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Process Manufacturing: Industry Specific Requirements Part One: Introduction

Written By: Olin Thompson
Published On: May 26 2004

Introduction

Traditionally, manufacturing is categorized by two methods: process and discrete. Many differences exist, but most can be grouped into two areas: those derived from material issues and those derived from production issues.

Process materials are different than discrete materials. Process materials are powder, liquids or gases; they must be confined; and they are more difficult to accurately measure. Process materials are close to their natural sources (farms, mines, etc.) and therefore, are of inconsistent quality. Inconsistent quality means extensive quality procedures, segregation (lot control), restriction of use (this lot is okay for one customer but not another), and usually the inclusion quality attributes as part of their inventory definition. Process materials vary with time. They get better, they get worse, and they change their identity.

Production issues give us the simplest definition of process manufacturing. Specifically, once you produce your finished product, you cannot distill it back to its basic ingredients. Have you ever attempted to return orange juice back to its original water, sugar, sodium, and, of course, oranges or extract the pigments out of paint? Conversely, you can disassemble a car back to its tires, spark plugs, carburetor, and engine block. There are similar components in process and discrete manufacturing such as ingredients versus parts; formulas versus bill of materials; several units of measure (i.e., pounds, ounces, and liters) versus EA (each).

There are, however, subtle differences. Process manufacturing is scalable. For example, if the formula calls for a 1,000 pounds of oranges but you only have 500 pounds, you can still make orange juice; just not as much. If you only have three tires, you are going to have wait for the fourth tire before the car can start rolling off the production line. In process, you tend make product in bulk or batches as in a vat of coke or a 500-gallon tanks of solvent and then pack it off to fulfill customer orders. On the other hand, in discrete manufacturing you would expect to see one computer at a time coming down the production line.

For a quick refresher on process manufacturing, peruse the articles, Process Manufacturing: A Primer or What Makes Process Process.

The remainder of this article focuses on process manufacturing. However, to say process manufacturing functions are the same in all industries is tantamount to saying that a Ferrari and a Ford truck are simply means of getting from point A to point B. Just as you would not use a Ferrari to haul lumber, aspects of process manufacturing cannot be applied equally and with the same importance to all industries. This article looks at the unique requirements of process manufacturing in three industries: food and beverage, chemical, and a hybrid industry, textiles. One way or another, these requirements must be satisfied. If a software vendor can provide this satisfaction, your organization's anxiety level concerning the implementation of enterprise-wide systems can be significantly reduced.

If you are not in these industries, you can stop reading. No, wait! Perhaps, by understanding how a particular requirement or aspect of process manufacturing relates to one of these industries you may get a better understanding or insight on how it can be applied in your company. Whew! Thought that I had lost you! Glad you're back.

Editor's Note: For the purpose of this article, process and continuous-flow manufacturing are treated as synonymous. Continuous-flow manufacturing is the eradication of product stagnation in and between processes. Once a product has entered the manufacturing process, it moves on without having to be stored. Special considerations to establish a continuous-flow operation, such one-piece-at-a-time production and multi-process handling, , will not be addressed in this article.

This is Part One of a three-part note.

Part Two discusses process manufacturing requirements for the chemical industry.

Part Three discusses process manufacturing requirements for the textile industry and provides a summary.

Food and Beverage Industry

As you might expect, any industry that affects the health and welfare of the human race is bound to have special needs and requirements. With the incidents of Mad Cow Disease and the sudden and seemingly continuous preoccupation with the Atkins Diet, the most insignificant requirement for the food and beverage (F&B) industry is in the area of quality control (QC). While your customers may have their own special quality requirements, first and foremost, conformance must be established and verified with external agencies, such as (in the US) the Food and Drug Administration (FDA) and Bureau of Alcohol, Tobacco and Firearms (ATF) or your product will never reach the market. Consequently, integration with these external sources and frequent changes would be a critical element of the QC function. As you go further back into the supply chain process, the QC function must extend and usually starts with the supplier. Regardless, as the producer of a finished product, the responsibility for quality is joint and several which gives little allowance as to where the defect occurred in the supply chain. Look for software that seamlessly integrates with external agencies regulating your particular segment of the F&B industry.

Of special note is the US Bio-terrorism Act of 2002. This act places a series of new requirements on F&B companies. Most, including the authors, think that compliance with the Bio-terrorism Act is not possible without computerization of both the production process and the supply chain.

Once the regulated and external requirements are satisfied, there are customer and ingredients-related QC specifications that must be addressed. If your company is producing a finished product that is an ingredient into your customer's product, additional QC compliance is typically required. This could be for nutritional or ethnic considerations. Consequently, the setup of the QC function within the software must be flexible and adaptable.

The accurate statement of the QC specifications for the ingredients can also come into play. Going back to the orange juice example, the acidity of the oranges determines the amount of other ingredients (sugar, water, etc.) that may have to be adjusted to counteract the pH level. The pH level, recorded in the QC process, will therefore impact the product's specifications but, equally important, effect the "on the fly," one-time formula modification. Other QC-related requirements, that should be self-explanatory, include

  • Nutritional reporting and labeling
  • Taste QC specifications
  • Color consistency QC specifications
  • Shelf life longevity and reporting

Having worked in the food processing industry, the most terrifying words that you can hear on a Friday afternoon are, "This hamburger or soda tastes funny!" Your weekend, and possibly your livelihood, could be ruined and until you can dispel or confirm the damaging insinuation, an F&B organization is living in anticipatory paralysis. The fear stems from the negative financial impact on the company's image and customer base. Consequently, product recallability is an essential.

The Bio-terrorism Act of 2002 spells out detailed requirements which are often referred to as "one up and one down" tracking. This act also calls for the appropriate records within four hours from the receipt of a request from the FDA. Furthermore, recallability implies isolating and locating the defective product to an absolute minimum with dead-on certainty. To achieve this objective, "bullet proof" lot and sublot tracking is needed. This is easier said than done and can be an extremely time consuming process. However, certain attributes of lot/sublot tracking in the software can expedite the recording and tracking functions and help to eliminate damaging fallout.

First, there is lot to sublot inheritance. This means that characteristics of a lot are transferred automatically to the sublots contained within the lot. In so doing, the characteristics of bulk quantities of meat or oranges, for example, used to make hamburger patties or juice, respectively, are retained or inherited by the boxes and crates of the finished product. As a result, the recording of sublots places less hardship on the production line personnel and is less prone to recording mistakes or errors of omission.

Secondly, lot tracking should follow the product through any re-work processes. Even with undergoing a re-working process, the original lot and sublot characteristics should not be lost unless the re-work makes these characteristics meaningless.

Finally, lot and sublot tracking must be able to remain intact until the product arrives at the customer's location. This is the only way a complete recall can be accomplished and the questionable product returned to the manufacturers. Software gaps, preventing any one of these three requirements from being satisfied, brings the entire recall process into question and would require significant custom coding or administrative procedures to be filled.

Other Operational Issues

There are several additional operational issues that any self-respecting F&B software should be able to address. In addition to accommodating picking strategies such as LIFO (last in first out), FIFO (first in, first out), and FEFO (first expire, first out) the software must account for the perishability of the ingredients as well as the finished product. Consequently, taking into account the expiration date is key when determining picking priorities.. Some customers also demand strict rotation where the supplier can never ship product that is older than the last shipment.

For some manufacturers, private labels represent a significant segment of a F&B production run. Using the private label concept, large supermarkets utilize the value of name recognition to provide products under their own label like Safeway, Albertson's, Royal Ahold, and Tesco. Because of the large quantities required by these customers, manufacturers usually cannot wait until the order is on hand to start up the production line. Alternately, if the raw ingredient is only available in season (vegetables in August for example), the entire year's demand must be processed in a limited time period. Accordingly, a food processor will create unlabelled products. Labeling will only be completed after the sales order is received and confirmed.

Because of their extended shelf life, cooked, canned goods lend themselves well to this type of production. Sealed aluminum cans remain on an inventory shelf for up to twelve months while waiting for labeling. Hence, the terms, "brite stock" or "shiny stock" were created to refer to this type of stock. To be able to accommodate requirements lot and sublot tracking must extend and be maintained within the brite stock. Also, the manufacturing process must be able to be separated into two stand alone, independent processing runs. One would be for the production run to make the brite stock and a second, a packaging run to label and ship the product.

Catch weight or random weight is a common, and non-negotiable requirement for some food categories, particularly with meats. While meat and poultry products may be advertised for $50 a box, tin, or drum, the invoiced price is based on the actual, not estimated or expected weight of the product. Accordingly, not only does the software have to track the total weight, including packaging weight, to calculate shipping charges, it must also track the catch weight for pricing. While the concept may be simple to comprehend, its application may not that easy. However, this is an industry practice that cannot be ignored in some categories; it is the way business is done.

Some food companies are in the "disassemble" business. These companies grow or acquire one raw material and make many products from this single raw material. For example, a chicken processor may buy live chickens to make many different parts. An apple processor buys many different grades and sizes of apples, sorts them, and processes them into many different products. In contrast, discrete companies buy many different parts to make one end item and the bill of material was designed for this purpose. In process manufacturing, when one raw material is made into many end-items, a formula or recipe (process's equivalent to the discrete bill of material) is being asked to do something for which it was not designed. Consequently, a formula must have the flexibility and tensile strength to be changed rapidly and still conform the existing resources and routings on the plant floor. For example, it may be a "game time" decision on how to process a batch of apples to maximize the product yield. The software must be able to accommodate these changes through formula and routing modifications and still stay within the constraints of the plant floor. Of course, we want to maintain the integrity of the original formula and routing.

Additionally, companies making multiple end items from a single incoming ingredient have a series of requirements that must be addressed. In place of a traditional bill of materials, they require a model that accounts for multiple outputs, often called by-products, co-products, and waste. With this model, companies require scheduling which reflects the logic of the plant. Are they scheduling a quantity of end item, end items, units of inputs or hours of processing time? All are common. If planning is to be used, will the planning system deal with independent demand for multiple items or limit demand to a single item? Costing functionality must reflect the various methods used today. Some end items are priced at market (the currently available price for that item), produced waste items should have their cost of disposal charged back to the process (and therefore products) that produced the waste. Finally, multiple end items may require that the cost of the entire process to be split based upon a percentage split of cost. Since producing multiple end items means that we may have the same item as both a consumed item and a produced item, the system must deal with recycles. Recycles can have a significant impact scheduling, planning, and costing.

Other aspects of the F&B industry that you must be aware of are:

  • Flexible packaging alternatives (i.e. consider the different ways you can purchase soda).

  • Re-pack functionality (i.e. don't have soda in 1 liter bottles but can re-pack 55-gallon drums).

  • Bulk storage using tanks and silos and the need to maintain, record, and track temperature and spoilage attributes.

  • Special needs of fresh, chilled, and frozen ingredients and products.

  • Container management for beverages.

This concludes Part One of a three-part note.

Part Two discusses process manufacturing requirements for the chemical industry.

Part Three discusses process manufacturing requirements for the textile industry and provides a summary.

About the Authors

Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food and beverage, chemical, and CPG process industries. Additionally, Strub was a consultant and Information Systems Auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.

He can be reached at JoeStrub@writecompanyplus.com.

Olin Thompson is a principal of Process ERP Partners. He has over twenty-five years experience as an executive in the software industry. Thompson has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce, and the impact of technology on industry.

He can be reached at Olin@ProcessERP.com.

 
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