All manufacturers are not created equal. There are discrete and process manufacturers. Discrete manufacturers assemble products such as appliances, cars, computers, furniture, toys, etc., made of component parts. Production involves soldering, screwing, gluing, etc. Contrarily, process manufacturers produce beverages, cosmetics, chemicals, food, paints, pharmaceuticals, and more, by mixing liquids, chemicals, and food ingredients. Products made by discrete manufacturers can be deconstructed down to the nuts, bolts, and their individual pieces. However, processed items cannot be taken apart once blended. With such different manufacturing processes, how can their ERP software offerings be the same? Truth is told anything less than an ERP solution specifically designed for your industry is simply not going to do the job.
Let’s compare the fundamental differences between formulation and bill of materials (BOMs) for the manufacturing world.
It’s common that manufacturers use the terms “formulation” and “BOMs” interchangeably and thus, incorrectly. Within the walls of the manufacturing plant, employees might know what they’re referring to, but in the context of choosing an ERP software solution, it’s important to know that these items are very different.
Batch process manufacturing companies work with recipes and formulas that measure and combine ingredients per order and batch size, and according to various units of measure liters, gallons, pounds, and percentages. A discrete manufacturing BOM lists parts, components, assemblies, sub-assemblies, pieces, raw materials, and the quantities of each of these; the BOM doesn’t change with the size of the order since the product is created one unit at a time.
Formulation and recipes are scaled regularly in process manufacturing. A formula to make 400 liters of a chemical can be scaled for production of 200 or 800 liters. Production batches can also be scaled according to the amount of raw materials on hand. However, in discrete manufacturing scaling product production is unfeasible. For example, you cannot make a stove with only two burner coils, a dining table minus two legs, or a car with only two wheels. Industry specific ERP with formulation management capability provides scaling ability by configuring batch tickets based on available raw material inventory data stored within the ERP.
Detailed instructions might also be contained within the recipe/formulation as opposed to a BOM. Attribute changes, recipe revisions, and customizations are noted in the recipe, making the procedure much more complicated than the repetitive creation of one discretely manufactured unit of product. The ERP software designed specifically for formulation management will include tracking of recipe revisions, note sections for each step of the production process on the batch ticket/work order, and contains historical information of revisions, changes and updates to the recipe.
It is essential for batch process manufacturers to use and an ERP solution that is developed with formulation management features. The ERP will provide capability for scaling, revisions, detailed procedure notations, and tracking of historical information in your recipes and formulas during production processing. When selecting ERP software, it is imperative to choose software capable of handling the complexity and specificity of your industry. A process manufacturers’ ill-advised investment in ERP software designed for a discrete manufacturer is the proverbial practice of trying to “fit a square peg into a round hole.”