Manufacturing Processes from an IT perspective

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As a system administrator, I don’t always understand the manufacturing or business processes that drive technical needs. I would really love some form of “how manufacturing companies work for sysadmins” or something like that. What is MRP? How does purchasing work in an enterprise? How and why are parts “transacted”?

Does anyone know of something like that (via Epicor learning or elsewhere)? I realize this depends greatly on industry and what is being manufactured, but really I’m looking for an overview of the what and why of an ERP system.

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Look for the technical reference guides on EpicWeb. They give an overview of processes, and then dive into the technical details of the algorithms involved and how they function.

They typically start off with flowcharts, and then dig much deeper from there, giving very detailed explanations and examples.

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What do you really want to know? I spent 30 years as a manufacturing manager before taking over my company’s ERP system.
MRP is the Epicor function that creates job and purchasing suggestions from demands in the system. When something is sold (Sales Order created and approved) that is a demand. That demand also has a required by date (ship date). The MRP function runs and creates a job or PO suggestions with a schedule that meets the required by date based on the method of manufacture and other lead time defaults set up in the system. Kind of a short explanation.
Purchasing takes the PO suggestions, either through Purchase Order Entry of the Buyer’s Workbench and creates a purchase order to send to the supplier. The purchase order (PO) is a legal promise to pay for goods and/or services from a supplier.
Parts get transacted as they are either processed or moved throughout their manufacturing or warehousing life. A person logs into a job, cuts a plate and drills a hole into it. That now becomes a part. The labor that the employee put into the work and the material that came out of inventory and was issued (or backflushed) to the job are transactions. When the part goes into inventory after it is complete is a transaction. When that part comes out of inventory and is used in an assembly, or maybe just painted and shipped to a customer, those are transactions. Each of those transactions has dollars (cost) attached to them. These costs flow through the financial functions to different GL accounts (buckets). The entire ERP system is a swarm of interconnected bees, each with a small bit of data, that try to work as a whole.
This is a very crude explanation for a complex system. Ask away and I’ll do my best to explain what I can and I’m sure there are others here who will chime in to help clear the confusion.

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What an awesome question!

How does your CEO know if any single product you make is profitable? How does your Supply Chain manager know what has to be purchased to fulfill manufacturing requirements for sales orders? How do you justify buying a new 5-axis milling machine?

Prior to an integrated ERP system (and this applies to all of them, not just Epicor), the Finance department had an accounting package and everybody else had some conglomeration of private and/or shared Excel spreadsheets and/or Access databases. Data does not easily travel between those platforms, and certainly not automatically. Lots of copy/paste. Lots of duplicate data entry.

In an ERP system, Sales enters a sales order (let’s assume they put the right dates in). Via the MRP process, inventory is automatically checked to see if it will be in stock on the date it needs to ship. If so, well and good, if not, it will create and schedule a production order for your planners to firm and release. If materials for that production order aren’t in stock, Purchasing gets a list of what needs to be bought.

When the Sales Order ships, Finance is automatically notified to create/send the invoice. Since all costing (labor, burden, materials, subcontract) has been captured during the entire process, gross margin is right there. Since my operators have been entering their labor time on each production operation, I can analyze my production standards against the actual data. I can see material pricing trends over time. I have the data to rank my suppliers on quality and timeliness as well as price.

A “transaction” (in the Epicor sense anyway) USUALLY indicates the movement of quantity and/or value. When I place a sales order, nothing has happened to either quantity or value, so no transaction takes place. When the order ships, though, quantity (and hopefully value) leave the building so a transaction takes place.

It’s mostly a matter of scale. When you have a couple of dozen customers and suppliers, and a sharp staff, “tribal knowledge” is sufficient… but training new staff is pretty time-consuming.

Ernie’s (not-so) Humble Opinion: Tribal Knowledge should be an ADVANTAGE… not a REQUIREMENT to be able to get the job done.

An ERP system is a tool that lets computers do what they do best (store and manage data) so people can do what they do best (manipulate that data) to make business decisions.

The processes that your business uses to store, manage, and manipulate that data, and the data you choose to focus on, are what differentiates your business from all the others. Although there are SOME system processes (like MRP), most of the processes are much more tailored to your business. It is an infrequent occurrence that a business uses more than one or two “Epicor standard” out-of-the-box processes without any tweaking.

Manufacturing at scale is about doing the same thing the same way every time. An ERP system is about that same consistency with your data.

Keep on asking questions.

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Phil,

Can you shadow the full Quote to Cash process? Meet with the responsible people and watch an order go through the system, following the steps that Rick and Ernie described.

The Epicor Learning Center should have a high level quote to cash process flowchart that Tim mentioned as well. They usually do a 1 week training for new companies where the ‘Epicor Team’ gets to learn the new software and see how the process works. All those instructions are documented and available if you’ve got the education ‘module’ licensed.

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This is a hall of fame post.