Factories have changed hugely in the past 50 years. Advances in automation, sensors, analytics, and other technologies have made significant changes in manufacturing. A modern manufacturing ERP system will make use of these technologies so that their benefits can be realized.
Two major transformational changes have occurred in manufacturing.
- The smart factory
The smart factory represents a transformational change from traditional practices to a connected and flexible system. In smart factories, physical and digital processes are integrated within the factory and across supply chains to optimize current and future supply and demand requirements. The way in which people, processes and technologies operate delivers information can to be used to improve manufacturing, maintenance, inventory tracking, and other activities across the manufacturing network. - Real-time data
With technologies such as the Internet of Things (IoT), data creation is happening at an exponential rate, meaning that manufacturing in the 21st Century isn’t so much based on gut-driven decisions anymore but rather on data.A company’s ability to manage the flood of data coming from the factory floor and other areas is becoming critical. And it’s not just data within the company, but also using and sharing it across the entire business ecosystem. By doing this, manufacturers can unlock additional value and accelerate innovation. New technologies, like advanced analytics and artificial intelligence (AI), allow this data to be used more effectively, and are transforming the world of production.
Manufacturing ERP supports manufacturing transformation
The answer to operating a smart factory and overcoming the data deluge, and therefore enabling innovation, can be found in the adoption of a manufacturing ERP system.
For a modern manufacturer, sticking with spreadsheets, simple accounting applications, or disparate siloed systems, limits its ability to deal with the changing manufacturing environment, By integrating the organization with a manufacturing ERP system, the company can ensure it has the software solution to enable continued growth and competitive advantage.
An ERP system enables performance in areas that are key to manufacturing success.
- It improves productivity by giving production staff immediate access to the information they need to do their work.
- It enables companies to be more flexible in their production processes..
- By connecting with digital manufacturing systems, it enables greater agility because operators can adjust production activities digitally.
12 benefits of a manufacturing ERP system
- Integrates business
An ERP application provides the solution for unifying the business under one system. Siloed departments means the business can use information to make smart decisions. With centralized financial, manufacturing, and operational data, information is available across the value chain from beginning to end and through all aspects of production. It eliminates duplicate work and ensures everyone works from the same accurate data. Management has visibility in real-time of how different business areas are working.But it’s not just internal integration. The ERP system must be able to connect to external services and applications. and have connectors that easily integrate with new services.
- Automate operations
An ERP system helps to integrate, streamline and automate daily workflows. This allows information to flow between different areas of the business automatically, without any manual data entry. - Manage supply chain
An automated and integrated ERP system will enable more accurate and timely procurement, inventory management, logistics and order fulfilment. Integration with supplier data means greater visibility throughout the supply chain that can help to identify bottlenecks that may impact production work and customer orders. - Efficient inventory management
An ERP system allows manufacturers to reduce costs and capital tied up in inventory. Integration of procurement, production and inventory means that purchase orders can be more accurately linked to what is needed for production and what is currently in stock.With features like demand forecasting, a manufacturing ERP can accurately predict future demand and align inventory levels accordingly. This information can keep inventory levels optimized to avoid common problems of over- or under-stocking and wastage due to the holding of obsolete stock.
- Improved production planning
Production planning helps manufacturers improve the efficiency of the production process by minimizing the lead time between the placing of an order and the completion of that order.
Production planning involves several components that together manage a production run — Bill of Materials (BOM), Material Requirements Plan (MRP), and Master Production Schedule (MPS). These must be coordinated in detail. Trying to do this manually using spreadsheets will become impossible in an increasingly flexible environment. - Manage dynamic production schedules
Manufacturers often face dynamic production schedules due to evolving customer demands and unforeseen disruptions. To thrive in such an environment, manufacturers need to optimize their shop floor operations and adapt quickly to changes. Production scheduling is the allocation of available resources to production processes.A manufacturing operations management (MOM) system can oversee what is happening across the production plant. A MOM handles all the different manufacturing processes and allows managers and supervisors to schedule changes depending on what machinery and resources are available.
A MOM can create a detailed and flexible production schedule which can be used for planning what work is done. This schedule includes which machines will be used, which operators will work on each machine, and how long each operation will take. MOM system monitors the production schedule regularly to ensure that everything is running smoothly, and can make adjustments to keep production on track.
- Ensure quality management
A manufacturing ERP system should offer comprehensive quality management capability that allows manufacturers to trace and document every aspect of their production process. From raw material inspection to testing before shipment, the ERP system provides a transparent and auditable record of traceability for compliance purposes.Additionally, a quality management module can automate compliance reporting, reducing the administrative burden on manufacturers. This not only ensures adherence to regulations but also improves overall product quality by providing real-time data and insights into production processes.
- Better decisions with AI
AI can make manufacturers smarter and more adaptive by:- analyzing data from machinery to predict and prevent breakdowns, reducing downtime and maintenance costs;
- automating planning and optimizing supply chain processes;
- monitoring processes and adjusting them in real-time, maximizing productivity and reducing waste.
- Better reporting
A manufacturing ERP system has built-in reporting tools that gather data from across the enterprise. Decision-makers can work with the most comprehensive, recent and relevant information. - Improved customer service
An ERP system enables different departments to share the same information. Whether dealing with a customer order or a complaint, sales or service staff can easily access sales account information to understand more about the purchase history. This means faster response times, improved order accuracy, and smoother deliveries. - Better cost management
Because an ERP system streamlines business processes and integrates the data from them, there is a better understanding of costs overall. This means the necessary corrective actions can be taken to reduce costs and make operations more efficient. - Recycling, reuse and a cleaner environment
Manufacturers are increasingly being required by customers and legislation to reclaim discarded outputs through recycling and reuse to make new products. As companies become more sustainability-conscious, they need to gather data on the full range of activities, from the original sourcing of materials through the end of the product life cycle. This allows designers and engineers to make decisions not just on product requirements, but also on material properties and the energy required to make products.
Companies that have successfully implemented a manufacturing ERP system have found:
- significant reduction in inventory levels,
- greatly improved inventory accuracy,
- more reliable production schedules,
- a higher number of on-time-in-full orders,
- more streamlined processes leading to improved productivity,
- better customer interactions,
- more effective procurement,
- improved order-to-cash process,
- faster financial reconciliation after month-end.
Be future-proof with a manufacturing ERP
In the face of disruption and change, a manufacturing ERP system is a pivotal tool for industrial transformation and ensuring the business is future-proofed. It provides a unified platform that integrates critical business processes across the enterprise, facilitates efficient decision-making, enhances collaboration, and drives innovation.
