ERP for mixed-mode manufacturing

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In past blogs, we have discussed different types of manufacturing – discrete and process. Discrete manufacturing makes distinct ‘things’, process manufacturing makes ‘stuff’ (for example, fertilizer). There is a third type that combines both discrete and process production – mixed-mode manufacturing. Operating and planning for mixed-mode production is complex and requires an enterprise system that specifically caters for the unique process and issues of mixed-mode manufacturing.

Mixed-mode manufacturing challenges

Discrete manufacturers work with units, called eaches, and use measures of size or length. Process manufacturers use formulas or recipes, need containers for their Bill of Materials, and use measures of volume or weight. Most enterprise software packages are not designed to handle the combination of process and discrete manufacturing processes, with their very distinct Inventory and Bill of Material needs. Some industries that use mixed-mode include:

  • Food
  • Beverages
  • Plastics and rubber

Typically mixed-mode involves producing batches from a recipe, then including those batches as a sub-assembly within a discrete parent assembly of packaged finished goods, sometimes of different size packages (for example, for beer, 200ml cans or 1-litre bottles).

Manufacturing planning and scheduling

An obvious requirement is being able to convert a demand for a certain number of finished (packaged) goods into a recipe with a volume that can fulfil that demand. Planning and scheduling need to take into account the time required for the recipe to be completed and then the conversion into finished goods, probably of different sizes.

There is a basic business question involved. When producing forecasts that will be input to scheduling, do you manufacture to stock – produce so many thousand liter then decide whether to put it in 250ml or 500ml bottles – or manufacture to order where the demand is for a quantity of 250ml and 500ml bottles so calculate the number of liters to make?  This is one of the manufacturer’s dilemmas – make to order and you lose potential sales as the product is not on the shelf, and make to stock and always be able to supply but the product may perish or become redundant.  Specific industries have specific manufacturing strategies for good reason.

The scheduling of demand-based products has to take into account lead times. For some beverage manufacturers, production needs to allow time for the liquid to mature, then when converting the process to discrete finished goods (for beer that would be filling the bottles), scheduling must allow time for the liquid to settle.

In situations where the process manufacturing stage has a long manufacturing timeline (beer fermentation), stock would be created based on forecasts using history and trend data. The packaging stage (the beer bottling) is shorter and so could be done based on demand (orders from customers).  Although, the plant throughput requires that the plant immediately starts the next batch of beer and so the beer bottles are rather filled and stand on the warehouse floor awaiting dispatch to a customer.

With the discrete manufacturing part having a short lead time, and being driven mostly by demand, planning and scheduling of the process manufacturing part is not easy and is based on market knowledge and approximate forecasting.

There is one element in mixed-mode production that other modes don’t encounter – the upside-down Bill of Materials. This is often the case where co-products and by-products are produced. For example, different grades of chocolate depending on the percentage of cocoa.

Managing this process requires an ERP system that has this very specific functionality.

Single Product and Upside-Down Bills-of-Material - SYSPRO ERP Software

source: Proud and Deutsch – Master Planning and Scheduling

Warehouse and inventory management

For the process manufactured material in mixed-mode, there are standard, and often regulated, requirements for warehouse and inventory management. These include:

  • Temperature control
  • Expiry date control

The conditions must be continually monitored and the ERP system must be able to report on deviations and exceptions, and enable those goods that have been impacted to be moved to different lots or locations.

Warehouse management needs to accommodate different items and contents, and allocate space when needed. This might occur when vats or tanks are getting full and some of the product has to be bottled to free up space.

As in some discrete manufacturing industries, certain mixed-mode producers have to fulfil call-offs – a customer’s purchase order for multiple deliveries over a period of time, for example, making soup for a specific customer’s requirements. To maintain product integrity, as well as financial control, inventory managers have to be able to assign the processed goods to specific lot numbers for later distribution.


Lot traceability and reporting are key factors in mixed-mode environments. The manufacturer should be able to track lot numbers from vendors’ raw materials, how those lots are processed, how they are stored, and then shipped as finished goods.

Traceability for mixed-mode does not involve tracking serial numbers, but rather hazardous materials, expiry dates, ensuring storage is correct, and tracking what lots (sub-assemblies) go into each discrete item, for example, soup ingredients going into cans.

In a number of mixed-mode industries, recall management is a serious fact of life. This means being able to trace all finished goods, and to whom they were sold, by lot. It is often a raw material that contaminates a batch, but finding it can be challenging, requiring traceability both backwards (suppliers and production jobs) and forwards (distributors and end customers). Not all ERP systems can accommodate this.

Managing these complex processes requires a sophisticated system. The ERP system needs to be tailored to the specific needs of the organization’s environment and market, and should be able to:

  • Manage forecast accuracy so that wastage is reduced, and products can be manufactured in time
  • Accommodate dynamic production schedules for different stages of manufacturing and monitor the quality of raw materials on receipt and in production
  • Manage a complex combination of inventory items and warehouse storage
  • Provide complete traceability to comply with regulations

An ERP system for mixed-mode manufacturing needs to combine the requirements of both discrete and process manufacturing in one plant and one system.

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