Process Manufacturing ERP Requirements: Recipes & Formulations

Managing and maintaining recipes and formulas is one of the most important ongoing activities for many process manufacturers. Management never stops as new ingredients become available or existing ones become unavailable. Food processors continually need to reduce costs. Pharmaceutical businesses must deal with changes to compliance rules. Chemical producers must manage environmental concerns. So what do you need from your ERP system to manage these changes efficiently and meticulously?

A requirement common to all process manufacturers is the need for configurability in the formulation management module. ERP must be able to use both volume and weight for recipe ingredient management and reporting.

Recommended Reading: ERP Manufacturing Guide - 10 Steps to Success

In food production, for instance, the ingredients might be in weight as they are added to the process, but nutritional information regulations require reporting of the same ingredients on the label by volume. This configurability is also vital in global manufacturers who must switch between units of measurement to accommodate local expectations.

Shortages & Substitutions

Your formulations are often based on nominal quantities that will yield a standard output. If your industry is particularly susceptible to material shortages, your ERP should be able to work backwards starting with the available amount of the short material and calculate a revised formulation and expected yield. This yield would then need to be fed into your inventory and sales module in real-time to avoid any backorders.

Any process manufacturer worth their salt knows the importance of optimizing ingredient usage.

Along a similar line to material shortages, many recipes and formulations stored in ERP must also cope with material substitutions. A drug might not permit substitutions for a component that must come from a certain manufacturer. Another chemical could be switched between two or three different suppliers with no change to the formulation. Still another might allow a substitution, but only if the quantity required is increased and another reagent is substituted.

Decisions Informed by ERP Data

Any process manufacturer worth their salt knows the importance of optimizing ingredient usage. How do you achieve this optimization? Maybe your suppliers offer a reduced price on the remaining quantity of a lot about to expire. Can a profitable batch be made up and sold? Can your legacy ERP give you this information? Maybe you buy and sell materials semi-independently of production due to ingredient value or availability fluctuations. A drought in the area where an ingredient is grown or political strife in the country where a mineral used in a drug compound is sourced. How do you currently manage this procurement? One thing is for certain, it should be informed by data from your ERP system.

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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

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