On-time delivery doesn’t happen on it’s own; rather, it’s the result of considerable planning, production, and accounting in the manufacturing process. As well, improved service levels means more repetitive business coming from continuously satisfied customers. In other words, predictability and repeatability allow manufacturers to more accurately forecast the economic, material, manpower, and production yields that make a company grow strong and regarded well by others in the supply-chain and the marketplace.

Planning, production, and accounting in the manufacturing process are intentional, and their validity and repeatability are paramount for prosperous growth. To the degree that these variables can be controlled, a robust enterprise resource planning (ERP) software system should be well-suited to managing such material and production variability as well accounting for raw materials and finished goods in the manufacturing process. ERP is the application in discrete manufacturing that helps make production jobs highly predictable and repeatable.

The primary reason for this is that discrete manufacturing, especially in sub-assembly and continuous assembly production, often has a low degree of product variability. This is not to say that there is a low degree of product pricing variability, for product pricing is still an imprecise science that could use more research. It is rather the notion that real-time accounting for all material and operational costs in the manufacturing process is vital to informing other factors that create the greatest challenges to overcome in production management.

Without accurate and up-to-date shop floor, material, labor, and shipping data, manufacturers cannot really make informed decisions on the key business issues that impact (directly or indirectly) their operation. As well, in the absence of being able to link finished products to considerations such as inventory maintenance, customer volume discounts, incentives, and quality, a manufacturer would be hard-pressed to determine product profitability.This is where the ERP application helps in providing accountability. Sophisticated ERP applications that are fully integrated into the production system will capture, assign, and compare actual and standard costs for all finished goods. A true ERP system will, in this regard, be a leaning function that also account for waste. Overall, through capturing and analyzing actual versus estimate, and actual versus standard, costs for products can be measured with less variability, and much more accuracy.

Of course, when dealing with innumerable raw materials, and the innumerable sources of such raw materials, variability will always be a concern of manufacturers. If variability must be a part of the manufacturing process, then it stands to reason that a higher degree of variability will affect a broader number of functions in an ERP system and therefore will require deeper support capabilities within the software.

This entry was posted on Monday, August 25th, 2008 at 9:00 am and is filed under Accounting, Implementation, Inventory, Scheduling, Shop Floor. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.