The differences between process and discrete manufacturing are more than just terminology; they are distinctly different manufacturing approaches. Take for example the can of paint and the paint brush in the image to the right; the processes and procedures to produce one look nothing like the processes and procedures used to produce the other. To support the distinctly different processes requires a distinctly different ERP system.
You surely know whether or not your company uses process or discrete manufacturing practices, but let’s do a quick review of how these approaches are defined and highlight some of the important areas to pay attention to when it comes to ERP selection.
In discrete manufacturing, identical items are made repeatedly, usually in an assembly line fashion, and the raw materials used from one to the next do not change. The raw materials are the same after the product is finished as they were before; they are not transformed in any way. The final good can be taken apart and the raw materials can be easily separated from each other.
A discrete manufacturer produces a “thing” like a bicycle or a car. You can take the wheels off and remove the individual pieces and parts to reuse them somewhere else if you so wish.
Discrete products are measured by a whole number, 3 bikes or 25 cars; and they are tracked with serial numbers, a different number for each item as it comes off of the assembly line.
Unlike discrete manufacturing, raw materials used to make the final product are changed and transformed in such a way that they cannot be separated or restored to their original state once manufacturing is complete. Process manufacturers use recipes and formulas because not everything they produce is exactly the same.
A process manufacturer produces “stuff” like paint or a can of soup. Technically you can pour the paint or soup out of the can, but you cannot get the salt out of the soup or the pigment out of the paint.
Process products are measured differently than discrete; they are measure by weight or volume; 3 gallons of paint or 25 pounds of flour; and they are tracked by lot numbers.
Why this affects ERP choice
So now you are wondering, “How and why do the differences explained above factor into ERP selection?” It’s a fair question; after all, most companies have the same need for general ledgers, accounts payable, accounts receivable, sales order, purchase order, and other business management modules. So where do these operational differences begin to matter? Again, think about the way your operation works and your end result.
Just like your processes, different ERP systems are designed to focus on certain things and solve certain problems. For example, process manufacturer who produces grape juice measures in quarts or liters and would require the ability to convert standard measurements into the metric system, etc. A discrete manufacturer would not necessarily need a system with such capabilities because they work in whole numbers; 100 cars or 6,000 computers.
Systems designed to handle these two very different manufacturing types are similar, even the same, in some ways but polar opposites in others; and trying to get one to work for the other is complex, expensive, and ultimately harmful to your bottom line.
Now it’s time to ask yourself if your current system takes the above into consideration; finding the answer can be complicated. We’ve developed a complimentary ERP evaluation template which, after you answer a few questions, will evaluate your current ERP system and provide a grade on its ability to support your business now and in the future.