Discrete ERP 101

Process manufacturers (AKA continuous manufacturers), on the other hand, make products that cannot be disassembled into their component elements (ex: spray paint, whiskey, talcum powder…).

Both process and discrete ERP software aim at full integration of management, staff, and equipment. This integration provides a way for information from any area of the enterprise to be communicated to any other area, in real time.

However, a discrete manufacturer who decides to select a process ERP solution to run the business is headed for a world of workaround pain.

TEC analyst Alex Hankewicz, in his recent article on ERP solutions for “mixed-mode” manufacturers, summed up some of the differences nicely:

“[In general,] discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes.

A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields.”

Discrete ERP software also focuses on the automation of such business processes as materials sourcing, resource scheduling, and customer order management. Potential benefits include improved workstation use and scheduling (leading to reduction of assembly line downtime), just-in-time (JIT) inventory management (thus reducing carrying costs), and a reduction in overtime. (Note, however, that JIT can be applied to process manufacturing as well.)

See TEC’s Discrete ERP Evaluation Center for more on the business benefits of discrete ERP applications.

If you are a discrete manufacturer burdened with a process ERP solution, you will be unable to properly allocate items to specific orders. Traceability thus becomes a major headache.

Furthermore, the overriding consideration for process manufacturers is quality. For discrete manufacturers, it’s quantity (with, naturally, a measure of quality control). A discrete manufacturer with a process ERP system will run into difficulties when trying to determine work station (resource) scheduling.

What Does the “P” in PLM Really Mean?

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

What Does the “P” in PLM Really Mean?

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

Hence, the meaning of “product” within “product lifecycle management” is changing over time with the process of more industries adopting the PLM methodology. In fact, as long as you offer something that “might satisfy a want or need”, you should think about the life cycle of your offering.

So, I hope you have a better idea about what the “P” in PLM really means.

Now, I am going to throw you another question. As I write this blog, I’m facing an Acer monitor. It has a model number and a serial number. The model number represents all Acer monitors that have exactly the same product structure and specifications; the serial number specifically refers to the one monitor in front of me. Which number (the product as a model or the product as a concrete piece) should be managed within a PLM system?

Discrete ERP 101

Discrete manufacturers assemble products from component parts. These products are made to order and can, in theory, be disassembled (ex: cars, computers, tables…).

Process manufacturers (AKA continuous manufacturers), on the other hand, make products that cannot be disassembled into their component elements (ex: spray paint, whiskey, talcum powder…).

Both process and discrete ERP software aim at full integration of management, staff, and equipment. This integration provides a way for information from any area of the enterprise to be communicated to any other area, in real time.

However, a discrete manufacturer who decides to select a process ERP solution to run the business is headed for a world of workaround pain.

TEC analyst Alex Hankewicz, in his recent article on ERP solutions for “mixed-mode” manufacturers, summed up some of the differences nicely:

“[In general,] discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes.

A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields.”

Discrete ERP software also focuses on the automation of such business processes as materials sourcing, resource scheduling, and customer order management. Potential benefits include improved workstation use and scheduling (leading to reduction of assembly line downtime), just-in-time (JIT) inventory management (thus reducing carrying costs), and a reduction in overtime. (Note, however, that JIT can be applied to process manufacturing as well.)