ERP in Process Manufacturing: The Challenge of Yield

The subject of yield in process manufacturing can become a very passionate and complex one, depending on your organization. Whether or not the subject becomes passionate depends on (a) what words you use to describe yield loss throughout the process (b) how different areas in your organization are measured and (c) how sophisticated your approach to yield –particularly as it influences standard cost - has traditionally been. The reason it can become complex is that there are usually many sources of yield loss (or gain) in a typical routing and not only is accurately quantifying them all a daunting task; they also might have variability from run to run.

Your ERP solution will probably give you more capability and flexibility to handle yield than you will need, and the math is generally straightforward. It is in deciding what the math data should be that requires thinking.

What Does “Yield” Mean to You?

Defining what “yield” will mean in ERP is the first priority for a process manufacturer. It can be limited to describing the physical changes in the sellable quantity of product solely as a result of mechanical or thermal processing. For instance, if ten pounds of chemical ingredients are combined, and heated, and a pound of water is boiled off as a result, then only nine pounds of product are available for sale. Similarly, products might shrink, stretch, or weigh more. Yield might also include a loss of product due to process methodology. Perhaps you lose a few gallons or a few feet at the beginning of every run. Maybe you set aside a physical sample every so often as a lab sample or a quality retainer. Maybe you trim off the edges of a web product to give a constant width. Traditionally, has this been yield loss? Or has it been called something else, like waste, or scrap? Sometimes some of all of a production run might turn out to be non-conforming. If this a yield loss, or is it off-quality?

Think Carefully about Measurement Methodology

The reason your internal measurement system is important is that often, performance measures are tied to yield. Yield losses that are the result of human decisions and behavior are often KPI for manufacturing managers. If those measurement methodologies are changed as a result of an ERP implementation, there is a perception of loss of control, as well as resentment at interfering with a measurement that might affect compensation.

Give yield thought. It has a place, but if you try to be too sophisticated before you thoroughly understand how you want it to work in ERP, you may find yourself creating more problems than you solved.

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Richard Barker

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Richard Barker