When our team works with mid-market manufacturers heading into an ERP selection project, we’re often asked to share insight into the ERP systems that best serve those organizations operating multiple facilities across multiple regions.
A previous blog post about multi-plant ERP looked at the variability related to the set of features that vendors call “multi-plant capabilities.”
As we continue to look at this important topic, we note that in the ERP world we refer to a group of requirements as the “multi’s.”
The Different Types of “Multi’s”
- Multi-Company enterprises which are organizations that operate with multiple tax ID’s. Many ERP systems can track operations at this level, but some systems require a separate instance along with multiple databases.
- Multi-Language enterprises which need the ability to display a screen in a different language based on the user ID. Many systems offer this functionality, but the number of languages supported could be an issue.
- Multi-Currency enterprises which need the ability for the ERP system to track transactions in a range of global currencies, while the base accounting system calculates financials in US dollars. Most ERP systems offer this feature. Note that inventory valuation in different currencies can be an issue.
- Multi-Plant is a designation that is similar to multiple companies. Here, the organization operates out of multiple manufacturing locations, but does not need multiple tax identification.
Key Business Issues
When it comes to ERP implementation, the biggest issue facing the Multi-Plant enterprise is the ability to setup the accounting system and the planning system to simultaneously handle multi plant transactions in real-time.
The issue is that both accounting and planning/manufacturing use the plant ID, or branch ID, or site ID. Note that depending on the ERP vendor, these terms will vary. The accounting system is setup to understand plant/site level profitability. The planning system wants to break down the walls and plan across multiple locations to best utilize capacity. Therefore, a conflict arises.
Furthermore, if the enterprise has a need to setup multiple companies so that there is a different tax ID for each plant, this greatly complicates the ability for an ERP system to make product across companies. The system will require a customer order and purchase order, and will restrict interplant routings. If a company merely wants to treat each plant like a separate company then the issue is mitigated. But as soon as the capacity of multiple plants needs to be co-mingled to meet the needs of customers, there will be system limitations for many ERP packages.
There are two methods of planning across facilities.
- Some ERP packages offer the ability to pull all of the orders into an Advanced Planning and Scheduling tool (APS) which will then perform the allocation of work across facilities. This assumes that similar products are made at multiple facilities.
- Other ERP packages offer the ability to create a routing that will cross facilities (OP 10 is at Plant 1, and OP 20 is at Plant 2). The seamlessness of how this is accomplished is also a variable, as some packages will automatically create the Shipping and Receiving paperwork and transactions in a seamless manner.
As one would expect, the larger ERP vendors SAP, Oracle EBS/JDE, Microsoft Dynamics AX, and Infor Baan/M3 offer the best features related to multi plant planning and manufacturing. And a few of the tier two ERP vendors support these capabilities better than others such as IFS.
The multiple company and multiple plant environments have emerged asa significant issue facing manufacturing organizations embarking upon an ERP comparison. This factor may drive our clients to look at larger, more complex, tier one ERP vendors.