Why A Manufacturing ERP Needs Lot Serial Control
Pat Garrehy, Rootstock President & CEO
June 10, 2014 – First there was MRP, then MRP II and CIM. Ultimately, T. Lee Wylie, then Director of CIM at Gartner Group, created the concept of ERP in 1990 to describe the evolution of MRP into the next generation of business systems. Originally, ERP came to represent a larger whole that reflects the evolution of application integration beyond manufacturing. It didn’t stay that way.
Today, not all ERP packages are developed from a manufacturing core, especially those residing in the Cloud. Some vendors begin with accounting while others start out in maintenance or human resources. The problem for the manufacturer is that many imply that they will work in manufacturing or any other sector.
So, when looking at ERP solutions, there are several things a manufacturer can look for when reviewing the various ERP suites. One is to determine if the ERP provides Lot Serial Control. If you are in a business, such as medical supplies, meat packers, packaged food distributors, beverage distributors, chemical supplies, automotive, aviation, pharmaceuticals and others, where the law requires you to maintain accurate records for each unique Lot and/or Serial Number purchase and sale, you already know you need Lot Serial Control.
There are, however, many examples of manufacturers that are not mandated by regulation to implement lot serial control but realize it gives them a superior ability to manage their business. Perhaps they need to track parts that expire, to assure that they are not used in manufacturing your product. A brand new piece of machinery built using dated belts does not make customers happy when a broken belt shuts down work only weeks after purchasing.
If the manufacturer has multiple vendors for a purchased subassembly, they may want to track lots to specific vendors to provide additional information for warranty repair analysis. If a high percentage of the warranty repairs contain parts from a specific vendor, it allows them to quickly make the required changes.
For those manufacturers that don’t think they need it, look at the continuing barrage of regulations coming out daily from Washington. In our litigious society, the day is quickly coming when any manufacturer better be able to trace the history of anything they make. While the manufacturer doesn’t think they need lot and serial control at present, it nonetheless should be nice to know that it is already available by simply clicking a checkbox to activate the functionality.
What Should Lot Serial Control Provide?
Lot Serial Control registers an item’s lot or serial number through the Purchasing Receipts, Inventory, Shop Floor Control and Sales Order Fulfillment functions of the ERP. The Purchasing Receipt function will note the Item Number classification and if “lot controlled,” the lot number must be assigned to the entire Purchase Receipt for the items being received prior to their “acceptance” into stock. There should be an option that lets the user assign the “receiver number” as the lot number, which provides an easy, but practical, application for the lot identification.
If the Vendor is assigned a lot number, this can be assigned by the user instead. If the Item Number is “Serial Controlled,” then, prior to the receipt into stock, the serial numbers can be assigned. The software will parse the serial field to insure that serial number records are created on the Purchase Receiver and on Item Location Records as well as an “item serial record,” insuring that only one serial can be assigned an item.
A complete manufacturing ERP system will allow the lot or serial number, as required, to be registered on all inventory additions, adjustments and scrap transactions. While Lot and Serial controlled items are not appropriate for “backflush” considerations, all other work order and subcontract order issues must allow the lot or serial number to be recorded on the issue transaction.
To assure the integrity of lot control, the system must allow the user to record the lot number for “lot controlled items” on work order supplies before the assembly is received into stock or scrapped. Likewise, the system must allow serial numbers to be assigned before the work order assembly is received or scrapped. Additionally, pick lists should be printed with serial number detail and lot information as appropriate. When the sales order is fulfilled, the serial number of the final assembly can be matched and recorded to the shipment.
The Point Is…
If you are a manufacturer, you must make sure that your ERP has the applications that manufacturers need. A one size fits all approach simply will not work in a manufacturing environment. Verifying that the ERP has Lot Serial Control – among other manufacturing applications – will help manufacturers narrow down their search for the appropriate ERP for their company.
ABOUT THE AUTHOR: Pat Garrehy is the Founder, President, and CEO for Rootstock Software®, a Cloud ERP company, and has an extensive background as a software architect and engineer. With over 30 years of management, sales and technical experience, Garrehy brings a unique blend of analytical focus and business savvy to the table.
Garrehy is also the founder and former CEO of Relevant Business Systems, a client-server ERP software provider with an exclusive focus on discrete manufacturing companies. Relevant, which was sold in 2006, remains the most profitable division of the acquirer to date. As a University of California at Berkeley graduate, he holds a BS degree in business and mathematics as well as an MBA in finance from the University of Southern California.