Process Manufacturing ERP Software Market Guide
Posted on 31st Jan 2019
What’s the Difference Between Discrete and Process Manufacturing?
As opposed to discrete manufacturing, where distinct products are produced, process manufacturing creates batches of goods that need to be divided into units such as barrels or bottles. Further, the ingredients and raw materials used in the manufacturing process are transformed through chemical reactions. This means they can’t be reused, unlike the parts and components used in discrete manufacturing.
As we will describe in detail below, these unique characteristics of process manufacturing make it difficult to manage. First, the fact that the production process cannot be reversed forces process manufacturers to be more careful when planning product recipes and operations. Product delivery can also present a difficult challenge for process manufacturers as their finished products have a greater potential to impact the health of both consumers and employees.
Plant managers require complex and specialized process manufacturing ERP solutions to deal with safety laws and regulations, demands from consumers wanting healthier and more environmentally-friendly products, and everyday functions such as careful operational planning of product recipes, accounting, customer management, sales, and purchasing.
The Top 5 Reasons Companies Choose Process Manufacturing ERP Software
While they may vary somewhat depending on industry or company size, the following are the most common reasons process manufacturers choose ERP for process manufacturing:
1. Quality Management
Quality management is critical for process manufacturers needing to comply with a plethora of laws and regulations, which can vary depending on where the products are made and sold. An ERP solution helps process manufacturing companies avoid recalls and other legal issues caused by a lack of compliance with safety or industry standards.
Poor product quality can also lead to health hazards like bacterial contamination or environmental issues such as pollution caused by dangerous chemicals. Besides the impact on the revenue of the company and the fines that may be incurred, these issues also impact the brand of the manufacturer. It usually takes years and a lot of effort for companies to regain the trust of consumers, which is why manufacturers prefer to prevent these problems from happening in the first place.
2. Supply Chain Optimization
Supply chain optimization is important for process manufacturers for multiple reasons. First, in order to provide good products at reasonable prices, process manufacturers need to purchase ingredients and raw materials from reliable suppliers. They also need to create long-term relationships with these suppliers. ERP solutions help process manufacturers track performance, costs, transaction history and other capabilities needed for effective and efficient supplier management.
In addition, process manufacturers have specific transportation needs, which can vary from one industry to another. For instance, a food manufacturer may require refrigerated trucks for delivery, while a chemicals manufacturer will need tankers. Not to mention, most countries and states have different rules regarding chemical goods transportation. ERP process manufacturing solutions help organize all of this information so you can fully optimize your supply chain processes.
3. Recipes and Formulas
Recipes and formulas in process manufacturing are not only complex, but they also don’t leave much room for error. A minor change in quantity for one ingredient can lead to the quality management issues mentioned above or may compromise an entire batch. While defective production batches can be adjusted to improve their quality, this process can be very complex, since manufacturers need to take into account all the possible chemical reactions generated by adding ingredients that were not part of the original recipe.
Another important challenge process manufacturers face is that some ingredients can only be used in very specific conditions, related to factors such as temperature, humidity or even exposure to light. Furthermore, the same ingredient may have a completely different impact on production depending on its potency or the concentration of the substance being used. Only a process manufacturing ERP solution can help manufacturers consider all these factors when creating and adjusting recipes and formulas.
4. Tracked Costs and Profitability
The complexity of the recipes or formulas makes cost tracking a challenge for process manufacturers. Ideally, they should track the cost of every ingredient based on the quantity used and its chemical characteristics, such as potency. Furthermore, the cost of wasted raw materials and ingredients also needs to be tracked as accurately as possible. Without all these details, process manufacturers cannot estimate their total actual costs per unit or compare this with the sales price to determine profit margins.
An important category of costs for process manufacturing is related to the inventory of raw materials and finished products. Not only do they often require special storage conditions like temperature-controlled environments, but these products can have multiple units of measure which makes warehousing even more complicated.
For instance, a finished product like juice can be stored in barrels for one customer, bottles for another and so on. On top of multiple units of measure, manufacturers also need to track expiration dates and lot numbers. Using a process manufacturing software, you can store and aid in the management of all this information.
5. Adaptation to Different Types of Markets
To adapt to a local market or comply with regulations, process manufacturers may need to implement formulas and recipes specific to the markets they serve. For example, a recent trend forcing food and beverage manufacturers to adjust their recipes is increasing pressure to reduce the amount of sugar in soft drinks. Even some of the largest manufacturers like Coca-Cola are changing their products so the amount of sugar and calories is reduced