Manufacturing ERP Software for SME

A series of primers for prospective implementers

Jobbing or Discrete - or the best of both worlds?

Background

Manufacturing operations can be divided into two broad categories based on the mode of operation, dictated by the nature of the end product. Each category has particular implications for the implementation of manufacturing Enterprise Resource Planning (ERP) software, and it is important to identify the relevant mode(s) before short-listing potential solutions.

Discrete manufacturing operations (including single product, batch mode and mixed-mode variants) manage the production of finished goods by breaking down the composition of the product into a (usually multi-level) Bill of Materials (BoM) structure, and describing the manufacture of each node in the structure with a "process route" consisting of a (usually sequential) series of operations to be carried out at various work centres. The main characteristics of this category are that each product has a fixed defined identity with a BoM and a process route, is manufactured singly or in batches using works orders, and the time-phased introduction of materials to the production line is co-ordinated with the start of manufacture of the various nodes in the BoM structure. A sales order is used to represent customer purchase order demand, and invoicing usually takes place once finished goods are dispatched from inventory after manufacture.

Jobbing manufacturers however take a different approach - the job is broken down into various elements such as material requirements, work centre operations and other ad-hoc elements (feasibility studies, design exercises, stage payments etc). The job will typically have a start date, various material issue dates, operation timings and a completion date. Invoicing regimes often vary depending on contractual and cash flow implications. The main differences with discrete manufacturing are that there is usually no fixed product identity, BoM, or process route; therefore time phased material issues and operation timings are dictated by job elements, and work orders are not normally required. The job itself represents the customer purchase order demand, and invoicing can take place at any stage during the life of the job. The jobbing approach is widely used in sub-contract engineering, project and custom work.

SME Issues

Historically, the larger manufacturing ERP systems would cover both of the above categories on a modular basis, or would be customised to accommodate different modes. Unfortunately, smaller manufacturers have traditionally been faced with a choice between jobbing based software and discrete manufacturing software, and have often had to compromise accordingly.

As competitive pressures have forced manufacturers to diversify and offer complementary services to maintain customers, it has become unreasonable to expect them to jump into one camp or the other. This has led to the emergence of software for manufacturing SMEs that incorporate both of the above modes. Furthermore, manufacturers should expect full integration between the modes, in material requirements planning, capacity planning, and invoicing etc. For example, if a job element demands the production of a complex assembly, the assembly can be produced on a conventional work order and then issued to the job. In the leading systems, it is even possible to design and manufacture a prototype using a job, and then automatically convert it to a standard manufactured product complete with top-level identity, BoM and process route, and even generate a new sales order as part of the process!