How to Manage Output Capacity with Manufacturing ERP

In order to consider the practical use cases of manufacturing ERP output capacity, we must look at our manufacturing output from several angles. There is no “one-size-fits-all” set of ERP processes which can improve or monitor output capacity. But there are some well established best practices which can give you a starting point during your ERP selection and implementation.

Monitoring Overall Output Capacity

First, we can look at the overall output of completed products. Ideally this output will match with customer demand or our desired level of finished goods inventory. We’ll load the master production schedule in our ERP with quantities of each product in time buckets. As customer orders are taken, we will consume the original forecast so that the sum of orders plus forecast remains flat. There are a couple of ways to do this and most ERP output capacity modules handle thisprocess behind the scenes very well.

Output Capacity Management

At the same time, we use manufacturing ERP to schedule purchases of required materials and our production lines. ERP can show us that all materials will be on time and that there is plenty of available capacity to meet our desired output. If we depart manufacturing “dreamland” and return to reality, ERP can also show us that we might not have shop capacity and suggest an adjustment to our schedule.

If we depart manufacturing “dreamland” and return to reality, ERP can also show us that we might not have shop capacity and suggest an adjustment to our schedule.

Now we enter the realm of output management. ERP workflows can alert managers that overtime is required to meet the desired output or suggest that we produce some products early and hold an inventory buffer to meet that output.

Our manufacturing ERP can also inform us when the desired output is impossible and suggest steps to optimize our output capacity to ensure the top customers get their requirements and perhaps some low-margin products are deferred until a later time period.

Reccommended Reading: Manufacturing ERP: 10 Steps to Success

We can also use ERP output capacity management to identify output disruption caused by material shortages or delayed deliveries of component parts. Our ERP can display production and output as originally scheduled and as a range of “what if” schedules so we can manage our schedule and optimize output from the factory.

Managing Production Resources

Our ERP can also monitor and optimize output from individual work centers or resources within the plant. The overall schedule will often leave certain resources under-used in a time period. Optimization of output means our ERP monitors the output and restricts production to what is needed now or in the very near future and perhaps leaves resource-heavy processes idle.

Other resources might have demands in a time period above their capacity. Optimization here means our ERP will suggest an increased rate of output at that resource or move the demand to other resources so the total output can be achieved. Manufacturing ERP provides the analytical tools and we should use them along with lean principles or theory of constraints to optimize overall output and individual work center outputs to best manage our factory.

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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.

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Tom Miller