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. 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.
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 ERP process manufacturing 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.
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Top 10 Benefits and Components
Although the actual functionality of a solution depends on which vendor you go with, it’s important to be aware of the capabilities that are typically most beneficial to businesses in the manufacturing industry. Factors such as deployment method, industry and company size affect which solutions may adequately serve your company’s manufacturing requirements. Regardless of these factors, it’s essential to keep in mind the top features that you should be looking for in your process manufacturing software.
1. Quality Management
One of the most important aspects to account for when selecting process manufacturing software is the quality management capabilities that the vendor offers. Yes, producing an item in an efficient and optimized manner is important, but the point is moot if it doesn’t adhere to important governmental regulations and industry standards. Because process manufacturers have a unique and significant need to meet regulations, it’s essential that the ERP or manufacturing software that you go with supports these endeavors.
Additionally, because many manufacturing companies have global operations or sell their products to international customers, it’s helpful for a program to support laws and regulations from various geographical areas. This can help you avoid legal issues such as product recalls, which occur when an industry or safety standard gets overlooked.
Ideally, the quality management function in your software solution will also include capabilities that support product quality in general. Because process manufacturing is so detailed, it can be easy for hazards such as pollution or bacterial contamination to occur. Therefore, quality management is an essential part of a solution as it protects your customers, your revenue and your brand.
2. Supply Chain Optimization
As you likely already know, there are a lot of moving pieces associated with supply chain management. It can seem overwhelming to manage this process without a software solution, which is why supply chain optimization is one of the essential functions included in process manufacturing ERP software. One of the key benefits associated with this feature is vendor relationship management, which helps ensure that you are using high-quality materials to create your product at a good price point. Vendor relationship management includes facets such as tracking costs, performance and transaction history.
Process manufacturers also have unique transportation needs due to the delicate or potentially hazardous nature of the products they create. For example, a pharmaceutical manufacturer might need to transport chemicals in a tanker, or food manufacturers might need a refrigerated vehicle to prevent food and other goods from spoiling during the distribution process. This is further exacerbated by national regulations that often affect how chemicals can be transported. Software for the manufacturing process can ensure that everything is distributed efficiently and that when developing products you are doing so efficiently and affordably.
3. Recipes and Formulas
When creating products using process manufacturing, there’s little to no room for error. This is why management and adherence to formulas and recipes are so essential, making it a key component of process manufacturing software. Recipe and formula management is a capability that ensures quality success and helps save money by reducing the creation of ineffective products. It can be very complex to fix defective products, which is why this function not only reduces the likelihood of defectiveness but also often includes recipes for substitutions that can be made to fix your product or deal with material not being on-hand during the manufacturing process. When using a substitute to develop an item, keeping track of potential adverse chemical reactions that can occur when adding an aspect that wasn’t included in the original recipe is essential to the safety of your employees and your customers.
The delicate nature of process manufacturing is further expanded by the fact that some products or processes can only be completed under specific conditions related to elements such as humidity, temperature or light exposure. Additionally, the concentration or potency of a component that’s used during the manufacturing process can affect the recipe and how chemicals react during the development process. Process manufacturing software accounts for all of these aspects so that you can ensure safety and quality when developing your products.
4. Tracked Costs and Profitability
The bread and butter of business is ensuring that your efforts are generating a profit. With cost tracking and profitability measurement tools, you can use the often complex information regarding the cost of materials for recipes and formulas to measure revenue and other financial factors. ERP Process manufacturing software should track ingredient costs based on chemical characteristics such as potency and the quantity that’s used. Additionally, the program should be able to measure and calculate how much wasted ingredients and raw materials cost your business. This enables companies to track total actual costs per unit and compare this metric with sales prices to discover what the profit margins are and adjust as needed.
Additionally, there are costs associated with the special storage conditions required for sensitive materials, such as temperature-controlled storage spaces and transportation vehicles. It’s essential to keep these factors in mind as well so that you have an accurate gauge of the total cost of producing an item. Items may also have multiple units of measure, which makes costs difficult. For example, you might ship a product in a vial for a certain customer but in a different container for another customer. Expiration dates and lot numbers should also be tracked in your process manufacturing software to reduce spoilage and the costs associated with it.
5. Adaptation to Different Types of Markets
With government regulations constantly changing, process manufacturers need to stay ahead of the curve to reduce the probability of compliance issues. An example of a regulatory change that process manufacturers had to account for occurred in 2000 when American producers of crude vegetable oil and similar products were issued a hexane emissions restriction by the EPA. For manufacturers that serve multiple geographic areas, new and changed regulations can be especially hard to track.
Another market consideration is how a product is labeled and packaged. If you’ve ever traveled internationally, you might have noticed that food labels can vary widely from country to country. This is all dependent on governmental regulations that determine what needs to be included on a label and what does not. When looking at packaging, size preferences can also vary by country. For example, the large soda size at a fast food joint in America could differ in size from the same order at the same establishment in China due to customer demands or expectations. With this differentiation in labeling, packaging and regulatory requirements across regions, companies can benefit from process manufacturing software by staying abreast of developments and market demands in various areas. This software can also help to facilitate changes to products as market preferences and regulations change over time.
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6. Reduced Waste
Waste is a sad but true component of process manufacturing, especially because it’s difficult to create a formula or recipe for a product that produces absolutely no waste. Therefore, most process manufacturers will have to deal with a percentage of their final output being waste. Additionally, waste can be caused by changing product recipes to account for increased demand or shortages of essential raw materials and ingredients. Reducing and eliminating waste is difficult, but software for the manufacturing process can help you keep track of the actual waste that’s produced and compare it to your calculated estimated waste to measure efficiency and help discover issues with the production process.
Another reason that waste occurs is due to bad planning. For example, if you don’t effectively track the expiration dates of your raw materials, they may expire before they can be used and therefore need to be discarded. Additionally, employee time is wasted through the reduced efficiency caused by unexpected downtime and changes in production. Therefore, production planning is an incredibly important feature to look out for in process manufacturing ERP software.
7. Agile Production
It’s common for process manufacturers to produce multiple different products along with variations of each product. Considering every item created has a different recipe or production method, transitioning between cycles can be extremely difficult. Process manufacturing software with agile production capabilities can help you plan ahead and adjust planning to improve productivity levels and efficiently utilize the equipment.
As a process manufacturer, you’ve likely had to replace planned production cycles for a product with a different cycle for another finished product. This can happen due to factors such as compromised quality of a good or material, which requires an adjustment or a fix to proceed. A flexible software solution will help ensure that these adjustments are efficient and timely while also making sure that the goods produced are of high-quality.
8. Improved Product Development and Go-to-Market Strategies
While the majority of product development is facilitated through product lifecycle management (PLM) software, there are capabilities in process manufacturing ERP software that can help with the gathering of data that’s highly relevant to product development. Some of the data that a system might collect include information on returns, sales volume and customer satisfaction. With this information in hand, you can easily see which of your products are a success and which ones aren’t. These software solutions also manage information related to what costs are incurred when creating finished goods along with any time variations. This enables you to produce high-quality products at a lower price.
Additional ways to leverage historical information include identifying trends in customer behavior that may affect your company’s revenue. With constant changes in the market, it’s essential to quickly adapt your current offerings, discontinue unprofitable items and release new products to adhere to customer demand. Sometimes process manufacturers will even sell or release products that have low short-term profitability in exchange for their potential for long-term revenue generation. This production method has its risks, but with process manufacturing software, these potential risks are more measured and well-informed, increasing the probability of success.
9. Responsiveness to Consumer Pressure to be More Environmentally Conscious
Recently, one of the ways consumer taste has significantly shifted is through the desire to purchase products from environmentally conscious companies that source their materials in a manner that doesn’t hurt the environment. Although it’s currently extremely difficult, if not impossible, to reach net-zero, there are still steps that companies can take to reduce emissions and have less of an impact on the environment.
Even after considering basic quality standards and safety laws during the production cycle, you also need to account for factors such as the use of conflict minerals. Conflict minerals are sold to perpetrate violence or war in the countries that sell them. With the rise of technology and an increase in consumer knowledge, it’s become increasingly common for customers to boycott organizations that use conflict minerals or otherwise use practices that they deem not environmentally friendly. Process manufacturing ERP tools can help reduce your company’s reliance on negative resources so that you can boost your consumer reputation and come off as a socially responsible organization.
10. Increased Competitiveness
By leveraging process manufacturing software, you can boost your company’s competitive position. Through benefits such as optimizing production, ensuring compliance and presenting a more environmentally conscious brand to your customers, you can attract more clients while also gaining revenue through increased efficiency. If you decide to look for a process manufacturing solution, you might want to speak to other businesses that used the vendor you are considering to see how it affected factors such as their bottom line and their customer base.
Automation capabilities and reduced spoilage are just a few of the many factors that can make your day-to-day processes easier while also optimizing opportunities for revenue.