Each day brings a new set of challenges for process manufacturers. While each manufacturer is faced with slightly different challenges, there is a common list among them. Some of the challenges need to be addressed with personalized company policies and well designed SOP’s; other challenges can be addressed through implementation of an integrated ERP system. The six most common challenges addressed by an ERP system are described in this paper.

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6 Critical Manufacturing Challenges Resolved with an Integrated Enterprise Resource Planning (ERP) System

The six most common challenges addressed by an ERP system:

One – Inventory ControlWhen working with inventory, it’s critical to find a balance between having too much of it and having too little of it. Having adequate quantities of the right inventory ensures a supply that meets the normal demands of a company’s customers. Another factor when considering inventory is the lead time it takes to get materials in. If a manufacturer waits until the material is out before reordering, there may be a long wait before the mate-rial comes in or a high cost to expediting the required materials. Both excess and deficient inventory can lead to costly consequences.

The inventory control application of an ERP system gives manufacturers the visibility and inventory counts necessary for better pro-duction planning. Starting with the customer sales order, the inventory is accounted for; any deficiencies are flagged immediately to alert the manufacturer. The system also changes the status of the inventory for that order to make it unavailable for any addi-tional sales requests. This is the beginning of maintaining appropriate levels of inventory stock in the warehouse. Other functions of inventory control involve reconciling inven-tory balances, monitoring item usages, and

reporting on inventory status. Additionally, with a fully integrated ERP system, other ap-plications such as purchase orders, finance management, and more are automatically updated in real-time.

Two – Lot TrackingLot traceability occurs for raw materials and finished goods. Without an integrated ERP system, many manufacturers resort to enter-ing numbers manually into spreadsheets. The obvious challenge with this is the accuracy of the entries. But the bigger problem is track-ing specific raw ingredient numbers that have been used in multiple finished goods that are then shipped to multiple customers, and so on. In a complete ERP system, both forward and backward lot tracking is accom-plished, from the beginning of the process with the supplier to the end of the process with the customer.While any company in the process manu-facturing sector would benefit from ERP lot traceability, companies regulated by the FDA are required to be prepared for a recall at any time. The cradle-to-grave traceability feature of many of the most robust ERP sys-

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An ERP system is developed with several different business applications; all

are integrated within the system as a whole, but each functions to manage

specific areas of the organization. Some of the common challenges faced by

manufacturers are addressed with ERP applications; others are addressed with

ERP through the advantages of a fully integrated system.

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When evaluating whether to invest in ERP, it’s important to ask if you need:

>>Tighter financial controls for financial compliance declaration (Sarbanes-Oxley and Basel II) as well as other forms of compli-ance reporting (EH&S, sustainability report-ing and industry specific initiatives such as 21 CFR part II).

>>More consistent data that provides a global view of the business that can drive continu-ous improvement strategies by helping to establish consistent performance metrics and measures to gauge the business.

>>Support for streamlined sourcing and procurement processes to match efficient response to customer demand and also a cen-tralized buying model to reduce unauthor-ized and unnecessary expenditures.

tems helps companies isolate the source of the food safety issue. The more specific the information, the more companies are able to determine the extent to which a product is affected such as how many batches and which ones.

Another advantage to lot traceability for manufacturers is quality control. While most of the traceability functions have been de-veloped to meet regulation requirements, companies can also use the lot tracking information to maintain quality standards. Manufacturers can quarantine raw materials and finished goods until they pass inspec-

>>A single data source for product or ser-vices data -- such as information relating to suppliers, customer orders and the products themselves -- to support faster new-product-development and launch cycles.

>>Support for closed-loop sales and opera-tions planning processes to ensure the orga-nization does not overpromise and underde-liver to customers.

>>The ability to automate business processes such as invoicing and sales and purchase orders in and out of one system.

>>The ability to more effectively manage projects in a portfolio approach and deter-mine profitability at the appropriate levels in the process.

>>A single base of information for consis-tency in billing and other interactions with the customer.

ERP Benefits By AMR Research Inc.~From financial controls to streamlined sourcing.

tion. Suppliers of raw materials can be more closely monitored for quality. Being assured that a product brand name is the quality a consumer is looking for benefits the manufac-turer and the consumer.

Three – MRPMaterial Requirements Planning is another component of an integrated ERP that ad-dresses the challenge of managing resources. Production planning optimizes the utilization of manufacturing capacity, parts, compo-nents and material resources using historical production data and sales forecasting.

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When MRP is implemented correctly, it re-duces cash flow and increases profitabil-ity. It does this by calculating the optimum production schedule based on the master production schedule, sales forecasts, inven-tory status, open orders, and bills of material. MRP reduces waste by providing informa-tion about purchasing the right amount of inventory at the right time; MRP determines the latest possible time frame with which to produce goods and buy raw materials, and still meet customer deadlines. With MRP fully integrated into the ERP system, any changes in orders and materials can be updated im-mediately with modifications to the produc-tion schedule.

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into manufacturing “bumps” such as bad raw materials that need to be calculated in order to have accurate batch ticket fulfillment. Without real-time information, a company can lose a great deal of revenue.

Data accuracy regarding vendors and cus-tomers is also a benefit when using a real-time system. Data replication is also a ben-efit within a real-time system because dual entry is unnecessary. The more current and consistent the data, the more accurate the information is that is used to make business decisions.

Six – Single Source of DataRegardless of the number of applications a manufacturing company implements, there will always be only one source of data with an integrated ERP. Companies do not have to pull together bits and pieces from differ-ent spreadsheets, accounting sources, batch tickets, sales orders, or others to learn of the company’s business status.

Enormous amounts of time are saved by elim-inating the need to perform data searches in various places as well eliminating re-entry of information. An ERP system functions to bridge gaps between departments. Histori-cally, the data from Sales and Marketing, Accounting and Finance, Human Resources, and Production and Operations were housed separately and not available for cross-func-tional analysis of information. A fully integrat-ed ERP eliminates barriers.

CONCLUSIONNavigating through daily challenges and bottlenecks are common in a process manu-facturing environment. Having the right ERP system can give manufacturers the tools necessary to make informed decisions. It can also help manage inventory and elimi-nate business inefficiencies. Having the right ERP system can help manage lot tracking and maintain visibility with raw materials and finished goods. Additionally, the right ERP system will help companies know what they need to buy and what they need to produce in order to meet customer needs and serve customers right every time. The right ERP sys-tem will help users gain full visibility and flex-ible reporting, performance analysis and drill down capability to see the data necessary to help business executives make informed deci-sions helping to grow their business. Having these functions in an ERP system is necessary when the information is in real-time and there is one single source of data the information is coming from. This kind of business manage-ment system is exactly what helps companies succeed and separate them from their com-petitors. - Tim SandsBusiness Development RepresentativeProcessPro® software

About the AuthorTim’s experience includes nearly 20 years in the sales and consulting field. His business develop-ment experience in the process manufacturing industry includes ERP qualification and systems selection. Tim’s involvement in the process manufacturing industry includes several associations including Natural Products Association, Organic Trade Association, Private Label Manufacturers Association and more. Currently, Tim manages the Business Development Department for Process-Pro, developers of ProcessPro® Premier ERP software. Tim’s primary focus is working with manu-facturers in the process manufacturing industry and specifically manufacturers with GMP and FDA requirements.

About ProcessPro® PremierProcessPro® Premier is proud to be the leading ERP software for the highly-regulated process in-dustry. Excelling in the small to mid-sized market, ProcessPro® Premier provides an affordable solu-tion to those who must adhere to strict QC and government regulations including FDA, cGMP, 21CFR Part11, Bioterrorism, HAACP, and more. ProcessPro® Premier seamlessly integrates all aspects of plant operations, from beginning order entry through manufacturing, packaging, shipping, and ac-counting.

This fully-integrated, real-time solution rises above other industry software in production capabili-ties, financial integration, user interface, system functionality, flexibility and more. ProcessPro® Premier is available with full source code and can be customized to fit your organization’s unique business needs. For more information, visit www.ProcessProERP.com.

Many accounting systems with MRP or ERP modules as options do not have the true functionality needed for process manufacturing. ProcessPro® Premier is one of the truly vertical packages avail-able for process manufacturing for any of the process markets: food/beverage, pharmaceutical/nu-traceutical, chemical/inks/coatings, and cosmetics/personal care.

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