Originally Published - March 10, 2007
As seen in such articles as Product Life Cycle Management in Process or Process Manufacturing Software: A Primer, what the process manufacturing industry lacks in glamour, it certainly makes up for in complexity. Traditionally, manufacturing is divided into two categories: process and discrete (if one is not counting hybrid, mixed-mode environments). Many differences exist between the two environments, but most differences can be grouped into one of two areas: 1) those differences derived from material issues, and 2) those differences derived from production issues.
Process manufacturing materials (ingredients and finished products) are different from their discrete counterparts. Process materials are customarily powders, liquids, or gases, which must be confined and which are more difficult to measure accurately. Process manufacturing materials are typically also processed close to their natural sources (e.g., farms, mines, oil wells, etc.). In addition, the materials are of inconsistent quality, which means extensive quality procedures, segregation (lot control), restriction of use (i.e., "this lot is OK for one customer but not for another"), and, usually, the inclusion of quality attributes as part of their inventory definition needs to be implemented.
Process materials can also vary over time. They can get better, they can get worse, and they can even completely change their identity down the track (e.g., owing to the aging process or a limited shelf life). In addition, ingredients often come in a variety of grades and specifications, which can impact the properties of the produced goods. This additional inherent variability leads to both product lifecycle management (PLM) and production or supply chain operations challenges.
It is the differences in production issues between process and discrete environments, however, that reveal the simplest definition of process manufacturing: once one produces the finished product, one cannot distill it back to its basic ingredients. Process materials often involve irreversible mixing, blending, heating, melting, and other operations, while the duration, operating conditions, and sequence of production steps can have a dramatic impact on the yielded material. Has anyone ever attempted to turn orange juice back into its original water, sugar, sodium, and, of course, unpeeled oranges; extract crude oil from derivatives; or extract the pigments out of paint? Conversely, one can disassemble a finished car into its original components, such as tires, spark plugs, axes, chassis, carburetor, and engine block. Thus, where with discrete manufacturing one talks of parts or components, with process manufacturing one speaks of ingredients. Similarly, formulas take the place of bills of materials (BOMs), and convertible units of measure (i.e., pounds, bags, boxes, ounces, and liters) can be related to units.
Thus, food, beverages, chemicals, paints, drugs, and many consumer packaged goods (CPG) are produced quite differently than their discrete counterparts. This is because process manufacturing typically produces products (including coproducts, byproducts, and recurring materials) based on formulas or recipes that detail the ingredients, production steps, and processing parameters, as opposed to on precise BOMs and routing operations, which is typical when making and assembling discrete items.
There are also more subtle differences between the two types of manufacturing. One of these differences is the fact that process manufacturing is scalable. For example, if the formula calls for 1,000 pounds of cake flour, but one only has 500 pounds, one can still bake cakes, just not as many. Conversely, in discrete manufacturing, one missing part means waiting for it to arrive before the finished assembly unit can start rolling off the production line. With process manufacturing, one also tends to make products in bulk or batches, as in a vat of coke or a 500 gallon tank of solvent, and then pack it off to fulfill customer orders. On the other hand, in discrete manufacturing one would expect to see one appliance or car at a time coming down the production line.
The Challenges of Process Manufacturing
For decades, enterprise applications vendors have used technology to automate the business processes that are found in the more straightforward discrete manufacturing setup, where much of the complexity lies in coordinating the great number of widgets that are assembled into computers, minivans, and television sets. The capacity needed to assemble the multitude of intermediate parts and subcomponents into finished goods is a simple function of the number of assemblers brought to the task, which can be increased or decreased according to demand.
Conversely, it is not easy to make changes in process manufacturing. For example, the amounts of chemicals that a plant can produce are fixed by the design characteristics of the tanks and reaction vessels it uses to make them. Adding capacity is a costly endeavor involving months of design work, followed by multimillion dollar construction projects. Disposal of off-spec material is another costly operation, even in cases where the material can be sold to another plant. Rework of unused material is preferable, but requires careful planning so that production of premium-grade products is not adversely affected.
Additionally, unlike with discrete manufacturing, switching from one product to another in a process plant involves significant downtime during which maintenance is performed and vessels and piping are cleansed to prevent product contamination. A classic example is a brewery, which has to mix and brew a variety of product flavors, handling hundreds or thousands of actions involving the complexities of pipes, tanks, and supplies. When one type of beer is being made, the tank being used to produce it is no longer available for other operations. Effective process enterprise resource planning (ERP) software needs to be able to control how long it takes to fill the tank, determine what ingredients will be used, and determine how long the beer needs to brew. Once the brewing is completed, the software must schedule when the beer will be pumped out to be bottled, and arrange for the tank to be cleaned. When one extrapolates from this simple one-product example, one can see that scheduling an entire plant to meet customer demand for a variety of products is too complex a process for ordinary mortals. It requires specialized software with high-level mathematical capabilities.
Product Development for Process-oriented Industries
Product development can also be a challenge for process manufacturers, as product development requirements differ widely between the two styles of manufacturing. Because process PLM systems revolve around recipes and formulas (for more information on what constitutes a full-fledged PLM system, see Critical Components of an E-PLM System and The Many Faces of PLM), and because of the aforementioned variability in ingredient quality, product designers often must experiment with multiple formulations before they achieve the desired result.
Defining and formulating recipe-based, industry-tailored products can be a complex process, involving developing, perfecting, and protecting franchise products, their potential successors, and even the failed prototypes that preceded them. Often, as part of the development process, materials have to be provided to customers free of charge so that the customers can evaluate the product's performance in their process. This back-and-forth between customers and developers may be reiterated multiple times. Thus, many producers are still struggling to balance development and production costs (while factoring in the impact of manufacturing capacity and supply chain speed) against the potential value of a new product.
Furthermore, product development is steadily becoming more about customer service than about mere product and process innovation, involving, for instance, developing unique products for preferred customers. Customers are increasingly demanding services that go far beyond mere delivery and replenishment. This is particularly true when it comes to specialty chemicals, where product development is often more about a one-to-one relationship with the customer and understanding its needs than it is about building a better molecule, since in this industry brands matter much less than in, for example, the retail or automotive sector.
Nevertheless, by combining process industry—oriented PLM capabilities with process manufacturing—oriented ERP ones, it may be possible to produce a unified sample management solution that would allow product samples for evaluation purposes to be delivered in the same manner that commercialized products are delivered. Further combining these PLM systems with process manufacturing—oriented supply chain management (SCM) solutions could provide additional recipe optimization capabilities, such as the evaluation of current inventory to develop least-cost or best-fit product formulations or recipes. Such evaluation would accelerate the new product development and introduction (NPDI) or new product development and launch (NPDL) process, help lower development costs, and shorten time to market for globally compliant products.
This would be particularly helpful in the specialty chemicals sector, where the NPDI process wins more business by recognizing and exploiting customers' needs (e.g., for adhesives, flavoring or scenting agents, polymers, etc.) than by trailblazing a new market with a purely technological innovation. In many chemical companies, but particularly in specialty chemical companies, every order might represent a new product, since it is often sufficient to tweak an existing formula or replace this chemical ingredient with that chemical ingredient. Thus, the faster the time to market and time to volume, the greater advantage these companies have over their peers, and the greater chance of gaining market share.
Regulatory Requirements for Process Manufacturing
Process-oriented industries may also benefit from the recent focus on regulatory management within the product development context, which parallels a general industrial trend toward better management of global regulatory requirements and environmental impact (see Atrion User Conference Highlights Need for Regulatory Compliance in PLM). This is because process manufacturers face different regulatory requirements than their discrete counterparts, which places additional demands on their software. The problem is in addressing compliance in a cost-effective manner. All of the benefits of PLM (including faster introduction of products to markets; reduced product cost; increased product sales; higher product quality; reduced waste; and more valuable product portfolios) can be quickly erased by significant, noncompliance events that impact the company through fines, penalties, negative publicity, or a prohibition on selling a new product in key markets.
In fact, regulatory management is only becoming more important as many regulatory bodies have renewed their focus on product compliance. Because these regulatory requirements vary from industry to industry, as do many other PLM requirements (see PLM Is an Industry Affair—Or Is It?), and because PLM functionality is becoming an essential element of an enterprise application portfolio, industry-specific functionality is increasingly critical to buyers of enterprise applications.
For instance, certain discrete manufacturing sectors are facing new regulatory requirements. Automotive companies, for example, must address the new requirements of the Transportation Recall Enhancement Accountability and Documentation Act (TREAD) in the United States, while electronics and high technology companies in the European Union (EU) must meet the demands of the Waste of Electronic and Electrical Equipment (WEEE) legislation.
On the process manufacturing side, food industry regulations range from developing nutritional and allergen information for product labeling, to the definition of control points to prevent contamination through a hazard analysis and critical control point (HACCP) process. Rising fears over bioterrorism and concerns with product safety and integrity are generating new government regulations that require food and beverage companies to track products throughout their life cycle. This means technology that tracks the original genesis of the food supply is of paramount importance. Thus, government regulations are driving the sector to invest in technologies that synchronize product labeling with formulation systems. For more information, see Process Manufacturing: Industry Specific Requirements Part One: Introduction and Food and Beverage.
The manufacture and use of hazardous chemicals are also governed by strict regulations, especially in North America and the EU. Thus, the chemical industry and companies that rely on chemicals within their plants must address a myriad of regulations, including Restrictions on Hazardous Substance (ROHS) and other regulations that require compositional analysis, the development of material safety data sheets (MSDS), environmental analysis, and hazards identification. The chemical industry must also deal with the impact of European Classification and Labeling Inspections of Preparations, including Safety Data Sheets (ECLIPS); Registration, Evaluation and Authorization of Chemicals (REACH); Science, Children, Awareness, Legislation, and Evaluation (SCALE); and Global Harmonized System for the Classification and Labeling of Chemicals (GHS). For more information, see Process Manufacturing: Industry Specific Requirements; Part Two: Chemical.
But it is the life science and pharmaceutical manufacturers that face possibly the toughest restrictions of all, requiring strict adherence to good manufacturing practices as well as to comprehensive and highly enforced Food and Drug Administration (FDA) regulations. Implementing and ensuring compliance with employee safety guidelines, possible food contact rules, monitoring emissions (which are often delineated by regulatory permits), and even validating the origin and composition of products are all mission-critical processes that contribute to the cost of doing business.
For such manufacturers, a further layer of complexity is added by the introduction of hazardous materials and dangerous goods that are closely regulated and must be reported. Software can greatly simplify this in two ways. First, when creating a new formula or modifying an existing one, that formula must be analyzed for the presence of hazardous materials. Performing this check requires a continuously updated and current list of regulated materials that are considered hazardous. It also requires knowledge of the percentage of these materials relative to the other ingredients.
Secondly, the reporting of hazardous materials must comply with a specific format, namely MSDS. These MSDS will usually accompany the customer's bill of lading (BOL), and therefore must be integrated with the billing process. While copies of MSDS can be kept on file and manually matched with the BOL, most companies will not want to risk noncompliance and would rather seek an automated remedy. Likewise, most companies will not want to rely on manual procedures to determine when a formula or product requires an updated MSDS. Instead, these companies will seek to have update notification incorporated into their enterprise-wide software, in order to automatically generate new MSDSs when needed. Thus, it is apparent that programming hazardous material compliance is not a trivial matter, particularly when one considers that it involves list processing and matching, percent of total analysis, scheduling, and formatting.