It’s common for manufacturers to produce components that are sold to various discrete manufacturers for use in finished goods — a pump may be installed in multiple types of equipment, for example. When those pumps leave the manufacturing facility, they need to be rebranded differently depending on who they’re sold to (e.g., labels, packaging, finish, color, etc.).
From an operational standpoint, gaining accurate financials means you need to track these basic variations, which is where revision change orders come into play. For more complex changes that affect the production line, material usage or configuration, such as the way the pump is built, you need an engineering change order (ECO).
No matter the scope of the revision needed, formal processes must be in place to ensure efficient and accurate revisions and routing, as well as accurate financials. There are multiple ways manufacturers have tracked these types of revision levels in the past — some with greater success than others.
The Old Way of Tracking Revision Change Orders and ECOs
Tracking issues arise when a part can be built in multiple ways. Most enterprises don’t want to create separate part numbers for each iteration, yet they want to track costs, inventory and revenue associated with each revision. Meanwhile, the assembly team needs to have a system in place to know which version they’re producing so the customer gets what they ordered. The production line needs the ability to build items in multiple ways yet track those items at the same levels as other departments for accurate reporting.
Some manufacturers have dedicated software to help manage various revisions, while others rely on spreadsheets and emails to document the insights gained from the tribal knowledge of engineers, customer service reps, operators and various departments.
The problem is that information can quickly become outdated, overlooked and even misplaced. These ways of tracking revisions and ECOs without standardized processes are highly prone to human error and lack transparency among everyone affected throughout an enterprise.
ERP Technology Provides Streamlined Processes
Many leading manufacturers leverage the latest enterprise resource planning (ERP) technology to not only help engineers with initial product design but also establish protocols and standard processes for making changes to the way those items are built in the future by placing controls around revisions and ECOs.
A major function is establishing workflows to ensure visibility across departments and approvals are routed properly. That way everyone who needs to sign off on a revision (e.g., product development, sales, purchasing, production, inventory, etc.) is involved in the decision and aware of how it will affect each of their areas. Reminder portlets on the system dashboard can show the number of ECOs needing approval along with next steps, for example. This helps you ensure there are no surprises or disruptions and that any potential impediments can be addressed early on.
NetSuite is one of the most robust ERP systems available, providing real-time data and insights into various revision factors, including cost implications, sales of components, remaining items in inventory, changeover processes, the impact on the production line and more.
Each revision has an effective date, yet the item number remains the same throughout, so sales, inventory and costs are all tracked at the item level and not the revision level. If you choose, you can also run a report to review costs by revision level. The flexibility and ability to generate useful, targeted data to gain accurate insights is available at the click of a mouse, and NetSuite’s BOM Revision Control & Supply Chain Management bundle provides one source of truth that’s visible to all to streamline processes.
Improving your ECO and revision change order processes is just one of many reasons to consider a new ERP system. If you’d like to discuss ERP functionality with a NetSuite Certified consultant who can explore the possibilities with you, contact us to set up a time.