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ERP Helps Process Manufacturers Cope with Chaos (Part 5)

21 August 2012

Continuous improvement implies building on the current foundation of business planning processes and supporting information technology.  It addresses one problem at a time, as functional needs warrant, or as business pain points need to be addressed. 

ERP Manufacturing

ERP Helps Process Manufacturers Cope with Chaos (Part 5)

In “continuous improvement” mode, information technology is implemented as needed.  However, to ensure proper information flows as well as analytical reporting of management data, many companies choose a gradual implementation of an integrated ERP suite.  This is because best-of-breed third party applications may result in the need for expensive and time-consuming custom integration, which is even more problematic during upgrade cycles of each application.

Transformation, on the other hand, implies a different approach. It starts with a common business-wide vision.  As an example, a regional dairy has identified that meats and eggs were complimentary products. Due to capital constraints of a regional dairy cooperate, they chose to use co-packers to produce new products. Since their existing systems were designed to support this scenario, they successfully brought these and several other new product lines to market with less CAPEX. This leads to a framework of the required process capabilities and business metrics needed to manage volatility, variability and variety within the “new normal” of business.  This path naturally specifies an integrated enterprise level information technology or ERP system that is delivering value in similar process environments.  The trick here is to find a system that’s easy enough to change to adapt to new conditions in the market and the business.

Many ERP system implementations cause disruptive shutdown of operations, or costly and lengthy upgrade cycles. There is one common application option for these two paths.  Companies can succeed on either path with less time and money by selecting an enterprise system that has been designed for flexibility and modular deployment, coupled with the ability to support change with evolving needs of the business.  Such a system can deliver fully integrated processes across all areas of the business.  A few are also crafted to support all of the complex needs of process manufacturing, including timely operational insight.

Overall keys to success

ERP-system needs of process manufacturers are indeed specialized.  Process industry companies are generally asset intensive, and face continual pressures in balancing needs for optimized product margins with constant variability in inbound and outbound materials. To ensure long-term competitiveness, manufacturers must continue to drive cost efficiency while also growing revenues in an increasingly global marketplace.  They require the ability to understand and incorporate industry-unique functionality related to supply chain planning, production scheduling, product lifecycle and asset management.

Beyond those long-standing issues, volatility, variability and variety generate a need to become far more agile and responsive to frequent change on short notice.  Retailers, wholesalers and other customers continue to push lean business practices that cut their supply chain costs and increase product availability.  They insist on tighter or more frequent shipping schedules pegged to end-item demand, while also insisting that there be no out-of-stocks on high demand products.  This upends the traditional process industry path to profitability of operational stability and long production runs.

Continued in Part 6



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