Process vs Discrete Manufacturing

http://www.infosysblogs.com/oracle/2009/04/process_or_discrete_manufactur.html

Process or Discrete manufacturing.. What difference does it make

 Whenever we talk about process manufacturing, it is assumed similar to Discrete

Manufacturing. It also has operations, activities, work orders etc. right? Agree, but it has much
more then that. Just an example, how do you measure a computer or Car? By numbers.. 2
computers or 3 Cars.. What about a cup of coffee?? 1 Cup, 200 ml, 190 mg, % Coffee.. In
Discrete Manufacturing, 1 plus 1 makes 2, while in Process Manufacturing, It usually less then 2.
Complexity of process manufacturing has just started!!!  

Before, we go ahead, let’s see what process manufacturing is:

Process Manufacturing is where the creation of a product is based on a continuous series of

processes being applied to raw materials. As per Wikipedia "The simplest and easiest way to
grasp the definition of process manufacturing is that, once the output is produced, it can't be
distilled back to its basic components. Think about it. Once you make a can of soda, you cannot
return it back to its basic components such as carbonated water, citric acid, and other
ingredients. You cannot put the juice back into the orange. A car or computer, on the other hand,
can be disassembled and the parts, to a large extent, can be returned to stock."

Some of the examples of Process industry include petroleum, chemicals, pharma, food &
beverages, textiles, metal, wood, minerals, paper, printing & publishing.

How it differs from Discrete Manufacturing? First & Foremost, the terminology used is
different.. Talk about BOM, Components, Job Orders, Assembly, Fabrications to process
manufacturer, and he will give you strange look. It is like talking Chinese to an

American    Talk about Formulations, Recipe, Mixing, Blending, Transforming, and you

have created a great first impression

Another difference is inherent variability in Raw Material. Most of the Raw Material is sourced
from Organic sources & hence the variability. In fact, the overall objective of process
manufacturing is to keep the variability within acceptable range in final product. What is
acceptable range? This question leads to another downstream question, how do we measure the
variability? There are lots of technical parameters used to measure the variability, few of them
are Generic like Density, Temperature & few are Industry Specific Parameter, for ex: %SNF for
Milk. You can see the importance of Quality in process manufacturing.

Raw Material in process industry varies with time also. In most of the cases, Expiry Date come
attached with Lots. In few Perishable products, like milk, Curd etc, Shelf life is short and hence
Supply chain planning for such products is critical to achieve maximum benefit & minimum
waste.

BOM & Formula are not just the difference of terminology. While in BOM, there is only one
output, in Formula, there can be more then one products. To add to complexity, these products
may not be produced in final stage, but can be in intermediate stages too. Another point to note
about formula is that, it not only contains Ingredients, but also their technical parameter. Most of
the Process industries rely on Computer added formulations to derive the approximate quantity
& quality of product produced. 

Another complication is Compliance & Traceability. Take example of Pharmaceutical industry,

where 21 CFR Part 11 is applicable or F&B Industry where regulations like Bio terrorism Act,
HACCP are applicable. Chemical Industry which handles hazardous material has to adhere to
numerous Safety Regulations. Remember the Bhopal Union Carbide Case, and importance of
such compliance will immediately clear. Lot traceability is another area to look into to ensure
minimum damage if a Bad Lot is somehow used in few batches. A bad lot can risk not only the
Image of company, but may result in Criminal proceedings.

So, what should we take out from above analysis? Process Industry's challenges are far greater
then Discrete Manufacturer. It not only has to face generic challenges like Globalization, 
Competition, Reduced Time to Market but also process specific challenges like Stricter
Compliance, Variability, Process complexity.  How Process industries are using ERP to address
some of these challenges will be subject matter of my future blogs.

Process manufacturing is the branch of manufacturing that is associated with formulas and
manufacturing recipes, and can be contrasted with discrete manufacturing, which is concerned with bills
of material and routing.
The simplest and easiest way to grasp the definition of process manufacturing is to recognize that, once
an output is produced by this process, it cannot be distilled back to its basic components. In other words,
“once you put it together, you cannot take it apart”. A can of soda cannot be returned to its basic
components such as carbonated water, citric acid, potassium benzoate, aspartame, and other
ingredients. Juice cannot be put back into an orange. A car or computer, on the other hand, can be
disassembled and its components, to a large extent, returned to stock. Process manufacturing is common
in the food, beverage, chemical, pharmaceutical, consumer packaged goods, and biotechnology
industries. – Wikipedia

Discrete manufacturing is an industry term for the manufacturing of finished products that are
distinct items capable of being easily counted, touched or seen. In theory, a discrete product can
be broken down at the end of its lifecycle so its basic components can be recycled. An
automobile is a product of discrete manufacturing.
Discrete manufacturing can be contrasted with process manufacturing. In process manufacturing,
the product is created by using a formula or recipe to refine raw ingredients and the final product
cannot be broken down to its basic components. Aspirin is a product of process manufacturing.

Discrete Manufacturing
part of the Oracle E-Business Suite Special Edition product line, by Oracle

Discrete Manufacturing supports most methods of manufacturing. Oracle allows manufacturers

to maximize operating efficiency and flexibility by deploying the best manufacturing method for
each product - discrete,assemble-to-order, engineer-to-order, and repetitive - at the right time.

All methods can be supported by a single plan, in a single instance, referencing a single
inventory database, all fully integrated within Oracle E-Business Suite Special Edition. Discrete
Manufacturing is one of the key components of Oracle E-Business Suite Special Edition.

Discrete Manufacturing complements Financials, Purchasing, Order Management, and Inventory

Management to provide the integrated business management foundation sought by today's small
and midsize businesses. Find out how Oracle can help your company gain control and visibility,
reduce cost of operations, and improve customer service levels for greater profitability and
competitiveness in your market.

How to achieve the costing of the by-product in Oracle Work in Process?

In case of byproducts, Standard Cost Type is preferred as the items can have a cost manually set
and it will be kept by the application until manually modified by user, in average costing can be
done too but when stock will get to zero, the item cost will be lost again.

In WIP, the byproducts are covered via Negative Matarial Requirements. In discrete
manufacturing, negative requirements are modeled as negative component issue transactions
whose costs are based on the current inventory cost of the component.

You need to perform and average cost update and set a desired cost for the by-product. Then, the
WIP Negative Issue transaction will get that very cost while transacting it.

WIP has no feature to calculate the exact cost of the by-product. When dealing with large
amount of by-products with complex setups, Oracle Shop Floor Management is more suitable
(even if WIP support the by-product recovery via negative comp. issues).

WSM (SFM - Shoop Floor Mgmt) has the option to split the job at certain point and then allows
the assembly to be changed. So the by-product will become the assembly of the second job.
However, WSM has prerequisites like the assembly will have to be lot controlled and all jobs
will be lot jobs. (also only Standat Costing Method can be used in WSM)

Oracle's Discrete Manufacturing Process

During this workshop you will learn the Discrete Manufacturing flow within the Oracle E-
Business Suite Release 12. This workshop concentrates on various business processes and
related transactions in Discrete Manufacturing and details the integration points between
Oracle Engineering/Bill of Materials, Cost Management, Oracle Inventory, Supply Chain
Planning, Work in Process, Oracle Purchasing and Quality modules in Oracle E-Business
Suite R12.

Learn how to manage the product lifecycle using processes such as Deign to Release, Plan
to Schedule, Schedule to Build, and Product Costing to Inventory Valuation. You'll benefit
from working with an instructor who will take you through exercises drawn from real world
experience. This approach allows you to learn problem solving techniques and discuss
business scenarios and solutions to common business problems.
Course Overview By the end of the course you will have:

 Know the Discrete Manufacturing processes and sub-

processes for Release 12
 Be able to create common transactions throughout Oracle's
Discrete Manufacturing process
 Understand business problems common to Discrete
Manufacturing processes and know the options and
functionality Oracle provides to overcome these situations

Prerequisite Knowledge and Skills

 Basic understanding of industry manufacturing cycles

 Oracle R12 Navigation experience

Recommended Audience

 Shop floor supervisors

 Planning specialists
 Purchasing agents and buyers
 Materials managers
 Business analysts
 End Users of: Oracle Engineering/Bill of Materials, Oracle
Cost Management, Oracle Inventory, Oracle Supply Chain
Planning, Oracle Work in Process, Oracle Purchasing and
Oracle Quality
 Course Materials

 Oracle Discrete Manufacturing Student Guide

Course Agenda   DAY 1  

Oracle's Design to Build flow - understanding how to create, review,

and update product cost information in Oracle's Design to Build
process.

Overview of Key Design to Build sub processes:

 Forecast to Plan
 Design to Release
 Plan to Schedule
 Schedule to Build
 Wall to Wall Inventory Accuracy  

Forecast to Plan

 Collect Forecast Data using MRP (Material Resource

Planning)
 Collect Forecast Data using ASCP (Oracle Advanced Supply
Chain Planning)
 Generate Sales Forecasts 
 Achieve Consensus Forecast using Oracle MRP
 Achieve Consensus Forecast using Oracle ASCP
 Collecting Supply Variability Data
 Collecting Demand Variability Data
 Calculating Item Safety Stock Levels
 Collecting Planning Data
 Running Production Plans using Oracle MRP
 Running Production Plans using Oracle ASCP
 Implementing Revised Constraints
 Release Schedule using Oracle MRP
 Release Schedule using Oracle ASCP
 Plan non-ASCP Material

  DAY 2  

Oracle Design to Release with Oracle Bill of Material (BOM) and

Oracle Engineering

 Developing Product Designs

 Requesting an Engineering Change
 Evaluating an Engineering Change Request
  Requesting an Item Addition
 Processing an Item Addition
 Bill of Material Maintenance
 Routing Maintenance
 Maintaining Price Lists
 Implementing an Engineering Change

Oracle Plan to Schedule with Material Resource Planning (MRP)

 Corporate Sales Forecast

 Publishing the Master Production Schedule
 Updating the Master Production Schedule
 Material Requirements Planning

  DAY 3  

Oracle’s Schedule to Build flow with Oracle WIP (Work in

Progress) and Oracle Inventory

 Releasing Discrete Jobs

 Production Activity Control
 Identifying Shortages
 Printing Shop Packets
 Issuing Discrete Job Material
 Operation Completions 
 Moving Completed Assemblies to Stock or Inspection
 Inspecting Completed Assemblies
 Moving material from Quality Inspection to MRB
 Moving material from Quality Inspection to Stock
 Discrete Job Completion

  DAY 4  

Wall to Wall Inventory Accuracy with Oracle Inventory

Defining an ABC Analysis

 Conducting a Physical Inventory

 Cycle Counting

Inspection to Disposition with Oracle Inventory, Oracle

Purchasing, and Oracle Quality)

 Receiving Inspection
 Receiving Inspection Using Inspection Suppliers
 Moving Material from Receiving Inspection to Stock
 Moving Material from Receiving Inspection to MRB
  Material Review Board (MRB)
 Moving Material from MRB to Stock
 Moving Material from MRB to Rework
 Moving Material from MRB to Scrap
 Scrap
 Returning Material to Suppliers from MRB

Discussions of common manufacturing-related business problem

and their solutions

 Dealing with substitute parts not listed on PO

 Obtaining pricing discounts from suppliers with the Global
Blanket Purchase Agreements
 Facilitate outside processing operations using manufacturing
and Purchasing modules

Discrete Manufacturing
You use discrete manufacturing for assemblies that you make in discrete batches.
You can also use discrete manufacturing to track activities such as rework, field
service repair, upgrade, disassembly, maintenance, prototype development, etc.
Typically, you use a process layout where you move your products in batches
between operations to the various shops/departments to carry out the work. You
track and associate all costs with the job.