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ERP Helps Process Manufacturers Cope with Chaos (Part 6)

22 August 2012

The overall keys to success for process manufacturers are the timeliness of business planning, and production processes, along with seamless integration of enterprise-wide data.  Profitability equates to a constant need to balance customer demand with capacity, production scheduling and asset optimization requirements. Too much or the wrong inventory, or expired inventory, will impact revenue and profitability. Too little or the wrong mix of inventory impacts customer satisfaction. Planning in a process manufacturing environment equates to the best match of variable supply to meet constantly changing customer demand.

ERP Manufacturing

ERP Helps Process Manufacturers Cope with Chaos (Part 6)

Specific ERP/Process needs:

Demand Planning. The ability to accurately plan and/or forecast customer demand is a constant and critical business need for process manufacturers.  More forward-looking planning and business process capabilities are the foundation for becoming more customer- or demand-driven. An accurate picture of demand allows more efficient use of warehouse and production capacity, operational resources, inventory and assets.

Granularity. Demand plans must include a level of granularity that reflects product hierarchies, customer delivery channels, and other important demand factors typical of pyramid modeling.  Pyramid modeling is when data is arranged and visually represented in a pyramid, allowing increasing levels of information granularity. For example, a producer of soft drinks would require the ability to forecast and plan for demand by package types (6, 8, 12 ounce and 1 or 2 liter container), by channel (wholesale, retail, vending, end-consumer), and by geographies (Asia, Europe, U.S.) or sub-regions. In today’s rapidly changing industry landscapes, there also needs to be the flexibility to accommodate changing views of demand data with different hierarchies.

Event Driven Adjustments. The ability to anticipate the impacts of events, seasonality or product promotions is also an increasingly important consideration for insuring responsiveness as well as efficiency within process manufacturing.  As an example, in a batteries or laundry detergent business, up to 50% of product volume is sold on the basis of promotion. Planners need to factor in the production and distribution timing window for ramp-up and ramp-down to support seasonality and/or promotion of products, along with the intelligence to understand the impact events will have on the overall production schedule and forecast. Advanced statistical forecasting techniques further assist planners in the smoothing of all forms of demand, along with the ability to support demand shaping that can influence more profitable production runs.

Collaboration. In order to support shifting realities in markets and products, more and more process-oriented companies are practicing integrated Sales and Operations Planning (S&OP) involving their key customers, suppliers and other stakeholders. Fill rate pressure drives an increased need for more frequent and timely planning cycles focused on forward-looking demand, supported by cross-functional or cross-company collaborative planning processes. Planners across regions and product lines need instant access to production schedules and plans, as well as the ability to plan various scenarios of the most efficient means to fulfill last-minute market opportunistic demand.

Increased use of contract manufacturing and co-packing as a supplement or business alternative is also driving the need to model external capable-to-promise and other constraints into S&OP decision-making processes.

Continued in Part 7



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