Process Manufacturing is much different from discrete manufacturing. In case of discrete manufacturing, the company makes products on a shop floor, with the end products being easily identifiable. In simple terms, the discrete product can be broken down to retrieve its basic components.
Most common examples of discrete manufacturing would be automotive manufacturers, consumer electronics, the aerospace industry, and household appliances. Process manufacturing on the other hand deals with formulas and recipes and the end product cannot be broken down to get its original components. Common examples would be paints, chemicals, pharmaceuticals, and the food and beverage industry.
Most of the companies in these industries have sophisticated software applications to govern their business processes. Highly popular ERP systems like SAP and Oracle are commonly used in these firms. There are many local vendors as well providing custom made applications.
However, a lot of companies jump into purchasing an ERP system, without doing a thorough analysis of their business processes and what solution would fit them best. For example, even in case of manufacturing there are many styles from job-shop to highly complex automated systems like robotics.
The solution that is chosen must support the business processes, the style of manufacturing and the business model of the company. For instance the interfaces required for a highly configured machine cannot be the same as that of a high speed automation machine making a hundred pieces an hour. This is probably the reason why most companies fail or are unhappy with their ERP investments.
This makes it absolutely crucial for companies to identify their critical success factors (CSFs) or the processes that are critical to their businesses and need to be automated. Moreover, it is always important to document the requirements so an easy comparison can be made at a later stage.
Many companies do not do a comprehensive study of their existing business processes. For instance a company may be doing certain tasks in a unique way and steps could be taken to replace or improve them. Without a detailed analysis of requirements and business processes, it would be difficult to evaluate an ERP solution or to predict its potential to be a perfect fit for the company.
For example, a large cosmetics manufacturing company implemented an ERP system, however after a few years, it did not realize complete value as some of their existing processes still had to be done manually. Real time inventory tracking was not a robust feature of their ERP system. In fact the employees had to manually count the stock to ensure availability to fill open orders.
Purchasing planning and scheduling took a beating and the company began making mistakes on purchasing inventory, at times investing more than required, hence increasing the cost of inventories. Such requirements are specific in process manufacturing industries which the company failed to oversee. It also did not have robust capabilities in defining item and lot characteristics which was becoming a concern.
Eventually they had to re-invest in another ERP system. To avoid such pitfalls companies must be better prepared and should do extensive planning on key issues before evaluating a vendor for ERP selection. The anticipated ROI, ERP system functionality, pricing, vendor capabilities, technical issues like platforms and customization, need to be analyzed well before evaluation.
There are some good products in the market which are tailor-made or industry specific. For example BatchMaster specializes in process manufacturing. Industry specific applications would be a good option to consider as the customization required would be less and the ERP system would have evolved over a period of time with installations in different companies within the same industry.
Finally if a company is proactive and has a clear ERP vision, with the expectations in place, it would only be that much easier for the company to choose a right system to suit its business, and to be a right fit in the long run.
Written By :
Lawrence Gilbert
(Business Development Executive at Accent Consulting)
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