As a manufacturer, you face a challenging and opportunity-rich environment. You must navigate changing demand patterns, manage global complexity, and meet growing sustainability and compliance requirements. One of the most common and costly mistakes a manufacturer can make is choosing an ERP software system that does not fit with their process. A good example of this would be a chemical producer who selects and implements software designed for a company that develops furniture or automotive parts. This is an obvious mismatch, but sometimes the specifics may not be so clear cut.
To highlight some of the differences, let’s take a closer look at the three main types of manufacturing:
This category includes companies that assemble products from distinct pieces, such as nuts or bolts. Examples of discrete manufacturers are those that assemble automotive, aerospace, or electrical parts and use Bills of Material (BOMs).
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Process manufacturers are those who blend liquids, formulas, or recipes. Once put together, the component parts can be distinguished or disassembled. Typical examples include those who develop food, cosmetics, chemicals, paints, and coatings.
Mixed Mode Manufacturing
This type describes companies who operate in both process and discrete environments. Mixed Mode Manufacturers require both a process and a discrete manufacturing system.
These differences are only the beginning of a long list of incompatibilities that process and discrete manufacturers have to deal with. Granted, some of the issues are the same: all need a general ledger, accounts payable, accounts receivable, bank reconciliation, sales order, and purchase order, to name a few. However, the differences in the types of types of manufacturing have very distinct inventory and bill of material requirements. For example:
Process Manufacturers require formulas/recipes, containers, and labels for their bill of materials. They need to measure pounds, gallons, ounces, liters, milliliters, grams, etc.
Then, within Process Manufacturing are the various types of industries—each facing their own challenges:
Food and Beverage companies must contend with the ever-present reality of food recalls, which makes lot traceability and reporting features crucial parts of a software package they may implement. These capabilities allow them to report lot numbers from the raw materials that have gone into their shipped products. In addition, they also have many other requirements mandated by the FDA. For instance, the FDA must be given notice on shipments of imported food as well as label and health claims. Companies that process meat from the cow or pig to the finished good must deal with catch weights. Catch weights refer to the actual weight of variable-weight items that use weight as the sales unit of measure but can also be measured by item. A wheel of cheese, for example, is sold by the pound but produced by the wheel.
Chemical companies must deal with lot traceability for product pigments and/or hazardous material tracking, viscosity issues, and material safety data sheet (MSDS) reporting, to name a few. Cosmetic producers also deal with the FDA and have a combination of issues that Food and Chemical companies regularly contend with.
Discrete Manufacturers need to measure lengths of material, such as wire in a roll and/or by the foot. Most discrete software packages neither understand a conversion of pounds to gallons, or liters to ounces, nor do they use this same conversion factor on a Bill of Material.
While discrete manufactures often deal with serial numbers, which in most cases is only one number per part, process manufacturers may have numerous lot numbers in a finished good that must be tracked.
Before you begin the software research process, it is crucial that you first understand your manufacturing type. Are you a processor of liquids, or do you assemble individual items to create an assembled product? This information will go a long way in helping you properly choose software that fits your organizational requirements.
Choosing Software for Manufacturing That Meets Your Needs
You will need to determine the best ERP to meet those needs. Aside from manufacturing type, you should also choose an ERP that will match your industry, company size, and scalability. Industry-specific ERPs are designed expressly with certain needs in mind, based on the industry you’re in. Ensure that the ERP you are selecting is appropriate for your industry; it won’t do to try tracking food manufacturing with an ERP geared toward construction!
Some ERPs are designed especially for the requirements of a small business, which means you won’t be paying for functionality that your business is too small to require. These scaled-down ERP solutions are perfect for providing the functionality you need at a price you can afford.
Finally, you’ll need to decide if you want an on-premise ERP that is housed in a physical server on location, or a cloud-based ERP. There are pros and cons to each set-up based on cost, implementation time, affordability, connection, and scalability. On-premise ERPs may be a larger up-front investment, but they also may be more customizable. This type of ERP is also good for companies that need to meet specific data security requirements, such as that certain data always remain stored on-site. Cloud ERPs are often sold as “software as a service,” meaning they have a subscription fee. These ERPs are often up and running faster than on-premise and offer the added advantage of data accessibility from anywhere with a connected device. SYSPRO ERP makes business easy and efficient with cloud hosting and mobile access, so you can get your numbers at your desk or on the manufacturing floor, or even while visiting a customer.
Still need more information? Download our FREE white paper, “ERP Solutions for Manufacturing Challenges” for a deeper dive into challenges and possible resolutions.
PositiveVision works with manufacturers of all types to help streamline systems and lower costs. Contact us to learn how SYSPRO can improve your processes.