BUSINESS PROCESS IMPROVEMENT
ERP in Complex Manufacturing – Key Considerations for Success
When it comes to ERP in complex manufacturing, a few definitions are in order.
We look at complex manufacturing as companies that manufacture highly engineered products with longer product cycle times and multiple levels of subassemblies in their bills of material.
These organizations design, engineer and manufacture “discrete” products to order. This approach is distinct from “batch manufacturing.” With complex manufacturing, the company needs to track manufacturing history down to each serialized product unit. In contrast, batch production manufacturers track production per work center, day, batch or lot.
Some of the complex discrete manufacturers we have worked with serve vertical industries such as aerospace and defense, specialized industrial equipment, electronics and other areas. They’re challenged by complex configurations and systems. As an example, one piece of equipment can have from 500 to over 1,000,000 components and require 200 to 500 steps to assemble.
Complex equipment manufacturing companies tend to be low-volume businesses with a large product mix.
Ultra’s team of independent ERP consultants has seen that in complex manufacturing, it is necessary to manage complex diverse product configuration, long product lifecycle, along with increased market pressure for shorter time to market for new products and stricter regulatory compliance oversight.
Some of the more significant challenges faced by these manufacturers are in the areas of:
- Tracking operations over long cycle times, low volume, make-to-order or engineer-to-order
- Complex product development involving multiple Bills of Material (BOM)
- Complex process routing sequences with decision points and loops
- High flow of engineering changes affecting work-in-process
- Production is not repetitive, and mechanics must be alerted for changes
Requirements for ERP in Complex Manufacturing
When considering ERP in Complex Manufacturing, it’s best to start with a look at the most pressing challenges. That’s a good way to approach setting ERP selection criteria. In fact, Complex Manufacturing, by definition, comes with some challenging issues and needs.
- Engineered products often require a high number of BOM’s supporting various iterations of similar products
- Industry requirements demand extensive product documentation that must be maintained based on contracts and regulatory controls.
- Compliance and enhancements drive extensive engineering change and product revision control requirements.
- Diverse markets cause complex supply chain and supplier certifications and quality Requirements
- Production resource constraints and organization often requires multi-facility/cross-facility manufacturing i.e. Sub-Assemblies supplied from alternate plants
- Customer service requirements include warranty and after-market parts management based on contract and regulatory controls
- Long production cycles demand complex scheduling and constraint management
ERP in Complex Manufacturing – Next Steps
I’ll be touching on additional issues impacting ERP in complex manufacturing in the second part of this blog series.
Forward-looking complex manufacturers are now evaluating how enterprise systems can be used to drive true business process transformation.
Contact Ultra to consider your strategies in the face of a complex manufacturing environment.
Jeff is the founder of Ultra Consultants, a well-known voice in the ERP consulting industry and an expert on ERP solutions for discrete and process manufacturers. Over the last 40-plus years, his companies have helped more than 2,000 organizations improve their business processes, select ERP software and implement advanced solutions.