Discrete ERP vs. Process ERP: Formula/recipe and Bill of Materials

Over the years manufacturing has changed drastically and the industry has broken down itself down into specific industries and niches within them. To keep up with this gradual change, ERP systems have evolved and done the same. This has made ERP selection, a process that has always been tough, even harder for those in search of the ERP system that will best support their processes, This is especially true when is comes to discrete ERP vs. Process ERP system selection.

There are a number of important differences between process and discrete manufacturing that must be considering during the ERP selection processes; in this article, let’s focus on one of the most important differences between the two types of systems: the difference between bill of materials and formulas/recipes.

Bill of Materials vs. Formula/Recipe

Formulation and bills of material, while they serve a similar purpose, are not the same nor are they interchangeable. This is an extremely common misconception among manufacturers.

Discrete manufacturers, while bringing together various parts and pieces to make their widgets, rely on a bill of materials (BOM). A BOM lists the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and quantities of each needed to produce the end product.

Process manufacturers, while mixing ingredients to make their end product, rely on a recipe or a formula. The recipe or formula specifies the ingredients and the amounts (in gallons, pounds, liters, etc.) required to make the end product.

Making Adjustments

Discrete manufacturing generally make the same thing, the same size, with the same materials, over and over again. The bill of material is fixed- it does not change from one batch to the next. If a discrete manufacturer gets a larger (or smaller) order in, they just package up the appropriate number of their widgets for the lot size and send them out.

For process manufacturers this is much different. Process manufacturers have to take into consideration the size of the order before the manufacturing process so that the end result is not only correct, but the right size. In other words, the formula or recipe being used and the process itself, depends on the end goal.

  • For example: If a manufacturer makes soup, they may sell to grocery stores who need single serving cans but they may also sell to restaurant chains who need commercial sized tubs. This means two different recipes would be used; one containing the proper measurements and ingredients for small cans, and a completely different one to produce the larger commercial size tubs of soup. The size of the end product may even impact which ingredients are used. The manufacturer needs to make sure they have enough ingredients on hand to make these different combinations and make the necessary adjustments to the recipe to ensure the soup tastes as it should for each order.

In process manufacturing, whether it’s for food or pharmaceuticals, an incorrect recipe or formula adjustment can bring with it many problems. From something as simple as a nasty tasting soup to something as serious as making dose strengths dangerous in medications. Profit loss, unhappy customers, physical harm, and even death, can result from the incorrect amount of ingredients which is why an ERP system that supports recipes/formulas is critical.

Revision Tracking

What ingredients were used in each production batch? When exactly were they introduced? how was used? These are critical questions for process manufacturers. Managing and tracking the formulas and recipes, as well as tracking the adjustments made to them is critical to ensure quality and to make sure revisions to the recipe are carried over from one batch to the next. Record of the formulas must be kept and any revisions must be tracked with extreme detail to ensure consistency throughout the manufacturing process

ERP Considerations

When it comes to the difference in BOMs, formulas, and recipes, process manufacturing tends to dominate the discussion because process manufacturers have more requirements when it comes to this topics; and there is still more to talk about. Be sure to consider the following when evaluating a process manufacturing ERP system:

  • Units of measure must correspond which requires a flexible unit of measure conversion engine in the ERP software
  • conversion rules must be specific to account for unique requirements of the specific business
  • Process manufacturing ERP must deal with formulation variability so recipe/formula scalability is an important factor in ERP to ensure proportions of ingredients must be accurate to allow companies to make the small can of soup and the large tubs.
  • In food and beverage companies must report nutrition facts such as calories, carbohydrates, proteins, etc. as percentages per serving to remain compliant with regulations. A chemical manufacturing company needs to consider the legal limits to the volume per weight of certain ingredients- A process manufacturing ERP system must help you follow these procedures.
  • Process ERP systems also need to deal with multiple units of measure because process manufacturing may require you to purchase and use liquid ingredients measured in gallons, liters, etc as well as dry ingredients measure in pounds.
  • By products and co products are also important factors in process manufacturing ERP. You may be making butter and at some point you drain liquid from that butter- that can be used to make butter milk that you can sell on the side. Process ERP has the tools you need to manage byproducts and co-products of your main operation so there is not any waste or missed opportunity for profit.
  • Recipe and formula revisions must be tracked and carried through from batch to batch.
  • High levels of security to prevent unauthorized eyes from seeing recipes and revisions
  • You must have the ability to integrate the unit of measure with the production process to ensure the ingredients are added at the right time during the production process.

Is your current ERP system meeting your needs? Will the system you are considering meet them? Our ERP check-up will evaluate your system from several angles and give you a calculated grade on:

  • General Features
  • Finance/Accounting
  • Human Resources
  • Sales/Marketing
  • Inventory/Warehouse
  • Manufacturing
  • Information Technology
  • Partner Services

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