By Anne Le Bris and Melissa Vaes, with contributions from TEC analyst data
So, you’re a discrete manufacturer looking for an enterprise resource planning (ERP) system.
This reference guide, based on TEC’s Discrete ERP Request for Proposal (RFP) Template, provides insight into the discrete manufacturing ERP features and functions currently available on today’s market. It will help you to determine which ERP features are a high priority for your organization, and which features are a lower priority.
You can download a detailed guide in Excel format at TEC’s Discrete ERP System RFP Template page.
Before we get started, here is a short overview:
What Is Discrete Manufacturing ERP Software?
Discrete ERP addresses discrete manufacturing requirements (according to APICS: “the production of distinct items such as automobiles, appliances, or computers” [APICS Dictionary, Eleventh Edition, 2005]). The goal of discrete ERP systems is to fully integrate organizational management and resources. Discrete ERP manages all aspects of production, inventory, purchasing, etc., within a manufacturing environment, as well as other enterprise management modules.
Other modules (quality, sales management, and product technology) can be integrated with the system according to your needs.
To learn more about the distinction between discrete ERP and process ERP, see Process ERP vs. Discrete ERP Differentiation.
About this Discrete ERP Guide
Our ERP discrete RFP template contains about 4,000 criteria; consequently, we’ll focus here on the “big picture” features.
You’ll note that we’ve brought discrete ERP features together by broad category:
1. Financials
2. Human resources
3. Manufacturing management
4. Inventory management
5. Purchasing management
6. Quality management
7. Sales management
8. Product technology
These categories 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 discrete manufacturing processes.
If you would like more information about full listings of enterprise software functions and features, please see TEC’s RFP Templates.
Reference Guide to Discrete Manufacturing ERP System Functions and Features
1. Financials
General ledger
General ledger keeps centralized charts of accounts and corporate financial balances. It supports all aspects of the business accounting process. In this module, financial accounting transactions are posted, processed, summarized, and reported. It 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 (AP)
Accounts payable (AP) 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 should support the following functionality: AP company policies and procedures; suppliers/voucher master data; payment controls; invoice processing and aging analysis; payment processing; journal voucher processing; AP ledger posting; check processing; AP transactions and controls; and AP reporting.
Fixed Assets
Fixed assets manage depreciation and other costs associated with tangible assets such as buildings, property, and equipment. The software should support the following functionality: fixed assets records; asset transactions; asset depreciation; depreciation books; revaluation and interest calculation; and tax reporting.
Cost Accounting
Cost accounting 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). The software should support the following functionality: cost data; cost allocation definitions; cost allocation process; cost management; cost and sales price calculation; ABC; and ABC tracing and tracking.
Cash Management
Cash management involves the capability of the system 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
Budgeting involves budgetary controls, budget accounting, budget development, and budget allocation. The software should provide sufficient tools to enable detailed budget development and analysis. Additional functionality should be available to integrate with project management software applications, either natively or with external interfaces.
Accounts Receivable (AR)
Accounts receivable (AR) 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. The software should support the following functionality: 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
Financial reporting enables robust analysis of company performance through delivered reports. These reports allow individual business units to view their financial information, while parent companies can roll up all business subsidiaries and view the consolidated information. Additionally, solutions should provide you generated reporting tools that are easy to use and provide sufficient depth of and access to the financial data to permit comprehensive analysis.
Project Accounting
Project accounting uses financial practices to monitor the schedules and spending of projects process.
2. Human Resources (HR)
Personnel Management
Personnel management automates personnel processes including recruitment, personnel profile, organizational structure, career development and training, reward management, job position and wage profiles, and business travel and vacation allotments. The software should support the following functionality: recruitment management; personnel information and tracking; organizational structuring; job position and salary profile; career development, training and performance management; compensation management; budgeting and cost control; government compliance reporting; expenses management; union information; discipline actions and grievances tracking; and employment history/personnel reporting.
Benefits
Benefits functionality is used to administer a diverse range of benefit plans. Such plans typically cover accidental death and dismemberment (AD&D), disability, life, medical, retirement plans, flexible benefits, and profit sharing plans.
Payroll
Payroll handles accounting and preparation of checks related to employee salaries, wages, and bonuses. The software should support the following functionality: employee payroll profile; earnings and deductions; eligibility controls; user balances; tax deductions and calculation; payroll calculation; payroll and payment processing; check processing and printing; labor distribution and accounting; payroll and regulatory reporting; IRS documentation; security and audit; and automated timesheets.
Employee Self-service
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 software should also support benefit enrollment programs and new hire initiation.
Employee Metrics
Employee metrics allow HR managers to analyze and report on such variables as staff headcount and movement, workforce planning, absences and leaves, wage and salary costs, competency profiles, and training requirements and histories.
Health and Safety
Health and safety provides the tools to administer compliance with the health and safety regulations, accident and injury reporting, and tracking of lost time by employee.
Workforce Management
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.
Training
Training functionality covers the planning and administration of employee training programs, and allows administrators to track training schedules, training budgets, training costs, and more.
3. Manufacturing Management
Product Costing
Product costing 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 is a system for using data from the shop floor to maintain and communicate status information on manufacturing orders and on work centers. Shop floor control can use order control or flow control to monitor material movement through the manufacturing facility.
Field Service and Repairs
Field service and repairs administers installed-base service agreements and checks contracts and warranties when customers call for help.
Production Planning
Production planning 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.
Project Management
Project management monitors costs and work schedules on a project-by-project basis. It usually includes the following sub-modules: project control, project analyzer, project budgeting, project timekeeping, project billings, contract management, and a workflow communicator.
Product Data Management (PDM)
Product data management (PDM) provides the ability to integrate at the engineering level to ensure accurate updated product information. It involves bills of materials and routings creation, and engineering change management. It also provides a consolidated view of the product.
Product/Item Configurator
Planning bill of materials (BOM) applies more to family BOMs (for example, what percentage of PCs with 20 GB, 50 GB or 100 GB drives will we make?). This is important during sales and operations planning, and forecasting phases. A software tool that simplifies order entry by asking which options the customer needs, then applies predefined rules to correctly configure the end products. The configurator populates the attributes of the newly configured item, tests for conflicts, and generates the appropriate BOM, routing, and price based on rules and calculations.
4. Inventory Management
Inventory Management—Online 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, online (including the ability to derive a historical perspective).
Processing Requirements
Processing requirements include the ability to manipulate inventory data online, and to trace and separate stored items based on different criteria.
Data Requirements
Data requirements include the ability to obtain additional detailed item-related information from the inventory master file.
Reporting and Interfacing Requirements for Inventory Management
Reporting and interfacing requirements 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 you with 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
Forecasting provides you 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 you to link items ordered by a customer with finished items 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 those items, unless they are properly unreserved or unlinked.
Adjusting Inventory
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.
5. Purchasing Management
Profile of Suppliers
Functionality for profiling suppliers refers to the system's capability for entering, storing, and retrieving master data information related to suppliers. This may include bank data, preferred payments, shipping conditions, etc. This data is used by the system when transactions with the 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 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 refer to built-in procedures for the creation, processing, and approval of requisitions and requests for quotation (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
Functionality for purchase orders (POs) provides you with the ability to set up parameters; create, modify, and maintain various types and numbers of purchase orders; and to perform conversions of manufacturing requirements planning (MRP) items and other requirements into purchase orders.
Pricing
Pricing functionality allows you to define, group, and maintain prices for purchasing goods that are further used in purchase orders. It also includes functionality for price discount 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 you to maintain, modify, and close previously created purchase orders. They can also classify items, categorize orders, maintain purchasing history, etc.
Procurement Reporting and Online Reporting
Procurement reporting and online reporting refers to built-in procurement reporting functionality that requires no additional programming or supplementary online reporting tools. All reports can be run online. Reporting information includes purchase order history and tracking, sorting, status reporting, alerts setup, etc., for items received. User-defined report modifications are also included.
Repeat Procurement
Procurement is the process of acquiring the goods and services required by an organization to fulfill its objectives (manufacture products, maintain assets, etc). Depending on the type of resources and their use, the frequency of procurement can vary from very low (as for capital goods) to very high (as for raw materials). This criterion refers to medium- or high-frequency procurement.
Receipts for Procurement
Receipts for procurement refers to the criteria related to the reception of ordered goods from the supplier. Between the moment when goods arrive and the moment when they are physically stored in the warehouse, there are a few factors that need to be taken into consideration, such as the quantity of the good 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?); and pricing (Did the price of the goods delivered change due to unexpected factors?).
Online Requirements for Purchasing Management
Online tools and portals are increasingly used by organizations for supplier interactions. In order to make communication efficient for both parties, these tools should provide functionality such as information on all available suppliers; the possibility of creating purchase orders with advanced options (e.g., define frequency, define delivery method, define payment methods, etc); collaboration that will allow changes to be easily communicated to suppliers, etc.).
Reporting and Interfacing Requirements for Purchasing Management
In order to track the efficiency of the purchasing department, organizations need to access statistics and reports on what has been ordered compared to what has been received; the quality of the services provided by each supplier; price comparisons between different suppliers, etc. These reports are useful not only for the purchasing department, but also for other departments that depend on goods received, such as production, sales, and accounting.
6. Quality Management
Production Quality Management
Production quality management activities relate to the production process, starting with raw materials or components, and ending with the finished product. Inspections need to be performed at all stages of production flow where the quality of the final product may be altered. Workflows need to be defined in order for you to know when and how to test the quality of the product, and corrective actions need 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 is 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. Upstream quality management concerns 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) has an 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 suffer. Also, improper storage of finished goods can damage them before they get shipped to the customer, or delay the delivery process.
7. Sales Management
Online Requirements
Online 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 requiring that a special program be installed 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 you with 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)
Available-to-promise (ATP) refers to the quantity of product that can be ordered without affecting existing orders. In other words, when a certain quantity of a product has been ordered 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, suppose that a product has 100 pieces in stock, but 30 have already been ordered by a customer: the ATP is 70 pieces (100 - 30).
Pricing and Discounting
Pricing and discounting modules help automate the data entry process of your customers’ orders and track the status of orders. It involves order entry, order tracing and status reporting, pricing, and invoicing. It also provides basic functionality for lead tracking, customer information, quote processing, and pricing and rebates.
Customer Service and Returned Goods Handling
Goods may be returned by customers either because of their low quality or simply because the customers do not need the products they received. Depending on the situation, organizations define workflows to accept or reject the returned products. Functionality for customer service and returned good handling include tracking customer complaints, creating and managing documents for returns, and reporting statistics on what has been returned, by whom, for what reason, etc.
Customer Relationship Management and E-commerce Requirements
Customer relationship management (CRM) covers a wide range of functionality, including campaign and leads management, sales force automation, customer service, etc. Most ERP solutions cover basic CRM functionality, including functionality for electronic commerce (online catalogs, Web-based interfaces for orders) and CRM (interfacing with phone systems, personal digital assistants [PDAs], e-mail tools, etc.).
Order Entry
Order entry functionality refers to the ability to create orders manually or automatically, including validation rules (for instance, a US customer should not be able to order goods that are only available in Europe).
8. Product Technology
Architecture
Architecture refers to the framework for organizing the planning and implementation of data resources. It also refers to the way the system is designed and how the components are all connected to one another.
User Interface
User interface refers to the manner in which people access and interact with the software. It includes usability and configurability of the software. The user interface should facilitate the easy operation of the software
Platforms
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. For a compatibility reason, it’s important you pay a special attention to this category.
Application Tools
Application tools are the components that provide the ability for an application or program to work.
Workflow and Document Management
Workflow and document management automate the manual processing of paper. It provides flexible control and supports cooperation on a workflow level, while taking versioning into account.
Reporting
Functionality for reporting refers to technical options for generating and delivering reports.
SaaS and Hosting Options
This category refers to features for software-as-a-service (SaaS) or hosted solutions.
Although this guide has covered the “big picture” elements of a discrete ERP solution, a comprehensive RFP will also include general considerations, including reseller and value-added reseller (VAR) channels and specific modules. It should also address technology-related information, such as technical requirements, control and audit features, and operational functionality.
We hope you find this reference guide useful. For more information on discrete manufacturing ERP software features and functions, see TEC’s Discrete ERP RFP Template page.
For more information and to start your own custom discrete ERP solution comparison, please visit TEC’s ERP System Evaluation Center.