As a manufacturing company you want to be able to make your product better, cheaper and faster. You want to improve quality, reduce costs and still get the product to market faster. You want to increase inventory turns while avoiding stock-outs and late deliveries. The right software can help you accomplish these goals.
For manufacturing companies evaluating new ERP software, Microsoft Dynamics GP Manufacturing can be a great fit. As one of our
But Microsoft Dynamics GP works better for certain types of manufacturing companies than for others. Let’s break it down into very simple terms to understand which manufacturers are the best fits for Microsoft Dynamics GP.
The two questions manufacturers need to answer are:
1) How do you make your products?
-Made to Stock, Made to Order, Engineer to Order, Job Shop, Combination
2) What type of products do you manufacture?
-Discreet, Process, Combination
PART 1: How do you make your product?
You either make to order, make to stock, engineer to order, or you're a job shop.
- Make To Stock (MTS)
You manufacture products that are put on a shelf and then people buy them. In other words you expect to be selling 5,000 of this product every week or every month, so you make them and then you stock them.
- Made to Order (MTO)
You manufacture products only when someone orders them. You make the same product over and over but you do not keep extras on the shelf as inventory.
- Engineer To Order (ETO)
You manufacture products that are slightly different each time they are ordered, so it requires some design or engineering.
- Job Shop
The items you manufacture are pretty much never the same twice.
Let’s use the example of a bicycle manufacturer.
For your bicycle you would have an item master. And then the manufacturing would be made up of a lot of subcomponents such as wheels and chains and handlebars and so forth. And you have a series of steps. The first step might be to go and get all the parts, next might be to put the seat on and then put the frame together, then the chain, then the wheels and so on.
Using the example of the bicycle, if you make a whole bunch of bicycles to sell in a store, this is made to stock.
In another case, somebody may call up and say they want these kinds of oddball bicycles. So you are not going to make any unless somebody calls up and asks for one. That is made to order.
And then perhaps someone else is making a really high-end bicycle. Someone calls and they want this particular type of wheel, this particular type of seat, this particular type of chain. It could be a $10,000.00 bicycle for the Tour De France. That is engineer to order.
You probably would never make a bicycle in a job shop type of environment. But for the sake of the example, pretend you are a company that uses one type of unique material and one day someone orders a bicycle, another day a desk, another day something new. This is something you will not make twice.
SUMMARY: If your product is made to stock, made to order or engineer to order then you are a good candidate for Microsoft Dynamics GP because Microsoft Dynamics GP Manufacturing is best for manufacturing companies that have repeatable processes.
The system requires you to do certain things such as create a master record, an inventory master record, bill of materials, routings and so forth. So make to order, make to stock, engineer to order are a good fit for Dynamics GP Manufacturing.
If your company is a pure job shop environment, you are probably not a good fit for Dynamics GP Manufacturing. There are not too many pure job shop environments that never make the same thing twice. And if there are, they tend to be very small. There is special job shop software available, but not from Microsoft.
Part 2: What type of products do you manufacture?
Now we'll talk about the product itself. Do you make a discrete product or a processed product?
- Discreet Manufacturing
The product itself could be a discrete item, like a widget or the bicycle we mentioned. You have a bill of materials and components for each product. Such as a bicycle that includes wheels, seat, tires etc.
- Process Manufacturing
A processed item could be something like a food product, or pharmaceuticals or paint. If you have a processed item you might call your bill of materials a recipe or a formula, but it's the same thing.
- Batch Process
Now, a process environment has a spectrum. At one end of the spectrum it looks an awful lot like a discrete item because you make these little processes in very discrete batches, over and over again.
- Continuous Process
On the other end of the spectrum you have a continuous process. Imagine great big silos and a process happening, like mixing paint, that is continuous.
All of these are a fit for Dynamics GP Manufacturing with the possible exception of continuous process. It's not completely as bad as a job shop, but it starts to get into what we call a red flag area and we start asking questions. We want to know if it is a continuous process with continual adjustments. In other words, you are mixing this paint and then you see that a little light goes on and you decide you want to add more pigment. So you are doing a little bit of this and that to make it right. When there is a lot of imprecision to the process, this is usually not a good fit for Dynamics GP.
Another example of a product that is a continuous process is a company that makes brick pavers, the type that you would have in your driveway. They have to mix sand and cement and other ingredients. And then they have to add different kinds of shading and coloration. And it all really depends on variables like the outside temperature and the particular consistency of the sand and the cement. It is a continual blending type of operation to make pavers that look like the last ones that the company made. The process has continual adjustments, it is not repeatable. Microsoft Dynamics GP can do it, but it is not the best fit.
However, another example of process manufacturing is a pharmaceutical company that makes aspirin. Even though there is a mixture, a blended formula, it is precise. You are making a million aspirins a day. Even though that is a process, to the software it is really almost like you are actually making a discrete item. The company may call it something different, but to the software, it is discrete.
SUMMARY: So any type of a discrete item or a processed item that is non-continuous is a good fit for Microsoft Dynamics GP Manufacturing. If the process has continuous modification and alterations, the formula is never the same, and the whole thing is more of an art than a science, this is not the best fit for Microsoft Dynamics GP Manufacturing.
What is Light Manufacturing?
A light manufacturer is someone that does not actually make all of the parts; they just buy the parts from somewhere else and put it together at their facility. These companies also tend to be a very good fit for Microsoft Dynamics GP because of the strong distribution features.
If your manufacturing process is more of a simple assembly and single level BOM. GP start pack includes a Inventory BOM (Bill of Materials) and separate assembly work order process to relieve component items and add Finish good into inventory.
What other options are available for Manufacturing needs?
In conclusion, Microsoft Dynamics GP Manufacturing will help enable informed decisions that drive cost reductions, ensure compliance, increase operational efficiencies using real-time data, promote agile manufacturing, and help you respond to changing design requirements.
Now that you know what type of manufacturing company is the right fit for Microsoft Dynamics GP, give us a call if we can help you evaluate new ERP software. CAL Business Solutions, 860-485-0910 x4
Thank you to our partner Joseph Donlan from
By CAL Business Solutions, Connecticut Microsoft Dynamics GP Partner serving Manufacturing,