ERP and IoT: Leveraging the Connect

The power of an ERP (Enterprise Resource Planning) software lies in its ability to ‘connect’ multiple departments of the entity together for coherent, synchronized functioning and reporting. In that sense, the software ‘connects’ the Accounts Payable department with their focus on managing Suppliers, invoices, payment schedules to the more central accounting function that manages the accuracy of postings into ledgers, sub ledgers and financial statements and reporting. It ‘connects’ inventory & stock keeping (also known as Material Management) that manage warehouses, SKUs, receiving and dispatching of stock with centralized Production Planning and Control (PPC), giving them up to date visibility into on-hand stock, incoming inventory and demands arising out of manufacturing orders, customer orders, requests for stock transfers etc and in turn weaves in the shop floor that focuses on completing manufacturing orders on time with available resources and inventory driven by the MRP (Material Resource Plan) plan and changes communicated by the PPC.

In my previous avatar as a sales, distribution and logistics executive at a large multinational, I have seen first-hand, the transformation, the connectedness and the jump in visibility that an ERP can bring to an organization. Instead of having to use educated guesses, the different teams and departments in the organization were able to use dependable data : sales guys had visibility into incoming stocks for their region, manufacturing had direct visibility into orders and backorders, finance and planning were now able to prepare accurate budgets and reliable prediction for monthly close, operations and logistics were able to plan warehouse space for inbound inventory and outbound shipments.

Let us take this story of ‘connectedness’ to another level – expanding it to include machines and assets across the enterprise. To enable machines and assets across the enterprise to “talk” and be “talked to”. This is what the ERP-IOT integration does – connects the core ERP to the factory, to the remote assets, to operational machinery, rolling stock among others, gather information, sift data from it.

What is/are IOT? Remember the excitement around a decade back of refrigerators connected to the internet, automatically ordering milk and eggs from the internet when the “smart” refrigerator “senses” that you are running low on these – this was an early retail consumer use case that created quite some ripples. The idea has already been around in a viable commercial model for more than a decade now (example : Out of Milk? LG’s New Smart Fridge Will Let You Know ( or this The Internet of Things and the Mythical Smart Fridge – | UX Magazine).

Traditionally, the internet has been seen as a large interconnected network of computers. The ”internet of things” (IOT) describes a world of sensors and other such smart objects, not just servers and computers, with the ability to interconnect, making them available, accessible and controllable from across the world. These “things”, embedded into the machinery design, have the capability to sense and interact with other objects and therefore be a part of a large interactive ecosystem, providing readings of key parameters and allowing for remote intelligent control of the machinery.

Fast forward a few years, when I was working with a specialist process manufacturing company in Europe. By incorporating sensors, PLC controllers and an array of mix-and-match technologies, this company had done wonders to take the story of connectedness forward. (it is a different matter that the mix/match brought different headaches to the IT team 😊, but that’s a story for another day). Each storage location, each vat & drum was enabled with RFID. And interconnected to the ERP for stock updates. Each work center and manufacturing process line was a literal Christmas tree of sensors, relays, remote controlled valves. And connected back to the ERP so the manufacturing work order literally ran the process – delivering needed chemicals in the right quantity, confirming that the ingredients were indeed delivered, updating the consumption back in the ERP, ensuring output yield at each stage was accurately measured, scrap and waste was made visible too. Kan-Ban cards and bins were also operated by the ERP, and run by the PLC control systems at the work centers. The consumption of machine-hours, utility hours and associated person-hours was reported back into the ERP too. This allowed precise cost control, and happy (is it possible?) cost & finance controllers. As the process chugged along, the average stress that the machinery experienced (temperature, pressure, torsion, aging related to run time) as well as extraordinary events (breakdowns, stoppages) all got recorded and was integrated with the maintenance schedules, once again managed by the ERP. Employees marked their attendance by swiping in/out, which in turn fed this to the ERP.

This example provides tantalizing glimpses into the advantages of integrating ERP with machinery and equipment in action, of taking the connectedness story to another level (though at the time, these were not true IOTs, but more localized PLC and in some cases, CNC controller based units).

The capabilities unleashed by the emergence of cost effective, industrial grade IOTs with wide spectrum capabilities, coupled with integration protocols, IOT platforms (both proprietary and open source) and the capability to consume and crunch large amounts of data that the IOTs produce has led to a wide variety of exciting industrial use cases integrating ERPs with embedded and extrinsically mounted IOTs. Let us explore some more:

a)      Health of remote assets monitored along multiple parameters (vibration, tensile bend, torsion, core temperature and temperature gradient, power drawn, current flowing, pressure per sq inch) via embedded IOTs and fed into a centralized asset management system

b)     Shop floor machinery not only providing a continuous feed of readings to centralized control systems, but also providing data for production yield, resource allocation, cost collection, time recording, safety monitoring integrated into the ERP.

c)     Speedier retail POS (Point of Sale) transactions with NFCs (Near Field Communication devices such as card or RFID readers) and IOTs interacting quicker with backend transaction processing layer feeding into the ordering, inventory, revenues and receivables of the ERP

d)    Monitoring health status and utilization of hard-to-reach machinery and their component modules & parts by combining data from the embedded IOTs with the maintenance module of ERP with standard engineering tables can significantly reduce unplanned maintenance downtimes. Smart maintenance of large scale assets triggering MRO spares replenishment, service work orders, managing preventive and breakdown maintenance schedules.

e)    Digital Twins mirror and model specific conditions of the Turbines at a much lower cost and risk providing a stream of data for analysis. IOTs are extensively used in creation of Digital Twins to simulate large and complex machinery (such ss Turbines).

f)     In Retail Businesses, embedded IOTs in shelving, flooring, shopping carts allow for active measurement and analysis of footfalls, sample testing, overt/covert buying behavior observations. This data can be coupled with billing information with ability to use predictive analysis for business forecasting.

g)      Smart Manufacturing (including robotics) with automation of manufacturing lines as sensors take over manual tasks. These techniques are applicable to discrete as well as process oriented manufacturing applications for monitoring, data collection, automation and control.

h)     Logistics & Transportation : With IOTs installed in trucks, railroads, cars, trailers, compartments, shipping containers, refrigerated & special purpose enclosed transportation and other rolling stock as part of integrated Fleet management, monitor a variety of on-the-road parameters such as active geo-tagged location, temperature, moisture levels, condition of pressurized units and so on. This information is reviewed for optimized route planning, improved health of transported goods and maintenance of rolling stock

i)      Warehouse space and operations have seen a dramatic insertion of technology with sensors, and robots reducing manual effort and errors, integrating real time knowledge of stock location and capacity calculation frameworks. In fact RFID was an early viable and cost efficient breakthrough, yet it was passive and needed active human intervention. IOTs embedded into pallets, space sensors and use of mobile robots now enable direct data feed into the central inventory and warehouse management system, and in turn control the MHE (Material Handling Equipment) in real time.

j)      Improved workplace safety and adherence to EOHS guidelines with real time visibility and real time reporting into workplaces and environments

k)     Innovations in product and services with newer uses for IOT/NFC technologies (remember the self-replenishing refrigerators, or medical services to remote areas, delivery/pickup and repair services for electric scooters – the list is endless)

Such an explosion of use cases integrating ERP and IOTs is due to a happy convergence of multiple trends that have developed independently and have influenced each other too.

a)      Availability of cheap and effective miniaturized technology leading to new and stable designs of IOTs: As mentioned earlier in this blog, the past 4-5 decades have seen a very dramatic reduction in size and increase in complexity and capability of these devices as a solid illustration of Moore’s law (Moore’s law – Wikipedia)

b)     Access to connectivity utilizing different network protocols providing the basis to connect backend ERP systems with IOTs: With the rise and ubiquity of computing devices, the protocols and technologies to support the protocols (and the other way around too) has push large quantities of data quicker from device to device to controller. We will briefly touch upon this a little later in this article.

c)      Strong growth of Cloud based applications and infrastructure providing a base for both the ERP and IOT have changed the way we look at computing and devices. For instance, just as the arrival of the personal computer freed users from having to depend on mainframes, and the arrival of mobile phones freed us from being tied to landlines, the arrival of Cloud has freed us from heavy infrastructure : this freeing has allowed us to completely re-think and revolutionize this space.

d)     Developments in Data Science and the tools to leverage large data volumes that are produced by IOTs and ERP applications: Organisations have always depended on data for much of their decision making. But now, with ability to gather and process very large quantities of data streams and draw analysis and inferences, Data Science, Big Data, Machine Learning have emerged into their own right.

e)     AI (Artificial Intelligence) engines and technology coupled with Machine Learning (ML) capabilities that assist in decoding and understanding of data and trends: To make sense of the tremendous amount of data that can be gathered from IOT’s, Data Scientists need far more than the traditional approach to data crunching – which is where the application of AI and ML to not only support obvious inferences but also to uncover hidden relationships and patterns.

This story is incomplete without a mention of the technology layers supporting the ability to connect. This has been largely driven by rise in proprietary technologies and connection protocols, pioneered by technology companies (such as Siemens, PTC, ABB, Schneider) or by software companies offering IOT platforms (such as Google, Amazon, Oracle). And to connect to these platforms and devices, today’s SaaS cloud based ERP’s such as Oracle Cloud Fusion ERP provide ample mechanisms to connect the world of IOTs/NFCs to the SaaS Cloud ERP, such as Device to Cloud connectivity protocols

·        SOAP / REST connectivity over the internet

·        MQTT (Message Queue Telemetry Transport) over SSL

·        Constrained Application Protocol (CoAP)

·        WebSocket

·        Extensible Messaging and Presence Protocol (XMPP)

·        Advanced Message Queuing Protocol (AMQP)

·        HTTP/ HTTPS as secure, standard protocol over internet / private networks

These are interesting times that we live in, and the benefits of an interconnected world with scale breaking potential are just being realized.



Out of Milk? LG’s New Smart Fridge Will Let You Know ( (

The Internet of Things and the Mythical Smart Fridge – | UX Magazine (

Moore’s law – Wikipedia (

Author Details

Mahesh Vithal Rao Kanago

Mahesh has been leading Business Transformation programs enabled by ERP implementations, rollouts and support for Infosys clients spanning Distribution, Manufacturing, Services, Hi-Tech, EPC, Telecom across Europe, USA, APAC and India.

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