issue in many migrations from SAP ECC to S/4HANA
4. Cleanse master data - items, BOMs and routings determine the quality of planning
5. Test interfaces early - test the MES link including failures and buffering, not just the happy path
6. Phased go-live - per site or per process, with a fallback plan

An example at a machine builder: ERP receives a customer order, uses MRP to plan materials, capacity and purchasing, and releases a production order. MES executes production and reports consumption and completion back. After delivery, ERP processes invoicing and updates inventory and financial records. A well-designed ERP environment also supports scalability as the organisation grows.

❓ Frequently asked questions

At which level of the Purdue Model does ERP sit?

ERP sits at Level 4 of the Purdue Model and ISA-95, the level of business planning and logistics. Below it are MES at Level 3 and SCADA, PLCs and field devices at Levels 2 to 0. An IDMZ at Level 3.5 separates ERP from the production network.

What is the difference between ERP and MRP?

MRP (Material Requirements Planning) calculates which materials are needed and when, based on orders and bills of materials. ERP includes MRP as one function, but also manages finance, purchasing, sales, HR and logistics in one system. MRP is therefore part of ERP, not an alternative to it.

Can ERP replace an MES?

ERP usually cannot replace an MES, because ERP plans in days and shifts and is not designed for work instructions, machine connectivity and minute-by-minute recording. Some ERP packages offer simple shop-floor modules that are sufficient for small companies. For complex or regulated production, a separate MES remains the norm.

What is B2MML?

B2MML (Business To Manufacturing Markup Language) is a set of XML schemas from MESA International that implements the ISA-95 data models. B2MML is used to exchange production orders, material consumption and completion confirmations between ERP and MES. It is royalty-free, and version 7 also includes a JSON variant.

Should ERP communicate directly with PLCs?

ERP should not communicate directly with PLCs or SCADA, because that bypasses network segmentation and the IDMZ and exposes the production process to failures and attacks from IT. Data should flow through MES or a historian replica in the IDMZ. That way, control keeps running if ERP fails or is compromised.

What does the end of SAP ECC mean for manufacturers?

Mainstream maintenance for SAP ECC 6.0 (enhancement packages 6–8) ends at the end of 2027, with optional extended maintenance until the end of 2030. Manufacturers migrating to SAP S/4HANA must also retest and often adapt their MES interfaces. That is a good moment to review the security of the ERP-to-OT connection as well.

📌 In summary

ERP is the central business system at ISA-95 Level 4 that plans what is produced and processes the results, while MES and OT handle execution; the connection should be standardised (ISA-95, B2MML, APIs) and always run through an IDMZ.

ERP makes a manufacturing company manageable as a whole, but only in combination with a clear separation of tasks and networks. If you draw the boundary between ERP and MES clearly, you get reliable planning, cost prices and traceability without letting OT convergence compromise the safety of production.