Discrete Manufacturing ERP Systems

Discrete Manufacturing

ERP Systems

Guide & Comparison

Table of Contents

4. Discrete Manufacturing vs Process Manufacturing ERP 5. Discrete Manufacturing ERP Guide 6. Discrete Manufacturing ERP Capabilities 7. The Top 10 Reasons Companies Choose Discrete Manufacturing ERP 9. Overcoming the Challenges of Evaluating Discrete Manufacturing ERP

Solutions 10. Discrete Manufacturing ERP Software Comparison Summary

10. Aptean 11. Epicor 12. IFS 13. Infor 14. Microsoft 15. Oracle 16. Sage 17. SAP

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SelectHub Manufacturing ERP Report 2019

Discrete Manufacturing vs Process Manufacturing ERP

Those involved in the manufacturing industry know that one manufacturing process is not necessarily like another -- and in this high-tech business world, manufacturing operations can vary a great deal. So do the systems that support them. The software architectures that manufacturing companies use to produce products and materials should be designed to support their specific operations.

There are two very different kinds of manufacturing: process manufacturing and discrete manufacturing. These two types of manufacturing have very different structures and very different needs.

What is Process Manufacturing?

In the world of process manufacturing, volumes of raw materials are refined and processed for sale. The manufacturing process does not produce discrete units of production. Instead, a product is produced in bulk and packaged for shipment.

What is Discrete Manufacturing?

In discrete manufacturing, manufacturers build individual units for shipment. Discrete manufacturers turn out individual items that represent the country's product line.

The Difference Between Process Manufacturing and Discrete Manufacturing

One way to think about these two types of manufacturing is to consider the production of commodities vs assets. We tend to think of commodities as bulk materials -- for example, wheat, corn or coffee.

On the other hand, experts often refer to the world of electronics manufacturing or the production of appliances as good examples of discrete manufacturing. In this process, each individual unit is put together in a specific way.

Another difference lies in the products themselves. While process manufacturers simply produces refined material, discrete manufacturing is often used to build big-ticket items. Companies rely on adequate discrete manufacturing processes produce complex products, such as cars or computers.

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SelectHub Manufacturing ERP Report 2019

Discrete Manufacturing ERP Guide

As technology becomes more affordable and the manufacturing sector more competitive, manufacturers of all sizes are increasing their efforts to adopt enterprise resource planning (ERP) technology. This is reflected in the growth of the size of the ERP market, which is estimated to reach almost $85 billion in 2021, according to Statista.

Another factor that is driving the growth of the ERP market is the fact that many manufacturers need to replace existing solutions, either because they use obsolete technology or because of a lack of robust features and functions in their current solutions. Our recent report, The ERP Buyer's Profile for Growing Companies, shows that the main reasons organizations replace their ERP software are due to bad functionality and outdated technology.

The main challenge buyers face when selecting ERP for manufacturing software is that ERP solutions aren't created equal. There are fundamental differences between various ERP solutions for manufacturers, and one of the most important is the way in which they address industry-specific challenges. Since it's extremely difficult to create ERP solutions for each industry, vendors have traditionally focused on the two major types of manufacturing: discrete and process.

As the name implies, discrete manufacturing refers to the production of distinct or individually separate products. Discrete manufacturers combine raw materials, parts, and components to create products that can be sold individually, like computers, furniture, etc. On the other hand, process manufacturing combines raw materials and ingredients to produce batches of finished goods that are either delivered in bulk or sold in different types of packaging, like bottles, cans, barrels, etc.

Once discrete manufacturers understand what type of ERP they need, they also need to take into account the main factors that make discrete ERP a good choice for their company.

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SelectHub Manufacturing ERP Report 2019

Discrete Manufacturing ERP Capabilities

Discrete manufactures require an ERP solution designed for their specific needs; which can differ greatly from process manufacturers. According to IFS, the type of manufacturers that can benefit most from a discrete focused ERP software are:

Engineer-to-order (ETO) manufacturers Configure-to-order (CTO) manufacturers Make-to-order (MTO) manufacturers Mixed-mode manufacturers Custom manufacturers Manufacturers with short product life cycles

Here are the core capabilities that should be included in any effective discrete ERP solution.

Solution Map provided by IFS:

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SelectHub Manufacturing ERP Report 2019

The Top 10 Reasons Companies Choose Discrete Manufacturing ERP

1. A Single Source of Truth

A single source of truth in an ERP database allows manufacturers to better manage different types of information, from customer data to inventory, production, and sales or purchasing transactions. It also simplifies searching for information on pretty much anything stored in the ERP database, which in turn simplifies reporting and analytics.

An integrated ERP system usually replaces several other tools, point solutions, or add-ons, and reduces or eliminates the use of spreadsheets. By adopting an integrated ERP, manufacturers avoid the problems that are caused by the lack of integration between separate solutions and the errors caused by double entry of the information into two or more software solutions.

2. The Replacement of Obsolete or Insufficient Technology

Replacing older technologies such as AS400 systems and accounting tools like QuickBooks is particularly important when manufacturers outgrow the systems they have in place and they cannot manage complex operations with basic software features. Also, accounting packages usually do not offer features for production management. The functionality for sales, purchasing, or inventory are also often too basic for growing manufacturers.

ERP can also replace software that's created in-house, usually by the IT team of the manufacturer or by external IT consultants. While creating one's own system may have been a good idea decades ago, these days the manufacturers that have built their own solutions are struggling to keep up with the latest technological advancements, not to mention they need to constantly patch the software to keep it up and running.

3. Increased Productivity

Increased productivity gives employees more time to focus on what really matters, instead of focusing on time-consuming activities like data entry. This is particularly important for employees involved in manufacturing operations, where the production output depends on the productivity of the people involved. An increase in productivity can also improve motivation, thus making employees even more efficient.

Another important factor that negatively impacts productivity is the fact that users are prone to errors when they don't have the right tools or easy access to the information required to do their jobs. Manufacturers have tried to address this challenge by using workarounds and by relying on spreadsheets, but this often ends up generating new errors. To break this vicious cycle, manufacturers can use ERP solutions that offer all or most of the features they need, such as a single data repository.

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The Top 10 Reasons Companies Choose 4. The Management of Production Across Multiple Locations

Managing production across multiple locations can be a major challenge nowadays, even for small

Process Manufacturing ERP manufacturers. Many manufacturers use separate solutions in each location as a result of mergers and

acquisitions or inconsistent IT strategies. An integrated ERP solution that can be used at any location allows manufacturers to improve information sharing and collaboration among all of their teams, regardless of their geographical presence.

A discrete ERP solution that can be used by multiple locations also allows manufacturers to improve the management of resources or equipment. For instance, raw materials can be transferred from a location with a surplus to another location without enough resources to meet its needs. Also, different production operations can be performed in multiple locations during the same production cycle.

5. Cost Reduction and Improved Profitability

Reducing costs and increasing profitability are two ways that an ERP system can help manufacturers achieve better ROI over time, even though an ERP is a big investment. As employees become more productive and production costs decrease, the overall profitability of the company improves. Manufacturers can also use ERP to reduce back office costs by reducing user errors and the time employees spend on the most common tedious tasks.

Another factor that can impact profitability is the business lost by the manufacturer to its competitors. Oftentimes, manufacturers lose important clients or contracts because they cannot comply with the timeline or the quality standards requested by the customer. This can be caused not only by a lack of production capacity or expertise, but also by the fact that the manufacturer cannot plan and execute well enough to satisfy its customers.

6. Support for Future Growth of the Company

Since selecting and implementing ERP is a costly and disruptive process, manufacturers should make sure that the system will be in use for at least 5 to 10 years. This means that they need to select an ERP solution that will adapt to their changing needs as they grow. A sufficiently flexible ERP solution should allow discrete manufacturers to start with the features they need most and add new functionality as it becomes necessary for the company.

7. Adaptation to Market Changes

Adapting to a changing market requires a lot of time and effort from manufacturers due to the complexity of their operations. For example, when one or more of the products they offer becomes obsolete, manufacturers need to design new products, find suppliers for new components, estimate which customers may be interested in the new products, and review the setup of their production lines to manufacture the new products. All of this cannot be achieved without a solution that provides the information necessary for each one of these activities, and can track all operations related to these activities, along with their costs and effectiveness.

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