Detailed Production Scheduling. A detailed ERP production scheduling system for process manufacturing demands a high level of sophistication. At a minimum, the system must have the ability to schedule manufacturing from multiple combinations, based on available inputs, capacity, and quality specifications. It requires the ability to generate detailed views of capacity and production constraints, including tanks and vessels. In process-oriented manufacturing, many production processes are coupled, and the overall goal of optimization is to reduce down time and changeovers and increase overall throughput.
ERP Helps Process Manufacturers Cope with Chaos (Part 8)
Tanks require specialized scheduling based on their operating behaviors, such as fill/empty rate. Vats are often linked to mixers, which are linked to packaging lines. This creates interdependencies on sequencing, due to the fact that one process cannot be scheduled without considering the state of an upstream or downstream process.
Genealogy and accurate lot tracking are very critical for quality and regulatory compliance. The ERP system must also account for time-based factors such as shelf-life and aging of both materials and final products. A production scheduling system needs to take each of these factors into account to ensure quality, compliance and recall capability.
Because no two customers are alike, the ‘new-normal’ requires that best-in-class scheduling has the ability to support customer specialized needs and requirements, and provide the capabilities to respond to market opportunities on a much more timely basis. At one point on the calendar, the scheduling objective may be optimizing profitability through more efficient production runs. At other points, it may be optimizing customer service or customization needs. At still other points, a plant may need to quickly respond to opportunistic events such as a late breaking customer order, availability of excess materials, or seizing other short-term opportunities in the market.
A best-in-class scheduling system needs to have the flexibility and adaptability to support any of these scenarios, while at the same, providing ease of use among planners and operational users.
Opportunities for Leadership
In the “new-normal” business conditions are never static. Business transformation provides the opportunity for process-oriented manufacturers to successfully respond to volatility, variability and variety within their market segment. A backbone of new process and information technology capabilities, coupled with more empowered professionals, ensures increased agility with less capital expenditure (CapEx). New markets and channels can be exploited and leveraged for increased revenue and profitability. Rationalization of assets and/or product lines leads to a more efficient and cost competitive processes. In the “new normal” the goal is integrated and agile operational excellence.
Yes, process manufacturers do indeed face extraordinary business challenges, but challenge presents opportunity for renewal and transformation. The ability to effectively manage and respond to market imbalances, supplier failure, increased regulation and quality requirements separates industry leaders from laggards. A determination to excel coupled with an ERP backbone that has been designed, integrated and tested for process-oriented manufacturing enables new levels of efficiency, insight, and more timely decision-making. Success in the “new normal” equates to having the complete set of capabilities.
Either the path of continuous improvement or of transformation can be best enabled by an end-toend information technology system that has proven abilities to integrate the collective processes of supply chain planning, PLM planning and enterprise asset management. It is an information technology backbone that has been built and tested specifically for process-oriented manufacturers, and enhanced to support the realities of the “new normal” in business.
New Product Introduction Planning. Constantly shifting consumer needs and behavior are driving ever increasing needs for new or improved products. Consumers and retailers will not wait and will often switch to products or manufacturers that will meet their current needs. Product management teams must more than ever be aware of local market requirements such as banned ingredients, unique labeling or packaging needs.
ERP Helps Process Manufacturers Cope with Chaos (Part 7)
Time-to-market and time-to-volume have become ever more critical. Reducing time-to-market requires short timeframes in the decision to develop a new or revised product, and the time to produce it, test it, and make it available to appropriate channels.
New products often fail in the market. For instance, in consumer product goods markets, up to 50% of products will fail after introduction. Manufacturers need to have the sensing capabilities to understand as quickly as possible how each product is faring in the market, and what adjustments need to made to the demand plan or to the product or sales approach.
Production Planning. Production planning for process-oriented operations involves constantly managing and optimizing variability, cost, and delivery. The challenges are that there may be multiple paths to produce finished product and that finished goods are often shipped in various packaging by style, material, size or weight. Processors need to balance the variability and specifications of customer demands and due dates (a mostly pull type of supply chain environment) with the scheduling and variability inherent in inbound supply (a push type of supply chain environment). An ERP planning system must have the capability and functionality to plan for both types of environments. Raw material feedstocks are ordered and validated to a set of product characteristics with certain tolerances for composition and quality. Production plans or campaigns are generated based on capacity needs, facility availability, or feasibility of yields for end products and co-products. In many situations, overall planning and scheduling needs to account for material usage, along with most efficient safety stock and inventory planning needs. Certain processes call for blending or trim optimization, which require specialized planning algorithms.
Process manufacturers need to ensure optimized material usage. This is complex, since a single raw material can be processed into various products that may or may not be combined with other materials to create the final product. The same final product may include different costs in its production based on materials and routing variability. This must be taken into account in optimizing planning. Shelf life, genealogy, accurate lot tracking, and reporting are also very critical to ensure conformance to quality and regulatory compliance. Expired inventory is of no value to either the manufacturer or the customer.
An effective process manufacturing ERP planning system must also be able to plan for each stage of the new product introduction process, integrating product planning information from product management and engineering with overall supply chain sourcing needs. In certain cases, new products will replace other existing products, and planners must be able to simultaneously plan for both ramp-up of the new product, and ramp-down of the product being replaced. Planners also require the ability to ascertain the overall effectiveness of the new product’s launch, and account for the promotions uplift for the new and possibly also end-of-life products.
Concluded in Part 8
The overall keys to success for process manufacturers are the timeliness of business planning, and production processes, along with seamless integration of enterprise-wide data. Profitability equates to a constant need to balance customer demand with capacity, production scheduling and asset optimization requirements. Too much or the wrong inventory, or expired inventory, will impact revenue and profitability. Too little or the wrong mix of inventory impacts customer satisfaction. Planning in a process manufacturing environment equates to the best match of variable supply to meet constantly changing customer demand.
ERP Helps Process Manufacturers Cope with Chaos (Part 6)
Specific ERP/Process needs:
Demand Planning. The ability to accurately plan and/or forecast customer demand is a constant and critical business need for process manufacturers. More forward-looking planning and business process capabilities are the foundation for becoming more customer- or demand-driven. An accurate picture of demand allows more efficient use of warehouse and production capacity, operational resources, inventory and assets.
Granularity. Demand plans must include a level of granularity that reflects product hierarchies, customer delivery channels, and other important demand factors typical of pyramid modeling. Pyramid modeling is when data is arranged and visually represented in a pyramid, allowing increasing levels of information granularity. For example, a producer of soft drinks would require the ability to forecast and plan for demand by package types (6, 8, 12 ounce and 1 or 2 liter container), by channel (wholesale, retail, vending, end-consumer), and by geographies (Asia, Europe, U.S.) or sub-regions. In today’s rapidly changing industry landscapes, there also needs to be the flexibility to accommodate changing views of demand data with different hierarchies.
Event Driven Adjustments. The ability to anticipate the impacts of events, seasonality or product promotions is also an increasingly important consideration for insuring responsiveness as well as efficiency within process manufacturing. As an example, in a batteries or laundry detergent business, up to 50% of product volume is sold on the basis of promotion. Planners need to factor in the production and distribution timing window for ramp-up and ramp-down to support seasonality and/or promotion of products, along with the intelligence to understand the impact events will have on the overall production schedule and forecast. Advanced statistical forecasting techniques further assist planners in the smoothing of all forms of demand, along with the ability to support demand shaping that can influence more profitable production runs.
Collaboration. In order to support shifting realities in markets and products, more and more process-oriented companies are practicing integrated Sales and Operations Planning (S&OP) involving their key customers, suppliers and other stakeholders. Fill rate pressure drives an increased need for more frequent and timely planning cycles focused on forward-looking demand, supported by cross-functional or cross-company collaborative planning processes. Planners across regions and product lines need instant access to production schedules and plans, as well as the ability to plan various scenarios of the most efficient means to fulfill last-minute market opportunistic demand.
Increased use of contract manufacturing and co-packing as a supplement or business alternative is also driving the need to model external capable-to-promise and other constraints into S&OP decision-making processes.
Continued in Part 7
Continuous improvement implies building on the current foundation of business planning processes and supporting information technology. It addresses one problem at a time, as functional needs warrant, or as business pain points need to be addressed.
ERP Helps Process Manufacturers Cope with Chaos (Part 5)
In “continuous improvement” mode, information technology is implemented as needed. However, to ensure proper information flows as well as analytical reporting of management data, many companies choose a gradual implementation of an integrated ERP suite. This is because best-of-breed third party applications may result in the need for expensive and time-consuming custom integration, which is even more problematic during upgrade cycles of each application.
Transformation, on the other hand, implies a different approach. It starts with a common business-wide vision. As an example, a regional dairy has identified that meats and eggs were complimentary products. Due to capital constraints of a regional dairy cooperate, they chose to use co-packers to produce new products. Since their existing systems were designed to support this scenario, they successfully brought these and several other new product lines to market with less CAPEX. This leads to a framework of the required process capabilities and business metrics needed to manage volatility, variability and variety within the “new normal” of business. This path naturally specifies an integrated enterprise level information technology or ERP system that is delivering value in similar process environments. The trick here is to find a system that’s easy enough to change to adapt to new conditions in the market and the business.
Many ERP system implementations cause disruptive shutdown of operations, or costly and lengthy upgrade cycles. There is one common application option for these two paths. Companies can succeed on either path with less time and money by selecting an enterprise system that has been designed for flexibility and modular deployment, coupled with the ability to support change with evolving needs of the business. Such a system can deliver fully integrated processes across all areas of the business. A few are also crafted to support all of the complex needs of process manufacturing, including timely operational insight.
Overall keys to success
ERP-system needs of process manufacturers are indeed specialized. Process industry companies are generally asset intensive, and face continual pressures in balancing needs for optimized product margins with constant variability in inbound and outbound materials. To ensure long-term competitiveness, manufacturers must continue to drive cost efficiency while also growing revenues in an increasingly global marketplace. They require the ability to understand and incorporate industry-unique functionality related to supply chain planning, production scheduling, product lifecycle and asset management.
Beyond those long-standing issues, volatility, variability and variety generate a need to become far more agile and responsive to frequent change on short notice. Retailers, wholesalers and other customers continue to push lean business practices that cut their supply chain costs and increase product availability. They insist on tighter or more frequent shipping schedules pegged to end-item demand, while also insisting that there be no out-of-stocks on high demand products. This upends the traditional process industry path to profitability of operational stability and long production runs.
Continued in Part 6