Discrete or Process Manufacturing and why it matters when choosing ERP?

When it comes to ERP software today, manufacturers are faced with many options. Looking for a solution that delivers industry-related capabilities that can be configured cost effectively for your manufacturing needs - whether discrete or process - can be confusing. We will define the ERP requirements for discrete versus process manufacturing below.

First, let’s start by defining discrete and process manufacturing

Discrete Manufacturing is defined by APICS as “the production of distinct items such as automobiles, appliances, or computers.” Consider that these are items that can be counted, touched and often times require assembly of parts and components.  The manufacturing process involves bills of material (BOMs) to define raw materials and sub-assemblies plus a routing to track labor steps. Discrete products can often be disassembled and components can be restocked for other use.

A simple example is the assembly of a snow shovel. There are specific components required to make a shovel including the blade (metal stamped or plastic molded), handle (molded), shaft, and miscellaneous fasteners to connect the individual components. If one component is out-of-stock, the finished good cannot be completed.

Process Manufacturing is defined by APICS as “production that adds value by mixing, separating, forming, and/or performing chemical reactions.”  Process manufacturing items include food, chemicals, beauty products, pharmaceuticals, and nutraceuticals to name a few. By definition, these products are the result of recipes and formulations that, when mixed, change the composition of the original raw material and cannot be disassembled.

An example of process manufacturing is baking sugar cookies. To make cookies, you need ingredients defined by a batch like flour, eggs, sugar, and seasoning. Once mixed, the raw materials combine to form a new finished good and the raw materials are not recoverable. You can still make cookies even if you have limited raw materials but you’ll need to decrease the batch size accordingly to meet your lowest common denominator. In other words, batch sizes are scalable and raw materials represent a percentage of the desired output.

Understanding which ERP solution is right for you

Typically, ERP systems specialize in one manufacturing method because terminology, workflows, costing principles, and compliance requirements differ across industries. A traditional discrete bills of material (BOM) does not accommodate process manufacturing recipes and formulations. Sometimes, businesses try to force discrete products in process environments with customizations, third-party enhancements and/or integrations to stand-alone solutions. As a solution provider, RKL eSolutions has taken an industry approach to the Sage portfolio, playing on the natural product strengths and customer successes.

Sage 100c or Sage X3?

Sage 100c is an ideal solution for discrete manufacturers, especially job shop operations. Sage 100c delivers a traditional BOM and Work Order for make-to-order and make-to-stock manufacturers. Optional modules include MRP (Material Requirements Planning) and Scheduling for additional production planning.

RKL eSolutions positions Sage X3 in process manufacturing environments especially Food Processors, Chemical manufacturers and Pharma/Nutraceutical sciences.  Sage X3 is the preferred solution for process manufacturers because of its native batch and continuous manufacturing capabilities. Additional industry-specific requirements for lot traceability, quality, allergens and Safety Data Sheets are configurable to meet regulatory compliance requirements, too.

Whether you’re a discrete manufacturer or process manufacturer, understanding the methodology, terms and manufacturing principles is an important step in shortlisting potential solutions to consider.