The concerns of quality management typically extend across every aspect of supply chain management in chemical manufacturing companies. This broad viewpoint of quality management, for example, ranges from the definition of item and formula information through sourcing purchased material, actual production, sales shipments, and returns. Special considerations apply to lot-controlled items, such as the assignment of lot numbers, lot attributes, and lot disposition codes that restrict material usage.[1]
Since Microsoft Dynamics AX addresses nearly the full range of quality concerns with out-of-the-box functionality, it represents a strong ERP solution in the world of chemical manufacturing. The customization and integration capabilities within Dynamics AX can also be used to support additional requirements. The list of out-of-the-box capabilities is no small matter, and they cut across many different functional areas. The capabilities can be roughly grouped into several categories, as described below. More detailed explanations of these capabilities are provided in a separate white paper about quality management.
Item and Recipe Definition. Item and recipe information provide a logical starting point for quality concerns, where a recipe consists of the formula ingredients and routing steps. Some of the major concerns include:
•Item identification, including the optional use of variant codes (such as color or grade) as part of the item identifier
•Specify and enforce authorized units of measure for an item
•Specify and enforce approved vendors for a purchased item or outside operation
•Approval of authorized formula versions for an item
•Approval of substitute ingredients within a formula
•Approval of authorized routing versions for an item
•Identify quality factors in production, such as planned yield percentages for a formula version, component scrap, and operation yield percentages
•Identify planned changes reflecting continuous improvements to formula or routing information, such as improved yield percentages and better production processes
•Enforce the use of authorized formula versions for actual production (aka batch orders)
•Electronic signatures for approvals, such as the approving a formula version or the release of a production order
•Specify and enforce the allowable weight range for a catch weight item
•Identify the needed documentation for items, formulas, routing operations, and other key constructs
Lot Tracking (aka Batch Tracking). Many chemical manufacturers require batch tracking for purchased and manufactured items. Some of these considerations are shown below, and a previous article described the significance of batch attributes for chemical manufacturers using Dynamics AX.
•Specify batch number assignment policies
•Specify restricted usage policies associated with batch disposition codes
•Assign disposition codes to batches, and enforce restricted usage policies
•Specify batch attributes of an item and the allowable values for an attribute
•Report the actual values for batch attributes
•Identify and reserve material that meets requirements for batch attributes or same batch
•Identify and reserve material that meets requirements for expiration dates
•Identify and disposition any expired batches
•Generate certificates of analysis with the relevant attributes and their actual values
•Integration with a specialized Laboratory Management System to capture actual production characteristics
Purchasing and Production. Several aspects of the business processes for procurement and production involve quality management concerns. Some of these concerns include:
•Specify and enforce approved vendors for a purchased item or outside operation
•Employ work flow approvals, such as the work flow for purchase requisitions or for the release of a production order
•Identify scrap or returns to vendor for receipts of purchased material
•Identify actual scrap or rework options for finished production quantities
•Access the needed documentation for items, formulas and routing operations
•Perform receiving inspection and report disposition (via quarantine orders)
•Perform testing and report actual values via quality orders
•Perform testing and report the test results within different business processes (via quality orders), such as picking/shipping steps for a sales order or for a production process steps for a production order
•Identify and track quality problems via nonconformance reports
Sales. The business processes associated with sales orders, shipments and returns involve several quality management concerns. Some of these concerns include:
•Identify and reserve material that meets the customer requirements for batch attributes or expiration dates
•Enforce restrictions on sales order processing, such as preventing order entry for restricted products or for stopped items
•Provide regulatory reports for sales to different countries
•Identify hazardous materials and their MSDS documents, and ensure compliance for sending MSDS documents to customers
•Specify RMA disposition codes and related policies for handling customer returns
Other quality considerations might include best practices in supply chain management, such as ensuring valid delivery date promises on sales orders or the correct assignment of sales prices or purchase prices.
Quality concerns typically extend across every aspect of supply chain management, as noted at the beginning of the article. Examples of these quality concerns have been highlighted for several areas, such as the definition of items and recipes, lot tracking, purchasing, production and sales. In a given company, those people responsible for quality management must decide how their ERP system will handle these concerns - with out-of-the-box or customized functionality. A chemical manufacturer considering or implementing Dynamics AX as their ERP solution can employ out-of-the-box solutions for a large proportion of their quality concerns.
Further Research on the Critical Issues facing Chemical Manufacturers
As part of my on-going research efforts, I would appreciate having you complete an on-line survey with just three questions focusing on critical issues related to ERP system usage and supply chain management in chemical manufacturers. The questions involve open-ended responses at this stage of the research. The results will be published in my MSDynamicsWorld.com column.
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[1] Dynamics AX employs the term "batch" rather than "lot" -- such as the terms batch number, batch attributes and batch disposition code - because the term "lot id" applies to an internally-assigned identifier for inventory transactions. The "batch" terminology will be employed throughout the remainder of this article.
BY Scott Hamilton, Chief Solution Architect, Solugenix
http://www.pargesoft.com/
