There are many different types of manufacturing operations and software vendors have developed specific solutions to support these operations. To begin your analysis of Manufacturing or Enterprise Resource Planning (ERP) software, you need to first understand the type of manufacturing process your company employs. By matching how you manufacture goods with the offerings of the manufacturing software vendors, you can better select a software package that will fit your needs. The three main areas of consideration are:
- Sales Type. Most manufacturing companies have elements of both make-to-stock (MTS) and make-to-order (MTO). For example, you may have an MTO environment, but components of the final product are built in a MTS environment because you will use the component for many different MTO products. Therefore, most companies see themselves as being somewhere along a scale of MTO or MTS depending on the types of products they produce. Although some manufacturing software is specialized toward one or the other, most manufacturing software products have been designed to encompass both ends of the scale.
- Manufacturing Type. Discrete manufacturing is the production of objects or items such as refrigerators, automobiles and computers. Process manufacturing is the production of chemicals or food and is done by mixing, separating, or performing chemical reactions in either a batch or continuous process. The two manufacturing types have many similarities and it is not uncommon to find a process manufacturer using discrete software if the bill of materials (BOM) module can handle the right measurements for recipes and formulas. Pure process manufacturing software tracks yield management, formulas, waste material management, etc. See our Process Manufacturing Software Selection Tips page for more information regarding Process Manufacturing software evaluation.
- Complexity of Operations. Manufacturing software helps you make a manufacturing plan and then execute it while recording the process and results. Not every manufacturer needs to execute a plan to the deepest degree possible. Software allows you to set your own level of complexity without becoming bogged down in the extended capabilities of the package. An example of this is that manufacturing software offers basic scheduling for simple requirements, with an additional module for advanced scheduling. In this way, you can begin with simple module and then add more sophistication as needed.
Modern manufacturing software offers excellent functionality and tools that you can leverage to improve operations and reporting capabilities. The following are some of key functional areas that you should consider when evaluating manufacturing systems.
- Sales Analysis. Manufacturing software provides visibility to all the data collected or associated with a customer in the course of their history with a company. Standard reports in sales analysis include customer information by salesperson, territory, region, frequency, volume, product line, and transaction size. Product reports include product information by category, revenue, discount, and profit margin. Ad hoc reporting tools are also available that are user friendly.
- Configurator. Production configurators are utilized where parts that are required for final assembly have yet to be created. The sales configurator can determine the parts needed for a final product, but if the parts have to be fabricated from bulk materials, it cannot tell the quantity and types of bulk materials that need to be ordered to create the part. The production configurator converts the parts as described by the sales configurator, and determines the raw materials that need to be ordered. In many cases, it will also create and manage the cut lists and BOM’s that are to be used in the production line so identical or similar parts can be created at the same time for efficient production. Companies that are make to order based with similar but not identical products from raw materials such as wood, plastic and metal are usually candidates for production configurators.
- Production Forecasting. When total demand has been established, manufacturing software is capable of calculating what needs to be produced in order to meet that demand. The software has a record of the finished product that is available and product that is in the manufacturing pipeline. This allows the software to calculate production requirements. For most manufacturers it is not enough to know how much more needs to be put into the manufacturing process but more importantly when it needs to be there. For example, you may have 3,000 units within two days of completion of a 10 day manufacturing cycle with a weekly demand of 1,000 units. Knowing that the next 2,000-unit batch must start within the next week in order to meet the next demand cycle is actually the most important information that manufacturing software tracks.
- Bill of Materials (BOMs). While the ability to create a bill of materials is standard in manufacturing software, there is nothing standard about the way the BOM works. Edit tools are available that allow you to drag and drop, cut and paste, copy, and change bills of materials. Many manufacturing companies need the ability to create phantom parts to break a sub part off as a product that can be sold, or allow it to continue in the production of another product. Modern systems usually allow an unlimited number of levels.
- Work Center Management. Work centers schedule people and machines for a particular process. The purpose of a work center is to set up a manageable unit where production can be tracked and measured for capacity planning purposes. Another benefit of Work Center planning is the ability to measure productivity machines and/or people. This is particularly helpful when a work center is used for multiple tasks and products that require setup for different production runs. Set up times and costs can be tracked and the efficiency of changing product runs can be determined. Outsourcing of specific operations can be set up and the cost associated with that outsourced work center can be tracked.
- Routing. Routing is the production plan as the product moves through each work center. Manufacturing software enables routing to be set up automatically or manually to make sure the work center is utilized in the most efficient manner and minimize changeover setup costs. Routing can also tie into quality inspection and testing. Some routing may be to outside contractors.
- Capacity Planning. Determining the capacity of a manufacturing operation is only as accurate as the plan that was created to produce each item. This process may be performed at the aggregate or product-line level. Manufacturing software allows you to do a rough-cut capacity plan that is based on current and production orders, which can then be used in creating a master production schedule to schedule all production. There are two types of capacity scheduling. The first is infinite capacity scheduling. This allows you to schedule production as if you have unlimited resources. Finite capacity scheduling allows you to include constraints on the manufacturing process such as limits on raw materials. Manufacturing software offers the ability to handle both types of capacity scheduling.
- Materials Resource Planning (MRP). Once a production plan has been determined, MRP can determine what materials you will need and when. MRP looks at the bill of materials, inventory, and the master production schedule to calculate the required materials. It also takes into consideration the time it takes to acquire or produce needed materials and when they should be ordered or created in time for the next phase of production.
- Vendor Metrics. Vendor metrics track information about the vendor including: orders, cost, on-time delivery, damaged goods, correct quantities, performance, etc. Manufacturing software maintains this information on an ongoing basis, but, more importantly, it gives the purchasing agent visibility of the pertinent vendor metrics at the time of placing the order, which is a very powerful tool to manage suppliers. You can also set purchasing requirements for the lowest price vendor and the shortest lead-time vendor where necessary.
- Electronic Approvals and Routing. Leading manufacturing software packages have excelled in the area of workflow and electronic approvals. This allows selected items to be approved by different managers before they are ordered. For example, many companies set the approval process so that the purchasing manager approves orders over $5,000, the production manager approves purchases over $10,000, and the vice president of operations approves purchases over $25,000. Workflow functionality routes a purchase requisition electronically to the inbox of the approver who attaches an electronic signature to the proposed order before it is converted to a purchase order. Electronic approvals and routings are usually fairly easy to set up. They speed the approval process and move the office towards a paperless environment.
- Work Status. Keeping track of work-in-process is a key element of shop floor control. Most manufacturers implement input tools on the shop floor that can provide real time information such as barcode scanners and floor terminals. Personnel enter the status of each item or batch of items at the work centers.
- Capacity and Efficiency Data. Another benefit that is gained by tracking materials on the floor are capacity and efficiency statistics. By tracking the throughput of items over time you can tell the flow rate of production, which provides some standard to measure any changes to production. This information includes not only how long it takes to move production along the line but also which work centers are most efficient and which ones are slowed by setup time or other constraints.
- Work Orders. Manufacturers use work orders to manage and control personnel, tools, and equipment. The work order is a way of identifying what work needs to be done and when it should happen. It is also used to track labor and materials in the performance and allows you to see what the on-hand and available inventory levels will be on a specific date. Multi-level work orders can be set up for building sub-assemblies and roll costs up to the parent level.
- Job Cost. Manufacturers use job cost to collect and identify cost and materials associated with a project. These projects can span multiple months or years, and the software allows the ability to track all related labor, machine use, material, and overhead, and any other cost associated with a job.
- Units of Measure. Many companies in the manufacturing industry have sophisticated requirements for units of measure and unit conversion abilities because goods are often bought in bulk, such as by the ton, container, pallet, or case, but inventory may be relieved in pounds, cases, or units. This is also true with finished goods as they may be kept in cases, but sold by the container or pallet. Convertible units of measure can also be applied through the manufacturing process so materials can be converted as the manufacturing progresses.
- Barcode/Radio Frequency. Barcode inventory tracking is standard functionality for manufacturing software. This reduces the mistakes that are made in the inventory tracking process and provides a real time view of the inventory and their location.
- Lot and Serial Number Traceability. Manufacturing software tracks lot and serial numbers. This includes the ability to trace a lot number forward to every customer who bought from a particular lot. It also tracks the serial number from the supplier to the customer, through a warranty return or replacement. Manufacturing modules that maintain lot and serial number tracking include receiving, quality inspection, all steps in the manufacturing process, and order entry.
- Customer Compliance. Some customers (particularly large retail chains) have shipping requirements that must be followed. These requirements include special shipping instructions, labels, and Advanced Ship Notices (ASN). Manufacturing software offers the ability to customize each shipment by customer. Special labeling can be printed and ASN’s can be sent via fax, email, or EDI.
- Returned Materials Authorization. RMA’s are generated to track returned goods that were sold to customers through the return, repair, or warranty replacement process. It is issued and attached to a line item on the original order of a customer allowing for partial returns. Establishing a link between the return, order, and customer enables return analysis to be done at a customer level. RMA modules also handle advanced replacements and provide tools to track the returning item, so the customer is properly credited or charged if the item is not received.
- Web Portals. Web portals are gaining in popularity for both customer and vendor activities. A portal is a way for the vendor or customer to access information from the manufacturing package with appropriate security. A portal customer can enter orders directly into the system using a simplified order entry screen over the Internet. The customer also has other screens available to track the status of an order through the process all the way to shipping and payment status. With a vendor portal, a vendor may access sales information, contract status, sales forecasts, payment status, etc.
For answers to specific questions regarding your manufacturing software evaluation project, feel free to email or call us at (425) 216-4030.