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ERP Helps Process Manufacturers Cope with Chaos (Part 7)

22 August 2012

New Product Introduction Planning. Constantly shifting consumer needs and behavior are driving ever increasing needs for new or improved products. Consumers and retailers will not wait and will often switch to products or manufacturers that will meet their current needs.  Product management teams must more than ever be aware of local market requirements such as banned ingredients, unique labeling or packaging needs.

ERP Manufacturing

ERP Helps Process Manufacturers Cope with Chaos (Part 7)

Time-to-market and time-to-volume have become ever more critical.  Reducing time-to-market requires short timeframes in the decision to develop a new or revised product, and the time to produce it, test it, and make it available to appropriate channels.

New products often fail in the market.  For instance, in consumer product goods markets, up to 50% of products will fail after introduction.  Manufacturers need to have the sensing capabilities to understand as quickly as possible how each product is faring in the market, and what adjustments need to made to the demand plan or to the product or sales approach.

Production Planning. Production planning for process-oriented operations involves constantly managing and optimizing variability, cost, and delivery.  The challenges are that there may be multiple paths to produce finished product and that finished goods are often shipped in various packaging by style, material, size or weight.  Processors need to balance the variability and specifications of customer demands and due dates (a mostly pull type of supply chain environment) with the scheduling and variability inherent in inbound supply (a push type of supply chain environment).  An ERP planning system must have the capability and functionality to plan for both types of environments. Raw material feedstocks are ordered and validated to a set of product characteristics with certain tolerances for composition and quality.  Production plans or campaigns are generated based on capacity needs, facility availability, or feasibility of yields for end products and co-products. In many situations, overall planning and scheduling needs to account for material usage, along with most efficient safety stock and inventory planning needs. Certain processes call for blending or trim optimization, which require specialized planning algorithms.

Process manufacturers need to ensure optimized material usage. This is complex, since a single raw material can be processed into various products that may or may not be combined with other materials to create the final product. The same final product may include different costs in its production based on materials and routing variability.  This must be taken into account in optimizing planning.  Shelf life, genealogy, accurate lot tracking, and reporting are also very critical to ensure conformance to quality and regulatory compliance. Expired inventory is of no value to either the manufacturer or the customer.

An effective process manufacturing ERP planning system must also be able to plan for each stage of the new product introduction process, integrating product planning information from product management and engineering with overall supply chain sourcing needs.  In certain cases, new products will replace other existing products, and planners must be able to simultaneously plan for both ramp-up of the new product, and ramp-down of the product being replaced.  Planners also require the ability to ascertain the overall effectiveness of the new product’s launch, and account for the promotions uplift for the new and possibly also end-of-life products.

Concluded in Part 8



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