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Process manufacturing served by enterprise resource software

Enterprise resource planning software has evolved and today's process-oriented ERP is well suited to meet manufacturing needs in industries like food and beverage, chemical and pharmaceutical.

In the eyes of the ERP software industry, there are two types of manufacturing: discrete and process. Process manufacturers (e.g., chemicals, pharmaceuticals, gasoline) deal with products or materials that pour -- liquids and powders. Discrete manufacturers produce distinct items (e.g., toys, smartphones, furniture) with parts and materials that can be counted rather than measured by weight or volume. Characteristics and needs that link "process" companies together in terms of data and processes make ERP designed for discrete manufacturing not particularly useful.

Yet in the early days, manufacturing resource planning (MRP) software was designed and structured for the most common kind of discrete manufacturing: fabrication and assembly of industrial equipment, consumer goods, automobiles and the like. Data fields and calculations were oriented with little or no ability to handle decimal quantities or batches. For example, a pharmaceutical company trying to use this early MRP system would quickly become frustrated trying to specify a bill of materials for one aspirin containing 125 milligrams of an active ingredient, then trying to store, count and dispense that ingredient by the milligram. Not enough decimal places were available to formulate each aspirin in fractions of a kilo, the most convenient stocking unit of measure.

Another bill of material (recipe, formula) complication is the presence of co-products and byproducts where more than one item comes out of a production process. A chicken processor, for example, uses one raw material (a chicken) and produces wings, thighs, breasts, nuggets and so on from one process. Another example is petroleum; crude oil becomes gasoline, kerosene, diesel fuel, solvents and more.

As MRP matured, systems grew to incorporate more decimal places, "batch" bills of materials (e.g., formula stated per 10,000 aspirins instead of each), and the ability to track inventory by batch or lot. This made MRP II at least generally functional for process manufacturing, albeit significant problems still were not addressed.

But today's process-oriented ERP is well suited to meet the needs of food and beverage, chemical, pharmaceutical and other process manufacturers. Functions and capabilities for process include:

  • Potency and strength -- Materials and products can have different characteristics that affect the quantity needed in a formula (or the quantity/strength of other ingredients), or the characteristics of the end product. Sometimes a process can produce different end products (different strengths, dye lots, quality) depending on the particular manufacturing experience. Shelf-life and expiration tracking is also a common product requirement in the process industry.
  • Traceability -- A requirement in many discrete situations as well, full traceability and batch or lot identification are common requirements in process industries. Food and pharmaceutical producers have additional traceability and quality requirements tied to specific processes, environmental conditions, equipment used, operator, test results and more.
  • Process scheduling and control -- Process industry companies are more likely to use continuous-process machines in their plants. This style of production requires different planning and scheduling approaches that are equipment-driven (based on capacity) rather than material-oriented (based on date or quantity). This is a requirement in many discrete consumer goods companies as well.
  • Quality -- Food, beverage and pharmaceutical companies, among others, have rigorous quality testing, tracking and reporting requirements best satisfied with a fully integrated quality module.

Most general-purpose ERP products on the market have been expanded to include at least some of the above capabilities, often packaged in a special version or edition of the package (e.g., "xyz for food and beverage"). You should study carefully the suitability and completeness of the solution for the target market before selecting such an adaptation to be sure that the needed functions are there, fully integrated and fully functional. A small number of ERP systems have been developed specifically for a process or a niche within the process industry. These are likely to have more functional depth for the needs of that specific industry segment. But, again, due diligence is advised.

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This was last published in January 2015

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