A blog on five reasons general Enterprise Resource Planning (ERP) software systems fail Process Manufacturers
1. A reliance on workarounds & convoluted adjustments to account for process manufacturing outcome
Unlike general ERP systems, Process Manufacturing software such as Sage X3, are designed to manage and account for variable production outputs. Recipes can account for constant loss factors and variable losses during production can be attributed to specific work orders. Proper process manufacturing software produces real costs to manufacture based on actuals and manages wastage, shrinkage, rework and batch-based costing. General ERP systems masquerading as process manufacturing systems rely on using bills of materials rather than combining BOM’s with a recipe and by performing general journals and stock adjustment transactions to account for the variable nature of process manufacturing outputs. Often, they lack the required precision of 4, 5 or greater decimal places on a unit of measure.
2. Quality control measures
Most general ERP systems don’t include the quality control capabilities that process manufacturers require. Forward and backward traceability is key to reducing the impact of a product recall whilst quality controls at the time of receipting raw materials; picking for a work order; during and post production and when picking to fill a client order ensure consistent product quality and protection of the company’s reputation. Product status such as quarantined (Q), or R-Rejected provide companies greater control over picking and dispatching goods.
Batch & Lot Tracking software capabilities have a far greater significance for process manufacturers than other industries. Sage X3 was built to support batch and lot tracking. The quality control measures work hand in glove with traceability and with lot and batch-based costing controls to best reflect the needs of process manufacturers. Most general ERP systems exhibit elements of traceability but fail to supply process manufactures an integrated system covering all the important areas of business carried out by process manufacturing concerns.
The concept of a recipe is foreign to general ERP systems. As an example, the recipe for a prepared TV dinner may service two or more finished goods. The recipe may be used to create a one person TV dinner and also a family sized TV dinner. The BOM for each finished SKU differs (Size of box, label, inner dish etc… but the recipe remains the same). The portions differ however and as a part of generating the production order process manufacturing software takes into account the various SKU’s to be produced. The raw material to create the required meal will be picked taking into account known loss factors.
5. Fractional Quantities
Pharma, Nutra, chemical and some food and beverage products require precise measurements of ingredients, to multiple decimal places, to ensure compliance, to control costs and to meet a predetermined product or batch threshold. Good process manufacturing systems include the ability to integrate with weigh scales and to manage fractional quantities of stock. Most general ERP systems fail to adequately deal with fractional quantities of stock leading to a need to constantly adjust stock on hand figures increasing the chances of stock loss, or incorrect stock valuation.