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

Discrete	Process
Production involves screwing, gluing, soldering or other forms of assembly. Can the product be disassembled to its components.	Production involves mixing chemicals, liquids or food stuffs. The resultant product has under gone some irreversible change, such as cooking or mixing.
Components are measured in single quantities e.g. 1 - 4mm Torx external 6-lobe screw. These items are identified by a part number.	Products are mixed from quantities of materials. A batch of health bars may require 1 liters of oil and 4kg of oats. These raw materials are identified by lot materials. This is very important in the case of a recall.
If the inventory is not able to satisfy the required number of components required to assemble a product we must halt production.	If the inventory is unable to provide sufficient quantities of materials we can mix smaller lots or switch to a product that does not require the unavailable material.
Each unit is counted individually.	Manufacturing units are measured in weights, volumes and percentages. The system must be capable of converting between these measurements.
The bill of material lists components and raw materials in integer values. (This is not completely true but we will discuss this later)	The bill of material is a formulia or recipe and can be quite complex.
Modifying a product is completed outside of the manufacturing environment, only minor revisions to the bill of material will be made.	Formulas change over time, as the quality of the input materials vary. Formulas and revisions must be tracked.
Discrete products rely on functional testing at a unit level.	When mixing products it may be necessary to place the batch into quarantine until samples pass quality control.

Adapted from processproerp.com

MRP Processes

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.

Bill of Materials versus Formula/Recipe

Discrete

Process

For discrete processing you would use a Bill of Materials to define the sub-assembles, assembles, components, raw materials, the end products, their quantities and their relationships from one step to the next. This is made up of a manufacturing BOM and the Engineering changes which gives the manufacturing BOM updates on changes in how you make the product. This is done through the Product data management system and ensures that the product specification is kept up to date.

There is usually no BOM for the manufacture of the product in process manufacturing until you get into packaging. Instead of this there is a formula or recipe with general ratios of the ingredients that make up your product. Due to dealing with food and pharmaceuticals as their main products process manufacturing needs to have stringent testing put in place so as to ensure the product is made to the recipe/formula specification. When transporting pharmaceutical ingredients there is a chance that they may be hazardous, in these special cases it is important that the correct precautions are taken to ensure the safety of the handlers.

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.

Sales Information

Discrete

Process

Sold as high quality items with their own individual serial numbers. Is not sold as part of a batch for example an automobile. They are sold like this because they are high complexity low volume products. They will therefore usually be a higher cost than a large batch produced good as they are a specialised item.This means that the best way to produce these products is through lean manufacturing. The reason for this is that lean manufacturing works well with the supply and demand needs of these high complexity products.

Sold as a batch with a batch number rather than each item having it’s own serial number. An example would be a shop getting a batch of chocolate bars rather than buying each individually. The reason for them doing this besides lower cost is that these are low complexity high volume products.The products can be made in batches without there being a significant impact on lead time. The reason for this is that for the machinery involved in process manufacturing, for chocolate there would be a roasting machine and mixing machine, would not be used to their potential if they were just making one bar at a time. It would also not be feasible for a company to do this.

Shop floor controls

Shop Floor

Blast furnace NT

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.