Continuous versus Discrete Manufacturing in ERP

'''When choosing a ERP system for a manufacturing operation it is critically important to choose a system that is designed to work with the companies processes. Manufacturing operations are at a high level divided into two major categories, discrete manufacturing which is concerned with assembly of products and continuous/process which is concerned primarily with the blending of formulas. Occasionally we see manufacturing operations that utilise elements of both discrete and process, we will explore these further later in this section.'''

Below we explore the differences in the two approaches to manufacturing across the different levels of resource planning.

Manufacturing type checklist
Adapted from processproerp.com

Master Production Schedule
The MPS takes a number of items as inputs and produces a schedule from which we can allocate resources and materials. An MPS is important for both discrete and process manufacturing These MPS will look almost identical but the units of measurement will differ, where lot sizes are used for discrete and batch sizing is used for process.

Purchase and inventory management
There are various differences which can be drawn out between purchase and inventory management for discrete and process manufacturing. One point which is valid for both processes is in the costs of maintaining safety stock levels. Maintaining high levels of safety stock can be expensive for two reasons. Firstly paying for the space to hold the stock can be expensive i.e. having to pay for a warehouse to store inventory and safety stock. Secondly there is the problem of company capital being allocated to stock instead of cash flow within the company. If there were to be a decline in sales leading to a drop in profits liquidity in the company would be tied up in stock which could not be easily sold.

Continuous manufacturing
Purchase management is much more important in continuous manufacturing, particularly for processes involving perishable goods. For example a company which produces cereal bars may need to purchase perishable items such as oats. If a company were to order too much then there is a risk of the material degrading before it is used. This is especially important when considering safety stock (which is extremely valuable if sales exceed projections). Safety stock is slow moving by its nature; companies must be careful to ensure that their safety stock is at an appropriate level and does not result in stock exceeding its shelf life.

Discrete manufacturing
The main difference in process manufacturing with continuous is since the items produced in discrete are more specialised usually purchased stock is usually kept lower. The main reason for this is because the items which are purchased in are usually more specialised and expensive. An item may also have an engineering change if for example we are talking about assembly. If the company is producing a computer but the manufacturer puts out a new hard drive and we already have some of the old ones in stock we would have to throw out the older ones. Maintaining a high level of safety stock in most discrete manufacturing processes is expensive but not as much of a problem for discrete. In a typical make to stock process the company may produce items and store them in stock for expected sales. If the product line changes in the future it would not be a big deal to start a new product line and fill up the inventory with the new items as the old ones leave the inventory.

Shop floor controls
The core focus of shop floor controls is to empower shop floor personnel to maximise efficiency and output. Due to the nature of process manufacturing shop floor control is limited. Process factories generally produce one or two products so prioritising is not necessary. The process of releasing orders in process manufacturing is much less complicated than for discrete. It is important as with discrete to check for things such as material availability before releasing an order.

Capacity control can be done in both process and discrete manufacturing. It is however mostly done in discrete as a work centre may only be used for a certain amount of time and then stopped. Process on the other hand will have work centres which are working constantly usually at full capacity so measuring capacity is less important.

The process of releasing orders is quite different between process and discrete manufacturing. In discrete a shop packet must be created for the item which contains items such as drawings and BoM details etc. The shop packet data is perhaps less in terms of importance and scale for process. Routing data is required but has a lesser significance than for continuous as most machines are automated for process. They will rarely have a BoM also and wont be concerned with things such as tool requests.

The work in progress function of shop floor control is very important for discrete manufacturing. It is important for monitoring the quantities which were ordered and completed etc. It is an important tool for checking the progress against the operation completion dates. Since process manufacturing would not have work centres as such the movement of items does not need to be monitored as much.

Data collection is very important for discrete manufacturing as adjustments in things such as actual lead times can be made as a result. Also gathering efficiency data for work centres can also be done. With process manufacturing data collection is not done as much but is still important. Lead times will be rarely adjusted as the machines which produce the goods are generally finely tuned and built for the job. The finished product may have barcodes which staff on the shop floor can scan to record that a quantity of the item has been completed.