Role Of Erp In Discrete Manufacturing Industry

By Author: Freedom Software
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What is the Discrete Manufacturing Industry ?

Manufacturing Industry is majorly divided into two sectors, one is called Discrete Manufacturing and the other as Process Manufacturing. Discrete manufacturing is the production of distinct products. Almost every item/product that we use in our day to day life or those we buy in the stores falls under this category. To put it simply, discrete manufacturing companies produce finished goods. Since they have complex business processes the role of ERP in discrete manufacturing is very crucial. Process Manufacturing is something that involves formulas and recipes. Examples of Process Manufacturing are food, beverages, chemicals, metals, pharmaceuticals, oil and gas.

Role of ERP in Discrete Manufacturing Industry

Difference between Discrete and Process Manufacturing :

Discrete Manufacturing :

The end product is finished goods or parts of finished goods that can be further assembled to create a new product.
Orders are measured as quantity and numbers.
BOM is crucial for production of items.
Example – Automobiles, Toys, Mobile phones, ...
... Electronic items.
Process Manufacturing :

The end product is a raw material or a refined item.
Orders are measured as volume or weight.
BOM is not necessary for processed manufacturing.
Example – Food, Beverages, Metals, Oil and Gas.
What are the pain points faced in discrete manufacturing processes ?

Discrete manufacturing is a complex process that involves various operations to produce a final product. Each product has its own defined processes and hence there are a wide range of ERP products available as well. The discrete manufacturing undergoes a sequence of steps that has to be followed with accuracy to yield a defect less product. Since many small scale sectors are yet to adapt an ERP Software and still following the legacy systems there occurs many challenges in the production line. Let us discuss a few commonly faced pain points.

Operational Blindness :

If we do not know what is exactly happening in the shop floor, the production line activities, the number of products in queue vs store, the inventory level and capacity as a whole, then the company is at great risk in delivering good quality products. Without the actual real time data there are many challenges in planning the ongoing and upcoming orders.

Procurement :

Procurement refers to purchasing the required raw materials needed for the production at the right time and right quantity with better quality as well. This is a complex process where one has to compare the best supplier for best pricing and on time delivery of materials. Any issues with lack of materials directly impacts the production line. Late deliveries create a bad impression and are difficult to sustain the customers.

Fluctuating Prices :

The price range is so unpredictable that the manufacturers feel difficulty in situations where the rising prices directly impact the supply chain process leading to delay in delivery. But having a software can help break down the cost of each item and a better forecasting of the right time to make a purchase.

Design & Quality :

Each component that is being manufactured has specific design and standard qualities. But to serve customers with their ever changing needs, there are certain modifications that are meant to be made at the design level continuously and this sometimes puts pressure on delivering timely goods. Hence a compromise is made to some extent that could impact the quality of the product.

Meeting deadlines :

As we all have heard “Customer is King”, it is the duty of the product owners to sustain the product quality hence retaining loyal customers. But sometimes due to the complexity of the business process, need for modifications and changing demands, there may occur a delay in product delivery.

Features of ERP that helps overcome the challenges :

Balanced Inventory :

The inventory module in ERP software helps to track real time data on stock materials, finished goods and also maintains minimum stock level to avoid last minute purchases or delays. The software enables an alert when the minimum level is reached to make sure you restock the materials. You can also easily retrieve the items from the store with the help of unique item codes and locations assigned to them. This saves a lot of time and prevents bottleneck moments.

Production Scheduling :

This is the major part in the manufacturing industry as the products are being produced under sequential tasks. But it is also important to make sure that the shop floor has been completely utilized and all machines have a perfect scheduling. For example, if there is a bigger order in upcoming days, then you have to efficiently plan and put a calendar for each machine to get the most of it in a short duration. This cannot be done manually and software can help you achieve it, giving you a clear illustration with real time data.

Material Requirements Planning:

This is where one has to focus on more as it involves major investments in business. If you blindly purchase some amount of raw materials then it is of no use. One must know the exact requirement like how much quantity/dimensions/weight of RM needs to be bought for the current order. If you could not match the requirements in purchasing then additional materials will lead to loss of money. Hence the software is a great help to determine the exact materials to be purchased depending upon the historic data you can get a better forecasting of materials planning.

Bill of Material :

A BOM is the crucial part of the discrete manufacturing process, as it gives you a clear view on all the parts/items/sub products that are required to create the final FG. A basic example is cooking, let’s say you are about to bake a cake. The first step will be to prepare all the necessary ingredients in the proper quantity. Missing a few ingredients or preparing an insufficient quantity of batter will obviously result in a spoiled cake. This example seems easy as it is a small recipe. But imagine manufacturing a huge number of products and what if you miss a few items off the list. This will be a nightmare for the owner that would definitely create a bad impression with the customers. Hence ERP Software helps you define the accurate BOM and is able to alert if there are any errors.

Analytics :

Analytics is something that every business should have. Specially for SMB sectors, it helps to predict the market requirements, demand and study customers’ varying needs. This will help companies make safe and on-time business decisions. ERP software with their historical data combined together eases this forecasting process resulting in appropriate future business plans. ERP in discrete manufacturing companies are a great tool for analytics to predict various defects area and where to focus on for enhancements.

Conclusion :

Since the discrete manufacturing industry deals with N number of unique production processes, there are many ERP software in the market to choose from. But it is also challenging to choose the right one for your industry meeting all your requirements. Hence opt for ERP consultants and watch a demo comparing as many tools as possible.