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Manufacturing Modes
What Type of Manufacturing Mode Are You?
Process, Discrete, Job Shop, Make to Order, and more

This is an important question to answer since software developers for manufacturing ERP design their software based on the types of companies or industries that they want to support. Keep in mind that most software started as a solution for a single company. Other software solutions may have been developed independently to serve an entire industry or industries.Regardless of its roots, all software has a fundamental design approach for how it will support the manufacturing and business process of companies who choose to purchase that program.

The primary level of design difference addresses how a company produces their products for sale. Companies that take a number of small components and combine them into a larger item are known as discrete manufacturers. The majority of software is designed for discrete manufacturers. However, there are companies that effectively take big items and make them small. These manufacturers are known as process manufacturers.

A company that uses numerous components to make equipment is a discrete manufacturer. A company that converts tanks of chemicals to smaller containers is a process manufacturer even though that process manufacturer has a formula or recipe for the elements that go into producing the tank contents. The main design difference is “many to one” for discrete manufacturing and “one to many” for process manufacturing.

Here is an overview of three types of manufacturing modes: Job Shop, Process, and Discrete.

JOB SHOP MANUFACTURING

    There are fewer job shops today than in the past. The definition of a job shop manufacturer is a business that produces what customers design after winning a quote based on the customer’s engineering drawing. The item(s) may be produced only once and never made again. Components are bought to and costed to the job/order. There is no practical inventory because the inventory bought was consumed by the job build. If there are left over parts due to minimum purchase requirements then the inventory value is zero.

  • Repetitive Job Shop

    There are job shops that (continually) get repeat orders from their customers. Some of these orders are blanket orders with structured releases of the total quantity of parts ordered for a defined period of time. These shops also quote from customer drawings the first time a finished part is produced. Or the customer orders additional parts when they are needed without a structured relationship supported by a blanket order. In the Repetitive Job Shop environment an inventory of raw materials, work in progress, finished sub-assemblies, and finished goods exist and have calculated values. It is not unusual in this environment for a customer to require the repetitive job shop to carry inventories of certain levels of parts.

  • Make to Order

    These manufacturers design and produce products that are sold into a marketplace. They create their own engineering drawings, maintain quality systems for the products they produce, and stock raw materials, work in progress, finished sub assemblies, and finished products. They quote their products to existing and potential customers but do not bid on custom work. All inventory has value. Finished goods are made only from customer orders.

  • Configure to Order

    – These manufacturers are a special sub-set of Make to Order. The products that they design and build can have features changed in the final design of the product. They allow for “features and options” that are used to take the “standard product” and produce an item that is better able to meet the customer’s needs, all within the parameters of the features and options offered. There is more about product configuration in a later section of this Guide.

  • Make to Stock

    This type of manufacturer treats a customer order differently from a make to order company. In a make to stock company the inventory of finished goods is built to a forecast of customer demand with orders for the company’s products ideally shipped from finished goods inventory literally the same day the order is received. This type of manufacturer relies on finished goods inventory availability rather than the rapid turn around of customer orders as the make to order company.

Factors to Consider When Choosing Job Shop Software

At one time most job shops were mostly, simple make-to-order custom work. Nowadays, manufacturers who are a mixture of job shop and assembly/repetitive,and batch/process manufacturing are no longer the exception but the rule. All these manufacturing categories come with their unique requirements for managing manufacturing activities and each one needs different forms of shop floor control, scheduling, material handling, supply chain and add-on modules such as quality control.

Some the most common differentiators between job shop software are the following:

  • Production planning and scheduling to account for supplier lead times
  • Work in process tracking to know what costs of labor and materials are complete for purposes of inventory costing
  • The ability to track open subassemblies
  • Quotes and revisions to efficiently access customer quote history and pricing
  • The ability to manage bills of materials for standard items with options
  • Finite Scheduling with either machine or labor constraints
  • “What if” scheduling for rush jobs
  • Adequacy of financial accounting for financial reporting and costing
  • Quoting – this includes customer quoting history, the ability to do markups, quote revisions
  • Cycle counting and physical inventory reconciliation
  • Quality limitations for scrap, defective tracking

For a detailed discussion of 4 Job Shop Software and what type of manufacturing they support, download the Manufacturing Software Selection Kit which includes a comparison of these 4 Job Shop Software:

ECi M1 , Epicor Express, Exact JobBOSS, and E2 Shop System.

PROCESS MANUFACTURING

These companies manufacture large batches of product and then sell their products in smaller quantities. These types of companies include chemical manufacturers, pharmaceutical companies, and food processing companies. Instead of engineering drawings they have formulas and recipes. They measure the yields of products produced based on raw material inputs. Their business practices still include quoting new opportunities. Smaller process manufacturers, often called pilot plants, function more like job shops where small quantities of special products are produced in a non-repetitive environment.

DISCRETE MANUFACTURING

Mixed Mode

Primarily connected to discrete manufacturing, this classification happens when multiple type of manufacturing philosophies are in place at one company – possibly your company. The most common mixed mode scenarios are make to order with configure to order. Repetitive job shop is often found with make to order. This model is the most complex to address due to the multiplicity of production modes and requirements.

Finally, many manufacturers distribute products made by other companies. This is not a mixed mode concept but rather a modification to the “regular” course of business where finished goods are bought and sold within the same environment as other products are produced. This is similar to distributing the products that a company makes on their own.

CONCLUSION

Software vendors have solutions that address one or more of these segments of the manufacturing marketplace. Some of the largest and most sophisticated offer solutions for both discrete and process industries but these software offerings do not target the small to medium sized manufacturing marketplace. All vendors will tell you where their products fit. Some will tell you that their products fit everything.

It is important to understand how software solution providers are positioned in the ERP marketplace. While you and your team may not be ready to fully communicate your requirements to software vendors you should be aware of how these companies are focused and who they want as customers.

For additional discussion about costs and types of manufacturing modes, see the second chapter, How Much Do You Have to Spend, in the Manufacturing Software Buyer’s Guide.