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Process Manufacturing Software: Key Benefits Elude Companies without Strong Inventory Control

Wednesday, August 11th, 2010 by admin

I met with a company recently who is evaluating new process manufacturing software.  They currently have separate systems for manufacturing and distribution.  They also have numerous processes they’re performing off-line in spreadsheets and on paper.  As a result, they don’t have one cohesive set of real-time information available for use across the enterprise.

Their #1 core business issue is that they have an inventory control problem.  This should not be surprising based on the discussion about separate systems and off-line processes;  however, in further peeling back the details behind this issue, while company management “wants” to resolve this issue, it wasn’t clear to me they were willing to do what was necessary to “make” the issue go away.

A cornerstone of strong ERP systems like Enterprise 21 is strong inventory management – a series of processes and associated data that enable process manufacturing enterprises to be able to plan and execute effective and efficient raw material and ingredient sourcing and production operations.  This means being able to buy and produce exactly what is necessary to support customer demand without incurring excess inventory, whether the business manages its production operations via make to stock, make to order, or a combination of methodologies.

Without strong inventory control and accuracy, setting and adhering to the processes and procedures necessary to know how much inventory is being held and where that inventory physically resides in the enterprise, a process manufacturing company cannot achieve strong inventory management and customer service.  Or said conversely, without strong inventory control, companies will have too much inventory overall, not enough of the right inventory to satisfy customer demand, and customer satisfaction will be reduced.

Process manufacturing systems that include fully-integrated RF/barcode-enabled warehouse management provide all the necessary software functionality to enable companies to have strong inventory control and inventory management.  However, software functionality alone is not sufficient.  Having documented, repeatable processes and procedures, training personnel to perform these operations, and requiring personnel to comply with the processes and procedures is more critical than the software functionality itself.

Having the greatest system in the world without people performing their appointed roles in the manner required will make that system useless.  In the arena of inventory control, this starts with personnel performing a system transaction for every physical task they perform regarding inventory – receipts, putaways, moves, picks, packs, and shipments.  A system task must be performed to update inventory data every time a physical task involving inventory is performed.

Even if a business were willing to put the necessary systems, processes, and procedures in place, it will be disappointed that a “new system” does not provide improved inventory control if it is unwilling to establish and manage to a culture of compliance with those processes and procedures.