2 Business Issues – 2 Dynamic Solutions!
Posted Wednesday, August 31, 2011 by Peter Kelly
One part of my job requires that I understand the difference between process and discrete manufacturing and be able to provide the best solution for each industry and process. Most people have no idea these type of manufacturers are very different. Process manufacturers are building something that can not be taken apart, i.e., a bucket of margarita mix or a jar of peanut butter. Technically you can take the mix out of the container and reuse the container, but you can’t take the peanuts out of the butter or the sugar out of the lime powder. This makes process manufacturers ‘process’ or formula based. Discrete manufacturers are making a widget that may have screws, nuts, handles, etc. that can be taken apart and sold as a part or used on something else if need be. If your company manufactures using both process and discrete manufacturing then you may be familiar with this industry term; mixed mode manufacturing.
These differences are only the beginning of a long list of incompatibilities that process and discrete manufacturers have to deal with daily. Granted, some of the issues are the same; all need a general ledger, accounts payable, accounts receivable, bank reconciliation, sales order, purchase order, and other distribution type features. However, in nearly every company I have encountered, these two types of manufacturing companies have very distinct inventory and bill of material needs. Process manufacturers require formulas/recipes, containers and labels for their bill of materials. They need pounds, gallons, ounces, liters, milliliters, grams, etc. Discrete manufacturers need eaches, perhaps lengths of material too such as like wire in a roll and/or by the foot. Most discrete software packages do not understand a conversion of pounds to gallons, or a liter to an ounce and nor are they able to use this same conversion factor on a bill of material. This only scratches the surface of the issues manufacturers have to deal with, there are many, many more. I find this industry very exciting to work with. It is fun to learn about new companies and processes and then provide solutions to the business issues and pains.