The manufacturing sector is undergoing a massive digital transformation with the emergence of IoT and Industry 4.0 technologies. From production to payroll management, technology-based solutions are transforming every manufacturing function. One of these solutions is Enterprise Resource Planning or ERP.
ERP in manufacturing plays an important role by integrating various business functions under one umbrella. Today, we will discuss the importance, benefits, and features of ERP implementation in the manufacturing industry.
Be it a small-sized manufacturer or a global manufacturing company, they can benefit greatly from the manufacturing module in an ERP solution.
ERP tools are perfect for any manufacturing company. ERP manages and integrates processes including manufacturing, procurement, supply chain, and distribution.
In addition to improving production efficiency, manufacturing ERP solutions provide 360-degree visibility into daily operations. Effectively, ERP for manufacturing acts as the single “source of truth” providing the most up-to-date information to any department or business process. With increased visibility, business stakeholders can coordinate and collaborate more efficiently.
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The ERP solution consists of several manufacturing ERP modules with functionality to improve business functions. Following are some of the main features of ERP for manufacturing companies:
The manufacturing module is a key component of any manufacturing ERP system. Starting from materials requirements planning (MRP), ERP solutions have evolved to add more manufacturing related modules such as production management and manufacturing execution systems.
The manufacturing module allows manufacturers to plan their production schedules by ensuring the availability of raw materials and production machines. These modules also improve manufacturing processes by tracking output against estimates. They also provide a real-time view of manufacturing operations by capturing data about in-process and finished products.
Every manufacturer needs a healthy stock of inventory to produce their products on time. With an inventory management ERP module, manufacturers can have complete control over available inventory and raw materials. Additionally, just-in-time and MRP help manufacturers streamline their inventory purchasing.
With ERP-based automation, manufacturers can automate their manual processes and reduce human efforts and errors. With manufacturing ERP, companies can automate various processes such as sales invoicing, procurement, and HR functions.
Poor product quality can be detrimental to any manufacturing company. With quality control, manufacturers can ensure that their finished products meet quality standards and regulations. For its part, ERP tools can monitor the quality of the manufacturing process from start to finish.
Apart from the manufacturing module in ERP, the accounting module helps manufacturers to track their financial transactions and accounts. Effectively, this feature allows manufacturers to increase their profits and reduce their business expenses. Through integration, accounting managers can also allocate the right budget for procurement of raw materials, labor and transportation.
Inefficient supply and distribution chains can delay production and delivery of finished products. ERP solutions' supply chain management features track the real-time movement of goods and supplies throughout the supply chain. This includes suppliers, manufacturers, distributors, retailers, and end customers. Additionally, this module allows manufacturers to easily manage products and/or materials for refund or replacement.
Next, let's discuss the main benefits of ERP for the manufacturing industry.
Following are some of the key benefits of ERP in the manufacturing domain:
Through its integrated approach, manufacturing ERP solutions provide a centralized solution to optimize available resources. With an effective ERP solution, manufacturers have real-time information that can help in making better decisions. This can increase productivity in the long term.
Without ERP integration, every manufacturing process works as an individual silo. Process silos create an “invisible wall” between business functions, resulting in uncoordinated efforts and inefficiency. ERP eliminates process silos by providing visibility across all manufacturing operations and processes.
With ERP-based automation, manufacturers can automate their manual processes and reduce human efforts and errors. With manufacturing ERP, companies can automate various processes such as sales invoicing, procurement, and HR functions.
Manufacturing companies often face critical situations where there is a sudden increase or decrease in demand for a product. With real-time ERP data, manufacturers can forecast demand by understanding market trends and factors. Manufacturers can produce accurate forecasts and reports based on historical data and trends.
Which ERP system is best for manufacturing? Now, let's see how manufacturing companies should choose the best ERP tool.
Manufacturing ERP solutions mainly consist of custom ERPs and off-the-shelf ERPs. The right ERP solution is one that suits the manufacturing company's business needs.
For example, based on how they are used, ERP solutions can be categorized as:
For example, every manufacturer needs a Finance and Accounting module to track their financial transactions and generate real-time accounting reports. For companies with a growing customer base, customer relationship management or CRM modules are critical to retaining and growing their customer base. Likewise, every product manufacturer requires
The manufacturing industry must continue to digitize its operations to adapt to the changing business environment. Manufacturing ERP solutions like SAP enable manufacturers to achieve operational agility and process efficiency. For general manufacturers, ERP solutions such as SAP Business One can reduce their operational costs while providing increased productivity.
Are you looking for a reliable ERP implementation partner for your manufacturing company? We can help. Contact us with your questions and business details today.
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