Part One: Types of Manufacturers
“ERP for Manufacturing” is a broad term. Each industry has very different requirements, and process manufacturers in particular are quite diverse when it comes to actual operational processes. When evaluating enterprise resource planning (ERP) applications, most of the differentiation occurs in the manufacturing process, and not all ERP systems handle all industry requirements. In fact, very few do.
Most ERP enterprise applications have three major components: manufacturing, distribution and finance. In the world of process manufacturing, quality management is often a core requirement. This blog examines the manufacturing element of ERP systems. Part one looks at the difference in manufacturing industries, and part two examines the actual manufacturing processes.
A Closer Look at Manufacturing Industries
To understand the nuances of manufacturing that are discussed later, it helps to first understand the three general types of manufacturing companies:
Process manufacturing companies are those that add value to raw materials or ingredients through processes that involve blending, formulations, reactions or disassembly. Often there is raw material variability to account for, and processes are often adjusted to compensate. Typical process manufacturing verticals are food, beverages, chemicals, pharmaceutical, life science, primary metals and pulp and paper.
Discrete manufacturing companies add value to raw materials through processes of fabrication and assembly.
Discrete manufacturing is often characterized by individual or separate unit production. Units can be produced in low volume with very high complexity or high volumes of low complexity. Low-volume/high-complexity production results in the need for an extremely flexible manufacturing system that can improve quality and time-to-market speed while cutting costs. High- volume/low-complexity production puts high premiums on inventory controls, lead times and materials costs. Examples are automotive, electronics and toys.
Hybrid (or mixed mode) manufacturing companies straddle the manufacturing paradigm, having some discrete and some process applications. There are hybrid examples in many industries, including primary metals, pulp and paper and even medical devices.
If your company is considering a new ERP solution, basic questions to consider include:
- What types of manufacturing processes are used?
- What types of processes might be acquired in the future?
- What part does manufacturing play in corporate goals?
- Is integration to CRM important?
- Are multi-language and multi-currency requirements?
- How will the ERP solution support the key requirements above?=
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