You need an ERP system for process 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.