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Needed – A Close Relationship between Manufacturing and Distribution ERPs

If you’ve reviewed the September 9 (2016) feature of Manufacturing Business Technology, you probably saw the article with this heading by Rootstock CEO Pat Garrehy. More than once, an interviewer has asked Pat why Rootstock created both a manufacturing and a distribution version of their cloud ERP. Pat typically responds with a real world example.

Consider a company that produces RFID readers. In its manufacturing process, it orders printed circuit boards from one vendor, LEDs from another vendor and plastic housing or steel housing from yet another vendor(s). The various RFID readers – some potted; some not, different colors, various read ranges – are then boxed, the boxes put into skids with shipping instructions applied and sent to the customer. This process is classic discrete manufacturing. For this function, the organization would select a manufacturing ERP.

However, this company doesn’t make long range read solutions because that’s an entirely different technology and the numbers don’t result in a profit by setting up manufacturing for these units. Yet, the company needs such units to fill out its line so prospects can buy all ID readers from one manufacturer, no matter the read range. So, the company buys long range readers from an OEM manufacturer who puts the buyer’s label on it in a box with their logo and information. Like the units it does manufacture, the company puts the boxes of long range readers into skids and applies shipping label instructions. This is classic distribution. For this function, the organization would want a distribution ERP.

Similar to that needed by a wholesale distributor, the distribution cloud ERP for the manufacturer must efficiently manage all aspects of the supply chain from first customer contact through final shipping and returns…a comprehensive set of capabilities that include purchasing, warehousing, sales, shipping and customer service. Manufacturing inventory control, distribution inventory management and replenishment planning should be identifiable by location ID, location number and, optionally, by lot and serial number.

A Great Deal of More Specifics

The article continues by describing why such customers needing both versions will find they need more than just a cloud ERP solution. They also need very definitive features that they typical cloud ERP does not provide such as supporting multiple ship-to and bill-to addresses for any given customer, among others. Pat points out how the distribution ERP provides a comprehensive set of capabilities that include Purchasing, Warehousing, Sales, Shipping and Customer Service. Inventory can be identified by Location ID, Location Number and, optionally, by Lot and Serial Number, this latter especially important to such manufacturers who OEM some medical equipment or other regulated products, among others mentioned in the article.

Who Needs What?

Attributes desired will differ from firm to firm. Instead of having to customize, distribution cloud ERP modules and manufacturing cloud ERP modules should be available to work in conjunction with each other. For a more in-depth discussion, read the article in Manufacturing Business Technology. Simply click here.

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