Search for error-free batch management software: demand analysis

Traceability with production management or commercial management?

The search for an inventory management system (inventory management software) is the main need expressed; but in fact it is the result of a purchase and sales management system. The choice is difficult as the vocabulary used is specialized and nuanced, such as the difference between manufacturing management and production management ... and moreover if we add the wish to reduce errors by automating the use of the barcode!

We will deal here with the accounting part of the stock management and not with the organizational part.

We have a significant number of calls from manufacturing or processing SMEs/SMIs who are looking for "inventory management software" and who cannot find this software. They then chose "commercial management" alone (without the production module) under the pretext that it is indicated in the specifications of commercial management: "stock management". They then want to add the use of barcodes to reduce data entry errors.

They are blocked and call me for help.
The intention of this article is to explain to those who are in the process of choosing, to explain to them why they will make a mistake that will impact their future operation and performance.

We deal here with requests from companies that have workshops, that produce from raw materials for which they wish to ensure the management of the stock, whether they trade or not in these materials.

It is important to understand that stock management is not a function in itself independent of the rest of the company’s management.
The management of stock is a result of the management of the purchases and the consumption of materials on orders of manufacture for these manufacturing companies by the simple formula below:

STOCK = RECEIPTS - ISSUES

A common solution for error-free data entry is to ask (to its software editor and its suppliers) to put barcodes on the numbers of BL and orders and invoices.
Another solution that we also use perhaps the recognition of characters (OCR) to record the numbers of parts: see OCR mobile character recognition: interface use and test apps.

Let us see then for the cases of trade and manufacture separately.

In trading companies, inventory management is the result of buying and reselling the same item, without changing that item. Sometimes, this article is included in a "bill of material" (list of articles composing the finished product known as "compound") which is used to make picking. This is to sell an article composed of several articles without transformation nor disappearance of the component articles. To carry out this type of operation, it is common to use a commercial management: this is largely sufficient in the trade.

NEGOCE STOCK = PURCHASES - DELIVERED SALES

It is then enough to seize the entries and the exits of the stock by connecting them to an accounting document: the supplier order or its BL for the entries, and the customer order or BL forwardings for the exits.

Indeed, at this stage of the number of seizures, to ask for a management by bar code. One sees well that this last is strongly related, and integrated with the data-processing management.

Now the question of the distance of the object to be seized to the PC with the ERP arises and it is there that the trap is: the simple shower by USB is not enough any more and it is necessary a mobile terminal with scanner and intelligence in the hand which is going to synchronize with the data-processing management.
(read §"Why choose a terminal with a scanner integrated with a handheld?" from Le code barre et sa lecture : les principes)
And as the management of these terminals is not foreseen: it must be added and this is not necessarily possible nor authorized by the editor (see PDA data and mobile printing architectures, interconnections)

Given the number of blocked situations, we propose solutions interfaced on the ERP Opensouce Dolibarr Data entry, mobile printing, stock management on hosted ERP DOLIBARR.

In a manufacturing company, the component articles are said to be "consumed", in other words they are transformed or disappear in an operation that is part of the range. Only a production management or "GPAO" allows to make these operations correctly and to follow them.

STOCK RM [1]= PURCHASES - CONSUMPTIONS on OF / Order
STOCK FP [2]= Finished OF - SALE

Example for a company manufacturing molded resin plates : a plate reference ZZ is composed of 2kg of resin reference YY and 300 gr of fiberglass (mat) reference XX.
XX and YY are the items in the bill of materials for ZZ.
The molding operation consumes these 2 items in the indicated proportions without it being possible to do the reverse operation.

We can say that the product costing is equal to that of the product BOM, which would be the same if we were using a simple commercial management.

Only, there are two major differences (without counting the absence of traceability of the batches and follow-up of the tools, follow-up of the real times)

 the transformation operation is done well before the sale of the finished article: the consumption and thus the decrease of the stock is carried out at the date of the operation whereas in a commercial management the consumption of the articles ZZ and XX is done at the time of the emission of the BL or the preparation order. In addition, this OF without raw materials in stock will not necessarily generate a need to purchase materials for the date of the operation, given the delivery time of the supplier.
 the cost price of the final product is composed of a significant part of operator time with an hourly rate: one could imagine using commercial management and putting "operator hours in stock": the consumption of these hours is not a problem whereas the purchase is impossible in commercial management. The control of production times is also impossible.

Some commercial management systems integrate what they call a "manufacturing management" which allows to make ranges effectively but cannot launch supplies on date, in cascade, nor manage a planning, what one finds in a production management system called "GPAO".

Because of the first difference, you need the function of "management of stocks to date" (which is also called "MRP" = Manufacturing resource planning) which is not always implemented in the simple commercial management: only this function allows the system to consider the forecasted stock shortages and the proposals of purchases (for example with an alert on "minimum stock").

We hope that this little reminder will prevent a number of companies from finding themselves faced with a commercial proposal that is tempting by its price, installing, setting up and noticing these differences to ask for an extension by the production module (if it exists) which is, as if by chance, much less interesting when the unhappy customer no longer has the advantage of a negotiating position by comparison.

In the case where this last module is not developed: there is only one alternative to waiting or immobility: change this commercial management: the investment in license and time is then simply lost!

Give yourself the means to change without making a mistake: we combine the hosting of the Open-Source ERP DOLIBARR with the mobile production and traceability modules corresponding to your needs and a customized solution of barcode / rfid traceability and label printing : Data entry, mobile printing, stock management on hosted ERP DOLIBARR

[1Raw Material

[2Finished Product

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