This reference guide provides insight into the process manufacturing enterprise resource planning (ERP) features and functions that are accessible on today’s market. This guide will help you determine which features and functions are essential to your organization’s needs and which are not.
You can also download this guide in Excel format at TEC’s Enterprise Resource Planning Process (Process ERP) RFP Template page.
Before we get started, here is a short synopsis of the role of ERP for process manufacturing:
What is Process ERP Software for Process Manufacturing?
Process ERP assists businesses in the process manufacturing field (e.g., paint manufacturers or refineries). The Association for Operation Management (APICS) describes process manufacturing as the “production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode.”
Process ERP software includes all features to determine batch control and reporting, formula and routing, and material management capabilities, as well as other generic enterprise software modules like financials and human resources (HR) functions.
To learn more about process ERP and to understand the difference between process ERP and discrete ERP, read Process ERP vs. Discrete ERP Differentiation written by Josh Chalifour.
About This Process ERP Guide
Our process ERP request for information (RFI) template contains about 3,500 features and functions; that’s the reason why we’ll focus here on the “big picture” features only.
We’ve brought process ERP features together by broad category:
3. Process manufacturing
4. Inventory management
5. Purchasing management
6. Quality management
7. Sales management
8. Product technology
These modules correspond to a high-level functional breakdown of software features. In this reference guide, we give a short explanation of how each category impacts your process manufacturing enterprise resource planning processes.
If you’d like more information about full listing of enterprise software functions and features (process ERP, discrete ERP, supply chain management (SCM), and other enterprise software categories), please see TEC’s RFP Templates.
Process Enterprise Resource Planning (Process ERP) Software Features and Functions
ERP process software functions and features, submodule #1: Financials
General ledger (G/L or GL) keeps centralized charts of accounts and corporate financial balances from a journal. It supports all aspects of the business accounting process. In this submodule, financial accounting transactions are posted, processed, summarized, and reported. GL maintains a complete audit trail of transactions and enables individual business units to view their financial information, while parent companies can roll up all business subsidiaries and view the consolidated information.
Accounts payable (A/P or AP) functionality schedules bill payments to suppliers and distributors, and keeps accurate information about owed money, due dates, and available discounts. It provides functionality and integration to other areas such as customer service, purchasing, inventory, and manufacturing control. The software with an AP function should support the following functionalities: AP company policies and procedures, suppliers/voucher master data, invoice processing and aging analysis, payment processing, journal voucher processing, AP ledger posting, payment and check processing, AP transactions and controls, and AP reporting.
Fixed assets functionality manages depreciation and other costs associated with tangible assets (e.g. buildings, property and equipment). The process ERP software that provides the fixed assets function should support the following functionalities: fixed assets records, asset transactions, asset depreciation, depreciation books, tax reporting, costs allocations, and cost management.
Cost accounting functionality analyzes corporate costs related to overhead, products, and manufacturing orders. It provides a variety of costing approaches such as standard; first in, first out (FIFO); last in, last out (LIFO); average; target; and activity-based costing (ABC). Cost accounting aims to reduce costs. It includes cost data functionality, cost allocation process, cost management, cost and sales price calculation, activity-based costing (ABC), and activity-based cost tracing and tracking.
Cash management functionality in a process ERP system involves the capability to record cash charges or deposits, recording of cash payments and receipts, cash projection reporting, calculation of expected cash uses/sources, current cash availability, etc. It monitors and analyzes cash holdings, financial deals, and investment risks.
Budgeting involves budgetary controls, budget accounting, budget development, and budget allocation. The software with a budgeting function should provide sufficient tools to enable detailed budget development and analysis. Additional functionalities should be available to integrate with project management software applications either natively or with external interfaces.
Accounts receivable (A/R or AR) functionality tracks payments due to your company from your customers. It contains tools to control and expedite the receipt of money from the entry of a sales order to posting payments received. It should include AR company policies and procedures, customers/voucher master data, bill processing and aging analysis, credit management, cash/payment application, receipt processing, journal voucher processing, AR ledger posting, multicurrency accounting and conversions, AR transactions and controls, and AR reporting.
Financial reporting functionality enables robust analysis of your company performance through delivered reports. These reports will allow individual business units to view your financial information, while parent companies can roll up all business subsidiaries and view the consolidated information. Additionally, solutions should provide generated reporting tools that are easy to use and provide sufficient depth of and access to the financial data to permit comprehensive analysis.
Process ERP software functions and features, submodule #2: HR
Personnel management functionality automates personnel processes including recruitment, personnel profile, organizational structures, job position and wage profiles, career development and training, reward management, government and compliance reporting, employment history, and business travel and vacation allotments.
Benefits functionality is used to administer a variety of benefit plans for employees. Such plans typically cover accidental death and dismemberment (AD&D), disability, life, medical, retirement, stock, etc.
Payroll functionality handles accounting and preparation of checks related to employee salaries, wages, and bonuses. The payroll section in a process manufacturing system should support the following functionalities: employee payroll profile, earnings and deductions, eligibility controls, user balances, automated time sheets, and security and audit.
Employee self-service lets workers access their personal information and benefit allocations on-line to manage life events and benefit selections without having to send forms to human resources. The process ERP software should also support benefit enrollment programs and new hire initiation.
Employee metrics functionality generates figures, reports, and analyses about employees, such as turnover trend reports, workforce planning, absence and vacation reports, human resource budgeting reports, and training analysis reports.
Health and Safety
Health and safety functionality provides the tools to administer compliance with the health and safety regulations, accident, illness and injury reporting, and tracking of lost time by employee.
Workforce management enables organizations to efficiently plan and organize their labor resources. It helps employers assess part-time employee labor, evaluate, and project the contribution from individual employees, track time and expenses, as well as manage contracts. Workforce management section integrates functionalities like workforce forecasting and planning, resource allocation, and time and expense tracking.
Training functionality in ERP software for process manufacturing provides tools to make training management more efficient. It includes capabilities such as training planning and training administration.
ERP process software functions and features, submodule #3: Process Manufacturing Management
Formulas and Recipes
Formulas and recipes functionality allows users to define, maintain, and apply formula—or recipe-based— bills of materials (BOM) of producing items.
Process Model (Formula and Routing)
Process model (formula and routing) functionality provides the ability to create a complete model of processing an item; including components and ways these components should be mixed or applied. Process model allows you to describe quality characteristics, expected results, tolerances, additional procedures, and resources.
Process Batch Control and Reporting
Process batch control and reporting functionality refers to the processes that allow your company to define, control, record, and report production batches as a part of process manufacturing. It also includes an ability of real-time batch tracking and monitoring.
Conformance reporting describes standard functionality on hazardous materials reporting, material safety data sheets management and various regulatory compliance requirements fulfillment.
Process Manufacturing Costing
Process manufacturing costing functionality describes specific costing features that belong to process manufacturing and used in addition to regular manufacturing costing criteria.
Material management includes the general functionality of material handling at the stages of warehousing, moving of these goods to, from, and through different internal locations, and shipping.
Product costing functionality analyzes product costs related to overhead, labor, material, and manufacturing costs. It provides a variety of costing approaches such as standard, actual, and average.
Shop Floor Control
Shop floor control functionality provides control and tracking of the status of production orders in the plant. It involves production orders dispatching, capacity planning, resource allocation, production tracking and reporting, and waste/reject tracking.
Production planning functionality performs capacity planning and creates a daily/weekly/monthly production schedule for a company’s manufacturing plants. It involves forecasting, production scheduling, and material planning.
Process ERP software functions and features, submodule #4: Inventory Management
Inventory Management – On-line Requirements
Online requirements for inventory management include the ability to view, sort, or run a query and obtain ad hoc reports for different aspects of inventory-related activities, in real time (including the ability to derive an historical perspective).
Processing requirements include the ability to manipulate inventory data in real time, and to trace and separate stored items based on different criteria.
Data requirements include the ability to obtain additional detailed item-related information from the inventory master file.
Reporting and Interfacing Requirements
Reporting and interfacing requirements functionality refer to types and categories of standard inventory reporting functionality as well as the ability to interface to the general ledger (GL) in order to obtain information from the GL and to update GL records.
Locations and Lot control
Locations and lot control functionality provides the ability to create or modify system options related to storage location description, classification, usage, and setup. These parameters can then be linked to specific items and can trigger inventory processing functions.
Forecasting provides users with standard system functionality for deriving purchasing or manufacturing item requirement forecasts along with forecasting parameters and massive data calculation capabilities.
Reservations and Allocations
Reservations and allocations refer to the processes that allow your company to link items ordered by a customer with finished products that have already been manufactured or purchased, and that are usually located in a finished goods warehouse. When items are reserved or allocated, no other client can directly use these items, unless they are properly unreserved or unlinked.
Inventory adjusting functionality allows you to change quantity, storage locations, or any other parameters associated with particular items, via either a manual or a batch process.
ERP process software functions and features, submodule #5: Purchasing Management
Profile of Suppliers
Functionality for profiling suppliers refers to the process ERP system's capability for entering, storing, and retrieving master data information related to your suppliers. This may include bank data, preferred payments, shipping conditions, etc. This data is used by the system when transactions with your supplier are generated.
Rating of Suppliers
Functionality for rating suppliers refers to the system's ability to define comparison parameters, and to analyze, compare, and rank your suppliers according to performance. The results of supplier comparison can be leveraged when revising existing contracts or when planning new supply contract assignments.
Requisitions and Quotations
Functionality for requisitions and quotations refers to built-in procedures for the creation, processing, and approval of requisitions and requests for quotations (RFQs) that the user organization sends to its existing and prospect suppliers in order to obtain the most favorable prices and supply conditions for procurement.
Purchase orders (POs)
Functionality for purchase orders (POs) provides you with the ability to set up parameters; to create, modify, and maintain various types and numbers of purchase orders; and to perform conversions of manufacturing resource planning (MRP) items and other requirements into purchase orders.
Pricing functionality in process manufacturing ERP software allows your company to define, group, and maintain prices for purchasing goods that are further used in purchase orders. It also includes functionality for price discounts calculation.
Vendor Contracts and Agreements
Functionality for vendor contracts and agreements allows you to enter, store, and maintain specific information used in contracts with your suppliers and in other supplementary documents.
Management of POs
Functionality for the management of POs allows your company to maintain, modify, and close previously created purchase orders. They can also classify items, categorize orders, maintain purchasing history, etc.
Procurement Reporting and On-line Reporting
Procurement reporting in a process ERP refers to the generation and management of statistics and performance indicators which can afterwards be displayed on screen and printed or exported to office tools (spreadsheets, PDF, etc.) Online reporting refers to the reports that can be viewed and modified online. Both options should provide relevant data about the procurement activity: acquisitions, outsourcing, etc.
Procurement is the process of acquisition or outsourcing of goods and services required by a company to fulfill its objectives (manufacturing products, maintaining assets, etc.). Depending on the type or resources and their use, the frequency of procurement can vary from very low (capital goods) to very high (raw materials). The criteria in this sub-section refer to medium or high frequency procurement.
Receipts for Procurement
Receipts for procurement functionality covers criteria related to the receiving of the ordered goods from the supplier. Between the moment when the goods arrive and the moment when they are physically stored in the warehouse, there are few factors that need to be taken into consideration, such as the quantity of the goods received (does it correspond to the quantity ordered?), the quality of the goods (were the goods damaged during transportation or handling, did perishable goods expire before getting shipped, etc.) and pricing (did the price of the goods delivered change due to unexpected factors?).
The online requirements refers to the availability of data on-line, which means that the information can be shown by the system in a Web browser, without requiring a special program installed on their computer.
Reporting and Interfacing Requirements for Purchasing Management
Reporting for purchasing management is used to generate statistics on whom, what, and when ordered, how much of the ordered quantities have been shipped, returned, canceled... This functionality should provide the user with the ability to print invoices, either one by one or by batch (per customer, per product, per date range, etc.) Another important aspect is comparisons between quantities ordered and shipped by the same supplier or for the same product in different periods of time (weekly, monthly, yearly, etc.). In order to generate these reports, integration with other systems holding purchasing data is required.
ERP process software functions and features, submodule #6: Quality Management
Production Quality Management
Production quality management activities are related to the production process, starting with the raw materials or components and ending with the finished product. Inspections need to be performed at the stages of the production flow where the quality of the final product can be altered. Workflows need to be defined in order to know when and how to test the quality of the product, and corrective actions need to be defined depending on what happens and when.
Non-production Quality Management
Quality management should start before the production process and end after the finished products are created. Downstream quality management should be related to purchasing—companies need to make sure that they receive the best quality raw materials and components, in the right quantity, and on time so the quality of the finished goods cannot be altered. Upstream quality management deals with the delivery and shipment processes, including returns, customer service, warranties, etc.
Inventory Quality Management
The quality of the goods in inventory (either received or produced) can have a big impact on the quality of the final goods or services delivered by your company. If raw materials are damaged during storage or manipulation, the quality of the finished goods created using them will be affected. Also, the finished goods may be damaged if not properly stored. This will cause delays and make the delivery process inefficient.
ERP process software functions and features, submodule #7: Sales Management
Online requirements functionality for sales management allows all types of users (employees, salespeople, customers, partners, etc.) to easily perform sales-related activities such as searching for customer information; looking for available products in inventory; creating quotes and orders; managing sales documents; displaying sales history for one or more customers; etc. When these options are available online, all authorized users can access them from a Web browser, without having to install a special program on their computer.
Reporting and Interfacing Requirements
Reporting for sales management is used to generate statistics about who has ordered, what, and when; or about how much of the ordered quantity has been shipped, returned, canceled, etc. This functionality provides the ability to print invoices, either individually or as a batch (per customer, per product, per date range, etc.). Another important aspect is the ability to generate comparisons between quantities ordered and shipped by the same customer or for the same product in different periods of time (weekly, monthly, yearly, etc.). In order to generate these reports, integration with other systems holding sales data is required.
Available-to-promise (ATP) refers to the quantity of a product that can be ordered without affecting existing orders. In other words, when a certain quantity of a product is reserved but not yet shipped and paid for, that quantity is reserved and will not be taken into account when another customer orders the same product. For instance, product A has 100 pieces in stock, but 30 are already ordered by customer 1. If customer 2 wants to order 80 pieces of the same product, the ATP will be 70 pieces (100 minus 30), which is not enough to place an order.
Pricing and Discounting
Pricing and discounting modules help automate the data entry process of customer orders and track the status of orders. It involves order entry, order tracing and status reporting, pricing, and invoicing. It also provides basic functionalities for lead tracking, customer information, quote processing, pricing, and rebates.
Customer Service and Returned Goods Handling
Customer service and returned goods handling functionality allows managing the situations in which goods are returned by your customers, either because of their low quality or simply because the customers do not need the products they received. Depending on the situation, your company can define workflows to accept or reject the returned products.
Customer Relationship Management and E-commerce Requirements
Customer relationship management (CRM) covers a wide range of functionalities, including campaign and leads management, sales force automation (SFA), customer service, etc. Most of the ERP solutions cover basic CRM functionalities and this section describes what we think to be a minimum.
ERP process software functions and features, submodule #8: Product Technology
Architecture in a process manufacturing ERP refers to the framework for organizing the planning and implementation of data resources. It also refers to the way the system is designed and the manner in which all components are connected to one another.
User interface (UI) refers to the manner in which people access and interact with the software. The user interface should facilitate the user's easy operation of the software.
The platform refers to the framework, both the hardware (e.g., type of processor) and the operating system that allows a computer or set of computers to function.
Application tools are the components that provide the ability for an application or program to work.
Workflow and Document Management
Workflow and document management functionality automates the manual processing of paper. It provides flexible control and supports cooperation on a workflow level, while taking versioning into account.
Functionality for reporting refers to technical options for generating and delivering reports.
A comprehensive process ERP RFP will also include other general considerations, including reseller and value-added reseller (VAR) channels, along with vendor viability considerations.
We hope you’ve found this reference guide helpful. For more information about process ERP features and functions, please visit TEC’s RFP Templates page.
For more information and to start your own custom solution evaluation of ERP software for process manufacturing, including the ability to assess and prioritize the process ERP functions and features that are important to your organization, please visit TEC’s ERP Software Evaluation Center.