What Kind of Distributor Are You?

Blog Written By | ERPFocus

Distribution ERP – What Kind of Distributor Are You?

Evaluating advice and information relating to ERP and distribution requires first that you understand exactly what portion of the distribution spectrum you are interested in, and then, what portion of the information – vendor claims, ERP implementation consulting experience. etc. – your evaluation is referring to.

Distribution can refer to channel – retail or web or wholesalers, for example. It can be shorthand for the primary function of administering transportation routes and freight management. If the distribution is used in the context of manufacturing, then it may be limited to getting finished inventory off the loading dock and on to a truck. In all of these cases, the functionality requirements of distribution ERP software are significantly different, and the vendor selection process can and should be different.

Channel Distribution

Managing channel distribution is largely a matter of marketing strategy. How you choose to sell your products, and to whom, must be a well thought out approach, or you can end up alienating your customers. For instance, if your primary channel strategy is to get your product to market via regional distributors, then later decide to also offer your product directly to consumers via a website, that could put you in direct competition with your distributors. The types of ERP solutions that help manage this sort of distribution have more elements in common with customer relationship management (CRM) than traditional supply chain management.

Logistics Based Distribution

Companies which make their money primarily from the transportation of goods from one point to another are dead center in the distribution spectrum. These companies deal with a very unique set of business problems and need a very unique set of ERP utilities as a result. Distribution companies are extremely sensitive to fuel costs and fuel consumption, and the effect changes in either can have an effect on costs and productivity. Transportation companies operate in a highly regulated arena, in which the hours drivers can work is rigidly specific, and can sometimes complicate the planning for long hauls. Truck and trailer (asset) management requires its own unique math formulas and logic. And all of this occurs in an environment that is chronically short of qualified drivers. Distribution ERP software for this segment needs to integrate smoothly with these business problems.

Manufacturing Distribution

Manufacturing operations often have a distribution function that is almost entirely a warehouse function, whether the warehouse exists as a part of the factory, or as a separate distribution center facility. Warehousing issues typically involve picking strategies, inventory movement, financial control, cycle counting, bin location, safety management, and document creation for bills of lading, shipping labels, and packing lists. Again, the ERP packages that handle these things effectively probably aren’t effective at handling the previous two categories of distribution.

The conclusion is to be well versed in what distribution requirements you have as you do your research for the right ERP vendor. No distribution ERP system on the market is all things to all organizations, and finding out the right fit for you will take self-knowledge and patience.

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You need an ERP system for process manufacturing

processing manufacturing

Blog Written By | ERPFocus

ERP in Process Manufacturing: Business Benefits

You may call it an accidental benefit, but one thing that an ERP implementation forces on an organization is a thorough examination of its business models and practices, and process manufacturing benefits disproportionately from this examination. By its very nature, process manufacturing tends to be more flexible and dynamic over time. As a result, many business practices are the result of evolution, instead of a thoughtful and well-executed strategy. In a process manufacturing, you can almost always accommodate one more special customer need, until, after a while, your business model hardly resembles what your manufacturing, service, or systems were designed for. The misalignment between how the business was designed to run and how it actually does run will be highlighted in a number of ERP design issues.

Turning Over the Rock

A typical example might be defining a business model as either make-to-order (a specific manufacturing plan for each customer order) or make-to-stock (sell orders from inventory). ERP generally rewards a clear-cut choice between these two with rich functionality, but process manufacturers often have difficulty committing to only one strategy. They want to describe a hybrid strategy and decide, order by order which strategy applies. While this sounds very customer-focused, it is an administrative nightmare. As you begin asking who has the authority to decide, and what the decision criteria are, you grasp that there is no overarching logic to the choices being made, and therefore it is not a business model that is easily programmable within an ERP environment. The conversation which emerges as a result of this ERP question is a vitally important one to the leaders of the business. If the leadership team is collaborative and synergistic, it is possible that ERP will serve as the framework for re-establishing a set of logical business rules. If the leadership team is dysfunctional and does not work together well, at least everyone explicitly understands that the business model does behave according to any predictable rules. This is not an observation in sarcasm; it is an important reference point for helping people understand why things do not go as expected.

Other examples might include how planning and manufacturing scheduling occurs, how a product that does not strictly meet quality specifications is handled, or how much lot traceability is truly required. The benefit in all of these, just like the one in the preceding paragraph, is to hold up the evolutionary decisions that a single functional area has turned into business policy, and examine them in the clear light of the total business process. The results can vary from exhilarating to frightening, depending on your organization.

If your workgroup can agree to operate your process manufacturing business logically, ERP will be a stair-step improvement. allonline365 can help guide you during your implementation of Dynamics 365 Business Central ERP, offering advice on the best modules and customizations need for your business. Call us on +27 (21) 205 3650 or email us on  info@allonline365.com. 

Do you need lot tracking in your ERP solution?

lot tracking in manufacturing

Blog Written By | ERPFocus

Lot Tracking in ERP

As with everything else in an ERP implementation, goals and objectives of lot tracking should be explicitly understood and agreed upon when designing a transaction flow. Not all ERP systems have lot tracking capability the way your process manufacturing may be used to. Because of that, you should be able to compellingly articulate the value you get from lot tracking since, at ERP software selection time, strong financial and purchasing modules might trump a weak or non-existent lot tracking system. If lot tracking is a “just in case” process (just in case you need to research something, just in case there is a quality problem, etc.) and its value to quantify, you could end up without a robust lot tracking system. In that case, some type of workaround has to be created.

Is everyone on the same page?

Careful communication is required to understand the lot tracking capabilities of an ERP package. because most vendors have good faith that they have a strong lot tracking capability. However, unless your ERP vendor has specific experience in your industry, and thoroughly understands your lot tracking problems, you have to be cautious. There are very real philosophical differences that create performance differences.

A subtle but critical difference, for instance, is what a “lot” represents. Almost all process manufacturing defines a “lot” as all production of a single SKU manufactured in the same production run. However, ERP packages that lack depth in lot tracking might stop there. In that case, the lot number represents a group of physical things comprising a total inventory quantity: a group of pallets, a group of rolls, a group of drums, a group of boxes. That lot has a genealogy comprised of intermediate lots created under the same definition. In this case, the “name” of the inventory quantity is the lot number and the attributes of that inventory are associated with that lot number. But in this scenario, there is no visibility of how many things (pallets, boxes, drums) make up that inventory quantity. In more robust lot tracking, however, each discreet piece of inventory – each pallet, each roll, each drum – receives a unique inventory name (serial number), and the lot number is attached to the serial number as one attribute (in addition to things like SKU number, quantity, and quality). The philosophical difference leads to cascading differences in how sales orders are written, how available to promise works, and how inventory can be managed.

Process manufacturing covers a wide spectrum of complexity and not every operation requires a complex lot tracking solution. The complexity of serial numbers may not be needed at all in a specialty chemical process, where homogenous quantities move in batches, but an absolute necessity in a paper and textile mill. The key question for your team to decide in advance is what priority lot tracking will have in making your ERP software selection.

allonline365 offers a comprehensive solution that grows with your business over time. Dynamics 365 Business Central has the capabilities to add a manufacturing module into your ERP solution as and when you need it. If you are looking for an ERP system for your manufacturing business contact us on  info@allonline365.com or  +27 (21) 205 3650.

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