4 inventory requirements for your discrete manufacturing ERP

The ability to use inventory cycle counts in place of periodic physical inventory counts is often high on the list of discrete manufacturing ERP priorities for people who manage materials. Such processes use frequent, statistically sound sample counts rather than wall-to-wall counts of every component part. A wall-to-wall count can take two or three days and introduce as many count errors as it finds and corrects. Statistical cycle counting will ensure the high level of accuracy required for material requirements planning and ensure enough accuracy that buyers and planners will not need to request a count.

Despite the historical importance of cycle counting, modern discrete manufacturing ERP systems have developed a number of features which can dramatically reduce the reliance on infrequent or incomplete inventory audits.

1. Inventory shelf life and environment

Although shelf life does not immediately spring to mind when discussing discrete manufacturing inventory, materials such as adhesives, paints, and lubricants lose their effectiveness over time. With that in mind, ERP should have an optional shelf life field at the very least; ideally, this would trigger alerts when the stock may perish. ERP systems should also track inventory environment such as temperature, humidity, and even magnetism; this is often driven by compliance requirements, so ensure this is taken into account when selecting your system.

modern ERP systems have developed a number of features which can dramatically reduce the reliance on infrequent or incomplete inventory audits.

2. Consigned material management

Many discrete manufacturers take advantage of consigned component materials, and many suppliers now support this method of meeting demand. ERP systems should be able to track whether the inventory is owned by the company or their suppliers. The ERP system should also plan to use up any company-owned inventory before using consigned parts. Your business may find it useful to have the ability to include a requirement to use consigned materials within a set time limit, and for the ERP to alert you when those materials must be returned or paid for.

Recommended reading: 7 steps to selecting discrete manufacturing ERP

3. Obsolete inventory

ERP systems should also help manufacturers control obsolete inventory caused by design changes. In an MTO environment, a customer may request that a different material be used in a product. If the manufacturer immediately knows the inventory level of the component being replaced, they can ask to delay implementation until the on-hand balance is used or negotiate a settlement with the customer while the inventory still has value.

4. Warehouse management

When selecting a discrete manufacturing system, you should also look outside your niche and take advantage of ERP features usually prioritized in other sectors. Distributors use cross-docking to avoid stocking and immediately picking a component that is required right away; discrete manufacturers often have parts arrive just in time for production. Slotting could also be used to store parts frequently selected for production jobs near each other and the front of the stock area.

Combine these inventory management tools with your well established cycle counting process and a powerful new discrete manufacturing ERP system, and your inventory accuracy and efficiency can improve no end.

author image
Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at customerteam@erpfocus.com.

author image
Tom Miller