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Table of Contents
Introduction...................................................................................................................................................3 A Closer Look at Manufacturing Industries ................................................................................................4 Manufacturing Processes & Production Requirements ..............................................................................5 High-Volume Repetitive Hybrid ...................................................................................................................7 Continuous Flow ...........................................................................................................................................9 Summary........................................................................................................................................................10 About Fullscope ............................................................................................................................................11
Introduction
Most ERP enterprise applications have three major components: manufacturing, distribution and finance. In the world of process manufacturing, quality management, since it is so imbedded in all the processes, also becomes a core requirement. The purpose of this white paper is to discuss the manufacturing element of enterprise resource planning (ERP). Most ERP solutions target either the process or discrete sector, and a few, like Microsoft Dynamics AX, straddle both.
Figure 1
The diagram above presents the process manufacturing paradigm. The top portion lists the different types of manufacturing processes within process companies, while the bottom shows the corresponding base concepts used to actually manage production. This paper defines these categories and provides a guideline for any process manufacturing company that needs to identify ERP system requirements most suitable for their business.
Organic Processing
Organic processing is one of the most complex and difficult processes in the entire manufacturing paradigm. For our purposes, organic identifies process industries that deal with products from the earth. These companies manage huge variability in raw materials that range from quality issues, quantity, cost and performance. In addition, these companies are often dealing with push supply chains, that is, not demand-driven but supply-driven. Examples of organics are companies that process meat, pork, poultry, dairy and agricultural products. The basic building block of this sector tends to be the inverse BOM or formula. Unlike discrete industries where parts are assembled to produce end items, this process starts with a raw material and disassembles it to produce co- and by-products.
Figure 2
This sector offers extreme challenges when it comes to ERP requirements in planning, scheduling, costing and production reporting. Again, the building block of the ERP system must support the inverse BOM and the batch order must be able to handle: Co- and by-product management Yield, yield by operations Scrap and waste Net realizable value (negative or positive costing of by-products) Recycled products Inverse costing (cost distribution for co- and by-products) Planning of the inverse BOM (supply and demand mapping) Formulations by percentage and quantity per item Scaling of formulas Multiple UOM conversions Catch weight reporting
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Figure 3
Cost per Ton (estimates) $100/ton $80/ton $105/ton $101/ton $90/ton $99/ton
Release 1 2 3 4 5 6
This production process is not common in generic process, but is very common in the chemical sector. It offers a streamlined reporting process in the ERP application and mirrors the way they work.
Continuous Flow
Continues flow manufacturing is most common in the world of petroleum refining. Most refineries use only the financial applications in an ERP because in a continuous-flow environment, the work order is out of place. A refinerys key performance indicators (KPI) are based on producing the most product at the lowest costs. Consequently, they will set up the plant to run a specific set of products, over a long period of time, to maximize efficiencies. In some cases they may spend up to two months retooling or setting up the plant before producing any end products, then run the plant continuously for maybe eight months and shut down. The final two months of the year will be spent on equipment change over, cleanup and maintenance. This is an extreme example, but a primary reason a work order based-system wont work. The long runs, called campaigns, are specific to this sector of process manufacturing. Another challenge for this industry is the consumption of materials from tanks and silos and correct allocation to the process lots produced. Since all materials are issued and consumed in a continuous flow, it presents a challenge for batch-based systems.
Summary
Process industries can be quite diverse when it comes to manufacturing processes. When evaluating ERP applications, remember that most of the differentiation occurs in the manufacturing process. First and foremost, if a company is a manufacturing-centric organization, what processes are involved? If a company is in an acquisition mode, what types of companies will be acquired? Begin to map requirements to an ERP application by answering these questions: 1. Is the company manufacturing-centric? Is manufacturing important to corporate goals? 2. What types of manufacturing processes are used? 3. What types of processes might be acquired in the future? 4. Which ERP application maps best to the required processes?
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