Recently our firm engaged with a client in “process” industry, a manufacturer of rubber from raw materials, who then fabricates finished goods from the batches of rubber they’ve created. We developed a method within Microsoft Dynamics NAV to formulate the batches and handle the lot-tracking, and wrote software to weigh the raw compounds in the process, and ultimately mix and account for the batches – which will then be used for parts production. So it was with heightened interest that we read about a recent Aberdeen Research report on ‘ERP in the Process Industries: Functional Ingredients to Create a Good Mix’.
Process manufacturing involves creating goods from a formula or recipe which, as Aberdeen article author Nick Castellina points out “cannot be separated back to their individual components. Therefore, the viability of ingredients is important, and manufacturers must be able to identify the source and ultimate destination of products that contain specific components.”
The result of this complexity often yields some rigid regulations and compliance requirements, not to mention great caution in product mixing, and the incumbent complications imposed on an ERP system trying to track all this activity. Process, in short, can create unique requirements. And so Aberdeen surveyed over 100 process manufacturers, and looked at the top pressures driving their ERP strategies, and the key functionality required for success, as well as the benefits of following through on an ERP implementation.
In this series of posts, we’ll look at a few key takeaways.
First, the key drivers. Process manufacturers buy ERP for five key reasons, according to Aberdeen:
- Must reduce costs (cited by 50% of over 100 respondents in process manufacturing firms)
- Need to manage growth expectations (41%)
- Must improve customer response time (31%)
- Delays in decision-making from lack of timely information (27%)
- Interoperability issues across multiple locations (25%)
No surprise, these business drivers are pretty much the same as those affecting manufacturers as a whole, though a few pressures stand out for process industries. The first is increased exposure to unpredictable demand, and the resultant issues with respect to materials sitting on a shelf that may go bad, or expire. Process manufacturers can also be challenged by a higher and faster changing level of regulatory requirements. And all of this leads to increased pressure for adequate lot-tracking and traceability. Strong controls must be put in place, and these are an obvious fit for an ERP system, which can help trace the sources of defect s and help to ensure efficient recalls.
So, with all these pressures, what defines a “Top Performer” in the process manufacturing sector? We’ll answer that question in our next post in this series. Stay tuned…