We’ve mentioned discrete manufacturing’s event mentality, which greatly influenced how the bulk of ERP systems on the market were designed. A variation on this theme, with ramifications for process manufacturers, is identifying the event with a serial number, a single, discrete product with a number stamped into its side. Obviously, that’s not going to cut it in process manufacturing. Process manufacturers need lot traceability; there are probably many units in that lot, but they have identical properties and quality and thus the same lot number. The very next lot produced might have slightly different properties within acceptable parameters.

ERP Manufacturing

Process manufacturers have unique ERP system requirements. (Part 3)

Some process manufacturers prefer to define the lot as a single day’s output, but then need to be able to assign sublots during the day as subtle variations of raw material quality and quantities creep into the process. The ERP system has to be able to accommodate this decidedly process point of view, tracking the materials used from an accounting perspective while also allowing time for the quality disposition as various lots settle over time.

Process manufacturers have relatively high fixed costs, expensive equipment that require that high output be achieved around the clock to improve Return on Assets and drive up yields from fixed costs. An ERP system that’s a good fit for a process manufacturer will have replaced its job-cost perspective with a much more complex costing capability consistent with the way process manufacturers do business. The ideal process manufacturing costing system will provide visibility into the impact of not only volume throughput changes, but also changes in the product mix.

Discrete manufacturers have a lot of capital tied up in the many components that go into a single product. As a result, ERP systems have evolved to place highest priority on the movement of materials into and through manufacturing. Process manufacturers know, however, that their business is much more sensitive to the optimization of capacity utilization, again reflecting their relatively high capital investments and added value. An ERP system should not require that a process manufacturer manage materials before managing capacity. Similarly, process manufacturing often requires high energy consumption, the cost of which can be a gating factor on production decisions. Waste production can be significant and often hazardous waste procedures are required that are costly and time consuming. An ERP system needs to enable process manufacturers to capture and track all consumption and production costs.

Holding an ERP vendor’s feet to the fire on these kinds of issues will reveal how committed they really are to meeting the unique needs of process manufacturers.

Written by :

kristine H