Unless a manufacturing company is fortunate enough to sign a long-term contract, most find themselves having to respond quickly to market demand for building new products in short time frames. This is especially true for mid-market manufacturing companies who live and die on their ability to meet small and custom orders from their customers.
Many mid-market manufacturing software systems rely on legacy, non-flexible interfaces that forces their users into a process that doesn’t fit the business. Often, manufacturing solutions don’t even come with financials or accounting, and growing businesses have to rely on disconnected software or integrations to third party solutions such as QuickBooks. Contrast that with Microsoft Dynamics 365 Business Central, a completely integrated and all-in-one ERP system that includes the manufacturing module to centralize all your operational management.
In this article, we’ll break down the Microsoft Dynamics 365 manufacturing module more so you can better understand it’s value for evolving and growing mid-market manufacturing organizations.
Why Software Features Are Not as Important as Flexibility
When considering new software systems, it can be tempting to simply look at all the functions and buttons candidates have and add up a feature comparison. That is valuable as a starting point, certainly, but it is miles more important how the system fits with the way you do business and service customers. Why? Because the minute you start rebuilding your entire business model, processes, and structure to fit a software system, and it isn’t the other way around, you introduce incredible risks to not just the project, but your business and it’s people as a whole.
As an anecdote to this, our company CEO used to work for a major consulting company that utilized software designed specifically to compare systems. The consultant would review hundreds of questions with the prospective buyer, classify them as “needs” or “wants,” and then compare the answers to the database of feature lists from available products. The end result was a fit percentage that was supposed to indicate the best match. Problem is, on average, there are often only five to ten key features that were critical to the buyer. So, solely focusing on the total number of features was, and still is, an extremely flawed process because it only concentrates on a minimal number of fit and match criteria for the business.
In addition to identifying the key capability needed, prospective software buyers should consider how close the processing flow and flexibility of a proposed system will match the requirements of the organization. The only constant in manufacturing is that nothing is constant. Customers will bring widely varied requirements to you and will want them changed again, sometimes during the manufacturing process. Your ability to be agile in serving new customers and retaining the ones you have will start with the systems and infrastructure you have to deliver and produce their requests for them.
It’s not uncommon for manufacturing companies to create unique business processes that deal with these challenges. The difference between breaking even or losing money and making a profit is the software’s ability to enable these processes. That’s why, significant advances in technology will help bring more opportunities to the table while simultaneously allowing your business to scale.
Does Your Manufacturing Software Vendor Have What It Takes?
Just as important as the system you select, is the licensing, implementing, and support partner you elect to work with. This is much more than a transactional relationship, it’s a long-term partnership executing on a critical arm of your business and manufacturing operations.
If your working directly with the software publisher themselves, it’s important to understand that many manufacturing software vendors started with their product as a single user system and then gradually moved into a networked, shared environment. All of their annual maintenance revenue, plus a marginal amount from new sales, goes to keeping the lights on and keeping up as much as possible with new platform technology. There are often little to no funds available to transform the product or update it for significant technology changes, such as the move to the cloud or for the latest in mobility initiatives.
Microsoft, on the other hand, has deep pockets that enable them to develop, support, and rapidly evolve the four accounting systems they acquired in the early 2000s. Two of them have been transformed into industry-leading cloud solutions: Microsoft Dynamics 365 Business Central (formerly Dynamics NAV) for the mid-market, and Dynamics 365 Finance (formerly Dynamics AX). In the process of doing so, Business Central has significantly only grown in capability and flexibility for manufacturing companies.
Breaking Down Microsoft Dynamics 365 Business Central’s Manufacturing Module
It is helpful to understand that the Business Central manufacturing module is deliberately designed to not be a full enterprise ERP manufacturing system with every possible option and all the bells and whistles (of which most growing manufacturers only use a fraction of but pay a high price tag for). It is intended to be easy to learn, easy to use, scalable, extendable, and most of all – incredibly flexible to handle different manufacturing operations and the twists your customers throw at you. The Business Central manufacturing module has been optimized for “build to stock” and “build to order” operations, but many customers have extended it to also handle “engineer to order”, “job shop”, and other requirements.
Business Central’s manufacturing module can be implemented relatively quickly and simply then expanded later to include more advanced features. The flexibility of the Microsoft Dynamics 365 Business Central cloud platform means it can be configured or extended to cover almost any manufacturing requirement, including organizations utilizing it for food and other process manufacturing.
Out of the box, Business Central’s manufacturing module includes the “big five” core components expected from a manufacturing system including production BOM’s (Bills of Material), production orders, MRP (Material Requirements Planning), shop floor routings, and capacity planning.
But Business Central’s ability to be agile and incremental in integrating with a manufacturing business means it’s immediate utility and long-term scalability are unparalleled. For example, smaller companies that have not formally defined their shop floor routings may choose to implement that piece later. Others may avoid MRP until the full inventory system has been thoroughly tested. In the meantime, the rest of the solution will work seamlessly with it’s corresponding parts of the operation, and thus deliver near immediate ROI.
Business Central’s Manufacturing Module Flexible Functionality
The system allows for versioning of production orders, comparison of components across versions, and substitution of replaced parts. Default production BOM’s can be attached to inventory items, which is useful when generating linked production orders from sales orders. Business Central can handle an almost unlimited number of BOM levels including phantom BOM’s. The production BOM allows for tracking input quantities by either quantity or dimension.
Routings also offer versioning and allow for either sequential or parallel processes. Routings can be edited once attached to a production order to create a unique process for cover planned or last-minute changes, such as deciding to use a third-party vendor to do something you might normally carry out in-house. There are also a variety of time elements available such as setup, waiting, processing, etc. Scrap can be tracked in a number of ways. Routings will be used when MRP makes build recommendations.
Several types of production orders are available in Business Central’s manufacturing module including planned, firm planned, and released. Once a BOM has been selected for a production order, the user can edit the components to suit a specific requirement if they don’t feel the new configuration is worth setting up as a new BOM or version. Firm planned orders can be included in the capacity planning.
Work centers can manage shift capacity. If necessary, one or more machine centers can be attached to a work center. Changes in capacity for events, such as employees calling in sick or quitting, can easily be processed and the production schedule updated.
Supply Planning and Demand Forecasting
MRP takes into account customer demand, as well as replenishment parameters and the master production schedule to produce a material requirements plan. This plan can be reviewed, edited, and processed by a user. Production orders can be combined with other parameters for both planned and committed actions.
Business Central’s manufacturing capability will schedule all production orders but operates best under a “finite loading” model, where only the elements in a work routing creating a constraint will be scheduled. Graphical add-on products offering “drag and drop” capability are also available from add-on partners, if a more visual presentation is desired. The feature supports the “capable to promise” ability.
The sub-contracting worksheet can be utilized to manage the sending of materials and work in progress to a third party for additional processing.
The Order Planning window provides users a view of requirements and gives them the tools needed to manually plan for demand from sales lines and create different types of supply orders directly. This integration allows production orders to be created directly from a sales order and allows the user to consider “available to promise” and “capable to promise” quantities. The linked production order will be tracked directly back to the originating sales order line.
There are many options in manufacturing for flushing parts to the production order including forward or backward flushing and by shop floor workstations. Labor can be consumed through a consumption journal. Output can be recorded through the output journal, either manually or automatically.
Some parts can be assembled in a “light manufacturing” environment to build out parts for your manufacturing process. The automatic or manual assembly orders can be edited to match your specific requirements. The system will re-cost and re-price the assembled component based on any changes.
If necessary, Business Central’s manufacturing module can be customized to add almost any capability if there are unique processes providing competitive advantage or improving your profitability.
When to Choose Business Central With The Manufacturing Module
Here is a starter list of qualifications wherein if one or more items are relevant to your business, it may make Microsoft Dynamics 365 Business Central manufacturing a great fit:
- You are a mid-market manufacturing organization with one or more shops but do not require capacity scheduling across more than one location at a time
- You want a fully integrated, all-in-one financial, distribution, purchasing, sales, warehousing, and manufacturing system with real-time visibility and updates
- You require, either now or later, shop floor routings with resource capacities, either machine or labor, for managing your manufacturing processes, tracking costs by stage, determining production order delivery date, and current processing status
- You don’t currently require a complex, rules-based configurator or you are willing to implement from a choice of third-party options, which means you have your rules carefully defined
- You need complex MRP requirements able to manage time elements in inventory purchases or the manufacture of sub-components
- You want to manage scrap at various levels in the manufacturing process
- You have a use for a capable kitting or assembly module to manage sub-components
- You have unique processes that won’t be found in any manufacturing system but are important to your profitability or competitive advantage
Here are some areas of functionality that can be enhanced through the use of best-of-breed, third-party extensions that are seamlessly integrated with Business Central manufacturing:
- Highly configured items including the need for a complex rules-based matrix of options
- Shop floor time collection using scanners or some other technology
- Quality assurance processes
Take the Next Step With Business Central Manufacturing
Having a centralized financial and manufacturing system never gets old. Literally. Business Central with the manufacturing module has the ability to scale and evolve with your business for life. It’s why we call it the ‘last software you’ll ever need.’
To learn more about Dynamics 365 Business Central, connect with us today to discuss how it can improve your manufacturing business processes.