Sunday, January 20, 2008

Scheduling – How low will you go?

manufacturing erp software
Every formula manufacturer performs some level of scheduling. Without a schedule or a plan no plant could function for very long and based on my experience most of the schedules are manual in nature. As a company grows past the $10 million in sales mark the manual processes may become burdensome and become a drag on the manufacturing process.
Unfortunately few small formula based manufacturing firms have the resources or knowledge about their scheduling options. I will try to provide a basic primer to begin the education.
Generally you can break the scheduling process into two primary components
  • Production Schedule
  • Shop Floor schedule

The production schedule identifies what products we will be making, the qty to be made and the start and end dates for the scheduled item. It does not attempt to assign resources such as machines or people. It is typically the result of ensuring capacity and material availability. Think of it as the overview of what a company will be making and when it will be completed and will often show data 1-2 weeks out from today.

The shop floor schedule is much more detailed and identifies what resources we will be using, the precise order the items will be made and dependencies required in running this item. It is very detailed and is often more detailed than users outside production need to review. This is the document that the shift supervisor works from and directs the line supervisors and is often limited to 1-5 days out from today.

Both are required to get the raw materials converted to finished goods in an orderly fashion. Additionally most (if not all) companies perform these tasks. The questions to consider are

  • How efficient is your schedule?
  • Could you produce more with the same resources?
  • How much time are you spending to prepare the schedule?
To a very large degree scheduling for a significant number of small to mid-sized formula manufacturers ($1-100 million in sales) is done in Microsoft Excel or similar tool. The data for the schedule is manually obtained from printed or electronic sales orders, inventory counts and best guesses of future orders based on history or a best guess. That manual process is the norm and not the exception.
Is that a bad thing? No.
It depends on the complexity of your business and how efficiently you are trying to run.
If you always make the same products, at the same quantity and in the same order – that is not a big issue. But as lot sizes continue to shrink, breadth of products offered continues to widen and lead times are reduced then a non-integrated "back of an envelope" approach may not work anymore.
When you decide to introduce electronic tools for scheduling you need to be very careful in selecting the tool. I my experience the tool should read open sales orders, forecasts, and quantity on hand. This data can be read periodically in a batch process if needed. There needs to be a greater relationship with the production system. For formula manufacturers you need your scheduling tool to understand the formula and required resources (machines, people and tools). This data is often more detailed than the ERP data and therefore more difficult to integrate.
With that information I would suggest discussing scheduling tools with your manufacturing application. If they do not have integrations to scheduling systems your options become limited but not impossible. At this stage you may choose a custom integration or considering a new production system. If this is your case the cost of adding an integrated schedule becomes pretty expensive.
If your production system does have integrations to one or more scheduling tools then pick the one that best integrates to your ERP system and is not too complex for your personnel to use.
One thing to remember – every scheduling implementation is unique to your own business. There is no such thing as a plug and play implementation of scheduling. It will take time and effort by your company. Therefore you should be certain that there is a high level of benefit before adding this tool. Electronic scheduling is not cheap. Often times integrated scheduling tools can equal or exceed the cost of your production system.
If the benefits are real and you have the rest of your production and ERP system under control then adding electronic scheduling tools may be the right next step for you. But whatever you do – keep your manual system as the primary system until the new system has made the manual one obsolete. After all – the manual system has gotten you to this point.

Thursday, January 3, 2008

Software for formula manufacturing

manufacturing erp software
One of the greatest misconceptions in the software industry is that manufacturing software is manufacturing software and that there are no differences in manufacturing products on the market. That is not true – let me share my perspective on the landscape.
I typically break the market into a couple sectors – much like Gartner and the like will do. I keep my categories simple – Big, Medium and Small. Big > $750 million in sales, Medium $150-750 million in sales and small $5 – 150 million in sales.
In the Big and Medium camp you have the typical very good and very expensive applications such as SAP, Oracle, Infor (many options), Ross and the like. These companies typically need outside independent consultants to assist them in the selection and it is worth every penny.
The real confusion comes in the Small sized company - $5 – 150 million in sales. While I do not have statistics to back this up I think this is the largest part of our market – at least in the US – and they have the least resources. They tend to be forced to rely on software vendors to assist in the selection process. As such there is much misinformation being spun to this group of users.
I will attempt to put some applications into groupings and give my perspective on what to look for in each grouping. To keep it simple I have limited the groups to three.
  • Assembly posing as formula/batch
  • All-in-one
  • Everything but financials
  • Extension to larger standard ERP solution
Assembly posing as formula/batch -First let me get the assembly applications out of the way first. This is a group of applications that have found very stiff competition in the assembly/discrete world and have moved over to batch/formula manufacturing where they see more potential market share. Typically they are easy to point out and are often eliminated by the trained eye. Here are a couple signs. Does their web site spend as much time talking as much time about BOMs, routings and subassemplies as they do recipes, compliance documents and intermediates? Do you see MSDS or Nutritional Analysis prominently displayed on the site? If not move on – you will spend more time customizing an assembly application than you will gaining benefit. Today there are plenty good vertical applications that do exactly what you need. Some examples include Macola, MAS90 and Dynamics Manufacturing – each are well suited for assemblers but not necessarily formula/batch manufacturing.
All-in-One – Through the 1980's and 1990's this model really was the standard. This is an application that was written specifically for an industry and hand tailiored to that industry. It will look and feel like your industry and will be feature rich and very deep in functionality. For the first couple years of usage you will feel great. The primary drawback of this approach is that it does not talk to any other application and they are the only ones doing the development for your solution. Sure you can export data to excel and manipulate it into other applications but that is a bit different than being able to pick from a myriad of solutions to solve unique challenges. Additionally these applications are typically written to fill as specific need such as Lab Analysis, MSDS, Scheduling or Formula Management. They will be strong is certain areas and very weak in others – such as financial analysis or business intelligence. This is largely caused by limited resources and the resources they do have know the technical aspects of the industry and not the broader ever-changing business issues impacting your business. The risk of this solution is in the unknown. How will they handle electronic payment of payables (common in the EU)? How will they handle web orders if you choose to go there? How will they broaden their sales order processing to handle export orders and all the paperwork associated with that business. Some examples include Deacom (although really assembly but have made a reasonable attempt at batch), ProcessPro and Syspro. Biggest benefit – it is a one stop shop for software. Biggest drawback – if the store does not have what you want after purchase – tough.
Everything but financials – This group amazes me. These are applications written specifically for the industry and have stopped short of being an All-in-One by attaching themselves to the core financials of many ERP systems. This model has tightly integrated data within their own functionality such as formula management, inventory control and compliance. When it comes to integrating with financials (GL, AP and AR) the integration is relatively weak. Normally there simple transactions sent to AP to pay the inventory invoices or transactions to AR to track outstanding receivables. All this is great until you want to perform analysis on costs from the GL and flow back into production. Because the transaction is foreign to the financial system (GP, AP, AR) it will not be able to make the jump to the source document (sales order, purchase order or batch ticket). This is often frustrating for users. Like All-in-One there are no other resources developing for this implementation. So if EDI becomes an issue for you after purchase you really only have one option with this group. As well if your financial application changes you are dependent on this group to keep up to speed with the changes. Now the part that amazes me is this. These applications tend to work with any and every financial solution on the market and claim to be tightly integrated with each. Logic tells you that can't be the truth. It is the old saying – "If you say it loud enough and often enough it becomes the truth". Not so. The prime application doing this today is Batchmaster (the one owned by eWorkplace). Biggest benefit – most of the software is written by one company. Biggest drawback – that one company may be trying to service far too many markets.
Extension to larger standard ERP solution – This is where the trend seems to be today. It is similar to the Everything but financials group with more reliance on the ERP solution for core business processes. In this model the application handles only the parts of your business that is truly unique – MSDS, scheduling by formula, formula management. It is not trying to handle order entry, purchasing, inventory or financials. The groups doing this are highly focused on the formula manufacturing parts of the solution and leave the routine transactions to the standard ERP solution. The reason this is a new development is that ERP solutions have gotten to a place in technology where they can accept third party applications into their suite of offerings. This was a huge technology change that began in the late 1990s and really picked up speed in the early 2000s . Now it is common place for software developers to leverage the work done by very large ERP developers and focus on what they do best. Some examples include Vicinity (Dynamics GP, SL and NAV), O2/EscapeVelocity (MAS500), JustFoodERP (Dynamics NAV), and Fullscope (Dynamics AX). Biggest benefit – significant resources are in both standard ERP and vertical requirements. Biggest drawback – upgrades need to be coordinated by your local reseller.
In 1,500 words or less I have attempted to group the software solutions for you. Each has merits to consider. Each has legacy to look into. For my money I would look for the solution that addresses your needs today, is easy to use and has the ability to change as your business changes around the corner.
Related Posts Plugin for WordPress, Blogger...