Discrete ERP 101

  • Written By:
  • Published:

Puzzled by process? Dazed by discrete?

First, let’s understand who should use a discrete ERP application.

Discrete manufacturers assemble products from component parts. These products are made to order and can, in theory, be disassembled (ex: cars, computers, tables…).

Process manufacturers (AKA continuous manufacturers), on the other hand, make products that cannot be disassembled into their component elements (ex: spray paint, whiskey, talcum powder…).

Both process and discrete ERP software aim at full integration of management, staff, and equipment. This integration provides a way for information from any area of the enterprise to be communicated to any other area, in real time.

However, a discrete manufacturer who decides to select a process ERP solution to run the business is headed for a world of workaround pain.

TEC analyst Alex Hankewicz, in his recent article on ERP solutions for “mixed-mode” manufacturers, summed up some of the differences nicely:
“[In general,] discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes.

A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields.”

Discrete ERP software also focuses on the automation of such business processes as materials sourcing, resource scheduling, and customer order management. Potential benefits include improved workstation use and scheduling (leading to reduction of assembly line downtime), just-in-time (JIT) inventory management (thus reducing carrying costs), and a reduction in overtime. (Note, however, that JIT can be applied to process manufacturing as well.)

See TEC’s Discrete ERP Evaluation Center for more on the business benefits of discrete ERP applications.

If you are a discrete manufacturer burdened with a process ERP solution, you will be unable to properly allocate items to specific orders. Traceability thus becomes a major headache.

Furthermore, the overriding consideration for process manufacturers is quality. For discrete manufacturers, it’s quantity (with, naturally, a measure of quality control). A discrete manufacturer with a process ERP system will run into difficulties when trying to determine work station (resource) scheduling.

Why am I talking about the dangers of selecting the wrong solution? Obviously, no discrete manufacturer is going to blindly purchase a process ERP application. However, the distinction between process and discrete is not always clear-cut.

Consider light bulbs, for instance, or semiconductors. They are not made to recipes or formulas. However, they are not the kind of product you can disassemble at the drop of a hat.

Which ERP application do you choose if you're manufacturing such items? Discrete or process?

Go to TEC’s Discrete ERP Evaluation Center to find out. You can compare discrete ERP solutions based on the needs and characteristics of your organization (size, industry, business model, IT platform, etc.).

It's fast, easy, and free. Hint: Want to start right away with a side-by-side comparison of discrete ERP software applications? Click on the big blue “Start Your Discrete ERP Comparison” button.

With thanks to TEC analysts Leslie Satenstein and Alex Hankewicz for their brains.
comments powered by Disqus