What You Need to Know About Discrete Manufacturing ERP
If the global pandemic has taught manufacturers anything it is that the need to scale and respond quickly with access to real-time, big data is most critical. Cloud-based discrete manufacturing systems are doing just that. So much so, that the discrete manufacturing ERP market is expected to grow 9% CAGR by 2027, notes MarketWatch. A discrete ERP system can help your organization focus on the business instead of focusing on the IT stack and administration.
What is Discrete Manufacturing ERP?
It may be an oversimplification to describe discrete manufacturing as: If you can hold it and count it, it’s discrete, but Wikipedia defines it simply as: production of distinct items. For most people searching for ‘discrete manufacturing’ it is probably better to just say “production of parts”. Of course, that is not to confuse the old Wendy’s burger chain’s commercial describing processed chicken patties as “parts is parts” but for the un-initiated, it is almost clearer to describe discrete manufacturing as not process manufacturing.
Difference in Discrete Manufacturing vs Process Manufacturing for ERP
Composition: Parts vs Ingredients
Discrete manufacturing results in a bill of materials (BOM) of parts, assemblies and/or sub-systems that are made from solid materials like metals, plastics, glass or even wood. Process manufacturing, on the contrary, deals with ingredients that are combined into solutions, compounds, or finished products that result in a continuous flow of product that is all the same.
Characteristics: Ability to Disassemble vs Irreversible
Perhaps the easiest way to distinguish a process manufactured product by its inability to be disassembled. Once you’ve mixed ingredients together, there is no de-mixing where in general, a discrete manufactured product can be disassembled into its component parts.
ERP Focus: Process – mixing times & temperatures vs Discrete – machining, stamping, or welding
A Process Manufacturing ERP focuses more on the process—mixing times and temperatures—as ingredients are transformed into the final product. This is more commonly delivered as a flow of said product such as via a pipeline or into a vat for bottling or packaging. A Discrete Manufacturing ERP focuses more on individual processes such as machining, stamping, or welding to transform raw materials (parts and assemblies) into finished goods delivered as individual, countable items.
Although these don’t sound that different—parts versus ingredients—and you can certainly count the bottles at the end of a bottling line or manage discrete manufacturing as a flow, the two are mutually exclusive. In fact, the example of a bottling line would be considered mixed mode manufacturing where the production of the product is process manufacturing, the handling of the bottles would follow discrete manufacturing processes with individual packages such as bottles of product being assembled into six-packs or cases. In this example, a discrete manufacturing ERP can handle the execution and management of production quantities for sale or distribution.
Essential Features of Discrete Manufacturing ERP Software
Regardless of the manufacturing mode, discrete manufacturing distills down to converting raw materials into finished goods—full stop. The activities required vary by industry and company-specific requirements, but the primary workstreams are below:
- Bill of Materials
- Production Planning
- Inventory Management
- Production Management
- Quality Control
Bill of Materials
Like a list of ingredients for a recipe (process manufacturing), discrete products are broken down into their constituent components (parts and assemblies) in a bill-of-materials (BOM). As illustrated below, a top-assembly may consist of all parts or a combination of parts and sub-assemblies which would further breakdown into parts. There may be multiple BOMs based on the complexity of the product and even the complexity of the manufacturing (Manufacturing BOM) and/or service requirements (Service BOM).
- Top Assembly (finished good)
- Sub-assembly (assembled in house)
- Sub-assembly (purchased as an assembled component)
- Part (discrete part used to assemble sub-assemblies above)
- Sub-assembly (assembled in house)
The primary challenge with BOM management is revision control. Each component part or sub-assembly may be revised (Engineering Change Order (ECO)) as improvements are made during design or manufacturing which makes it a different item number. Different models of the same product may include different components to suit different markets and therefore, each assembly may have a unique item number even if it is 99% the same.
One of the primary strengths of a discrete manufacturing ERP is the ability to manage this complexity in the underlying database but present the BOMs in logical ways in the user interface. ERP systems can overcome the challenges of keeping track of a specific version with specific parts and the sub-assemblies that are included in the specific version of the BOM.
As the manufacturing business sells products, orders accumulate into demand but each has its own cumulative lead time. Customers may have different delivery expectations that must be satisfied to retain them as customers.
The challenge for the Purchasing or Procurement department is to determine not only the required quantities of each item but choreographing the delivery times to ideally arrive just in time (JIT) for production’s schedule of its next level manufacture. Although JIT is a formal strategy in lean manufacturing to support rising customer expectations, the goal of any manufacturer is to minimize the time any purchased item remains in their possession prior to shipping and being paid (minimize order-to-cash cycle).
A discrete manufacturing ERP makes this job much easier. Inclusion of a manufacturing requirements planning (MRP) engine automates mapping all variables in lead time from order processing time to physical receipt at the plant as well as the quantities for each item pulled from the demand plan. MRP has been a staple of discrete manufacturing for decades and is very effective at enabling timely fulfillment.
Procurement as described above must be complete before any manufacturing can commence, but planning the work is always done in parallel. Production planning starts with a high-level demand plan that outlines how much product will be produced in specific intervals (per year, per quarter, per month, etc.) Production scheduling further breaks this down for which elements of which products will be produced on individual production lines and runs.
The biggest challenge for production planning is coordinating all of the inputs required—material, equipment, labor—with the time that the production run is scheduled. Virtually anything can interfere with a perfectly planned product run from stock-outs (material not being available) to staffing shortages (required skillsets not available due to illness) to unplanned downtime (broken or otherwise non-functioning equipment). And even external challenges outside of a manufacturers control, such as customers requesting faster delivery or larger quantities may occur.
A discrete manufacturing ERP includes the ability to dynamically reschedule the production schedule by juggling the above resources and inputs while calculating the cycle times against scheduled delivery dates. Most automated production scheduling capabilities include a visual user interface for the planner—often drag-and-drop—to see where and when demand can be produced and includes level-loading, which is another lean manufacturing technique to spread out production demand and mitigate the risk of overly tight scheduling.
Raw materials must be ordered, delivered, and usually stocked (unless using JIT) prior to being allocated for production. This requires material handlers to know where the materials are, the necessary allocated quantities, and to perform the materials movement transactions in the ERP to keep the facility operating smoothly.
There are many challenges in inventory management for discrete manufacturers, but the most important thing is to ensure that changes are recorded. If people move material, scrap parts or don’t record production, the ERP will be out of sync with the actual inventory situation and the above challenges for production and production planning result.
Discrete manufacturing ERP systems embed best practices workflows for optimal inventory management that contribute to the bottom line. The features make it easy for employees to record the comings and goings of inventory such as a hand-held barcode scanner that quickly records which inventory is being handled for which transactions. A modern discrete manufacturing ERP should include a mobile app to perform the same transactions but has the added power of all the functionality of the ERP accessible from wherever the work needs to take place. This takes the guesswork—and human error—out of the recording of inventory transactions.
Once production begins for any production run, a discrete manufacturing ERP needs to record how much of each component is produced and where. Automated recording of production not only counts the units produced but needs to account for any waste or scrap discovered by quality control.
Some of the key challenges of managing production are centered around dealing with the unplanned and unforeseen disruptions to an otherwise good schedule. As outlined above, disruptions in resources such as operators calling in sick or being injured can throw off the schedule. But the biggest challenge to the schedule is unplanned downtime of the equipment being used. This can be as simple as calibrations causing small errors to complete shutdown of a machine for electrical or mechanical reasons. These disruptions may be overcome by running overtime (which adds to costs) or may result in complete rescheduling.
A discrete manufacturing ERP operates on a work order concept where every activity is templated for what resources are required and how long it should take. The system makes those work orders visible with respect to their particular status and are linked to all of the relevant information such as material, operator, or even alternate equipment or processes that could be used. This makes responding (versus reacting) to disruptions easier and keeps the plant running productively. By continuously recording the actuals versus the planned, production teams can continuously improve their operations.
As mentioned above, it is typical to expect scrap or waste from operations that result when products are inspected and do not comply with the agreed upon specifications. In addition, there are often other customer, industry, and/or regulatory requirements that must be complied with. Quality compliance requires manufacturers to document the processes, equipment (including inspection device calibration), and countermeasures should something go awry.
Managing quality control has many moving parts and can be seamlessly integrated into a discrete manufacturing ERP system. Depending on your industry, your quality management system (QMS) may be as simple as documenting inspections in your ERP as documentation that may be required to ship with products. Highly regulated industries like automotive, aerospace, and medical devices have more complex requirements such as documenting failure modes and effects analysis (FMEA) or corrective and preventative actions (CAPA) which can make this integration critical to compliance.
As work orders are completed and production is completed in quantities ordered by customers, they are staged for shipping. A discrete manufacturing ERP effectively tracks all of the required work and accounts for the consumed raw inventory that result in finished goods to be sold. In addition to the movements described above, the final step is to ship the product to the customer which initiates the invoicing and payment processes. ERP software will help ensure you consistently hit your promise times and exceed customer expectations.
6 Key Benefits of Discrete Manufacturing ERP Software
The many quantitative and qualitative benefits to ERP software are vast. Keeping all of the above processes working in a repeatable and predictable way is the primary objective of a discrete manufacturing ERP. Everyone from frontline workers to supervisors, managers, and executives rely on the following elements to keep the business profitable. Here are some of the key benefits of ERP discrete manufacturing ERP systems.
Real-time access to accurate information for rapid decision-making
A discrete manufacturing ERP manages a vast amount of data as well as contextualizing that data into robust reporting and dashboards for immediate insights. Because of the many dynamics and challenges described, management needs to have timely access to the information they need when they need it to remain agile and profitable.
Greater employee connectedness & responsiveness
Workers in all roles need to communicate with their upstream and downstream counterparts to keep things moving. Instant communication and collaboration is critical for productivity and dealing with change and should be mobile-enabled. Pre-defined processes via built-in workflows help move data and information through process steps with quicker approvals and detailed recording for accountability.
Optimal supply chain visibility – upstream and downstream
In many cases, customer expectations are more demanding than can be fulfilled by waiting for an order. In these cases, having earlier visibility to quotes before they become orders can buy valuable time for planning and reduce the risk of business disruptions. Similarly, a discrete manufacturing ERP can include suppliers as users such that supplier volumes and predicted shipping dates can resolve many raw materials inventory issues.
Complete, end-to-end traceability for auditing
A discrete manufacturing ERP records who did what to which item and when. This is virtually impossible in a paper-based system where only specific activities are recorded, and unfortunately are very often not recorded or not recorded accurately. Depending on the industry, a customer or regulatory body may audit your company and without ready access to the audit trail created by end-to-end traceability, you may have to spend hours, days or weeks to find what an auditor asks for. Failure to comply can result in fines and even shuttering of a plant in extreme situations.
Effective scalability to support business growth
Many businesses start out without an ERP system and by the time business growth is throttled by the lack of one, they have created processes that they consider strategic or competitively differentiating. With business growth as the core focus, and mergers or acquisitions occurring at all-time highs, ERP program scalability is of paramount importance. Cloud ERP software can be reconfigured quickly to support business changes without disrupting production. Modern low-code technologies enable tailoring of the user experience without the risk that comes from customizations to the underlying software. Once configurations and tailoring have been completed and tested, the new ERP can go live and the production operations transition from the old way to the new system.
Improved ROI to the bottom line
The ultimate goal of a discrete manufacturing ERP is to streamline processes, eliminate errors, and reduce operational costs. ERPs systemically manage the costs of materials and operations and can easily report any financial metrics that you’d like to track. With this information and a continuous improvement mentality, manufacturers can leverage their ERP to lower costs and increase revenue which improves profitability that can return capital resources back into the business to fuel growth.
The elements above combine to create a digital manufacturing operating system to run your manufacturing business. When deployed on a common platform like the Salesforce Platform, a discrete manufacturing ERP software system can extend to the entire business, including customer relationship management (CRM) on the front end, and connect all the way to after-market, field service management (FSM). When you combine the efficiencies from a common data model across all enterprise software systems and enable your workforce with a common user experience, you make your precious human resources more productive because the ERP handles all the complexity, freeing your people for innovation and continuous improvement.