7 Must-Know Benefits of Manufacturing ERP Software
Manufacturing is a highly competitive and dynamic industry. As time progresses, the need for increased productivity and efficiency is on the rise and will only continue to rise as demand increases. There is no slowing down for the manufacturing industry, which caters to the growing population and increasing demand for infrastructure improvements and general, day-to-day consumer and business needs.
In the same way that a manufacturer must upgrade machines to meet customer and industry demand, the need for software to manage production is needed to keep up with that same demand. Enterprise resource planning (ERP) software has been around for over forty years and has significantly improved the productivity and traceability of production in the manufacturing industry. There are a number of benefits to using ERP software in manufacturing and seven of these benefits have been outlined below.
1. Automation
Throughout your software research, you’ve probably heard the word “automation” more times than you can count. Well, there is certainly a reason it comes up so often when discussing the benefits of ERP software. If you consider the opposite of “automatic”, the word that comes to mind is “manual”.
Remember when your only option for calling a friend or family member was to use a rotary dial (pictured below)? Well, now, all you have to do is open your smart phone and say, “Siri, please call Joe Smith” and within a second or two, your phone will start dialing Joe for you. Imagine using a rotary dial in this day and age. It’s almost like using manual methods instead of an integrated system, like ERP software, for your manufacturing business.
Manual methods in manufacturing can lead to mistakes throughout the entire production process, from order entry to shipping errors. Automation, on the other hand, allows you to:
better track production,
manage material reorder points,
report work-in-progress (WIP),
notify customers of upcoming deliveries, and
schedule work on the shop floor based on machine and employee availability.
Even modules that are not in active use are running in the background to ensure that data is live and accurate. As changes occur, the system responds accordingly to give you up-to-date information at all times. This is especially important for job tracking and reporting.
2. Supply chain management
Whether you work in a 100% custom job environment or produce standard items, one area of importance is supply chain management. From procurement of raw materials to on-time delivery of finished goods, one thing is certain: if your supply chain is not well-managed, then order fulfillment will be extremely difficult to gauge and forecast to customers.
Stock management in both raw materials and finished goods (if working with a standard part) will be increasingly important for business growth and as competition increases in your manufacturing sector. A main component of ERP software is inventory management. Having up-to-the-minute inventory counts allows you to provide accurate estimates of both time and resources to your customers.
In MIE Trak Pro, specifically, your supply chain manager or warehouse manager will be able to take detailed notes of vendor deliveries to determine which vendor(s) are most reliable and, therefore, deserve the majority of your business. If Vendor A has an RMA percentage of 2.5% and Vendor B has an RMA percentage of 0.5% (assuming that delivery volume is similar), then Vendor B may be a better partner for your team in the long-run. These are things you can determine with the use of a data management system, like ERP software.
3. Connectivity
One thing that is often discussed when considering ERP software is the need for better communication between departments. For example, if a work order has already been released to the shop floor but a customer calls to make an adjustment, how does customer service update the shop floor staff of the changes? If it’s a drawing change, then the machine operator needs to know ASAP of the change.
Customer service can update the shared database of the ERP software to inform the shop floor of the changes instantly, without the need to speed-walk to the technician and update him or her of the changes. On the other hand, if inventory for a raw material is low, the shop floor staff are also able to request material from their work station without speed-walking to the office to inform the purchasing department of the low inventory.
With ERP software, not only are you better able to connect with other departments within the company, but you can also directly communicate order information to your customers through shared dashboards. MIE Trak Pro offers what we call Web Dashboards to allow our customers the flexibility to give their customers the information they desire regarding their open projects.
4. Cost Reduction
Perhaps the most important benefit of ERP software is cost reduction for your business. What exactly do we mean by “cost reduction”, you ask?
Accurate job costing can increase profitability
Efficient staffing
Machine utilization - Machines are expensive, get the most use out of them by decreasing idle machine time
Material utilization (lean manufacturing) - nesting orders to save material will save costs
Accurate inventory management - save time on staff manually counting inventory
Saving time on order entry, scheduling, quoting, etc., will lead to saving money
5. Production efficiency
Like automation, production efficiency is the idea that processes throughout the production process will be handled seamlessly and without the need for multiple areas of data entry. The first phase of production for many manufacturing companies is quote creation and, if you have more than one estimator, there may not be a consistent quotation process—which is where ERP software can be a huge help. Consistency between estimates and estimators is important for creating a standard for quoting.
With MIE Trak Pro, you can create a quote directly from a customer’s RFQ, then create a sales order directly from the RFQ or quote as well as the work order to send to the shop floor. From the sales order module, you can easily create an invoice.
ERP software gives you visibility of bottlenecks in your manufacturing process as well as how to get rid of them. Common bottlenecks in manufacturing include:
inadequate inventory levels,
machine capacity,
forecasting errors, and
scheduling conflicts.
Each of these bottlenecks can be prevented using ERP software with proper inventory control and automation, machine utilization dashboard, WIP (work-in-progress) reporting, and Advanced Planning Scheduling (APS).
6. Decision-making
As you’ve read through the previous 5 benefits, you’ll notice that decision-making is a component of many of them. How to handle bottlenecks in production, where to focus cost-savings, what inventory to keep on-hand, and when to use automation to improve efficiency between departments, are all decisions that your team must make.
Reporting on costs, employee efficiency, machine utilization, sales performance, as well as profits and losses will help your management team make decisions that will further the company’s success. ERP software offers all of the necessary tools to simplify decision-making. Using these tools effectively will be the difference between you and your competitors.
Make the best decisions possible to ensure your company is successful. For many companies, ERP software has made all the difference in the world when it comes to making the right decisions.
7. Customer satisfaction
Without a doubt, one of the most important benefits of ERP software is customer satisfaction. As explained throughout this article, having visibility of your supply chain, eliminating bottlenecks, and utilizing up-to-date dashboards on open projects are all benefits to your customers.
Email notifications / updates to customers
On-time delivery
Accurate and competitive pricing (when you understand your actual costs)
Be competitive in your pricing without losing money. Profits are important and so is customer retention! Keep your customers coming back for more!
Many businesses understand the importance of customer satisfaction and retention but don’t always know the best way to retain customers. Offering timely delivery of products and services, keeping customers up-to-date on fulfilment, and—most importantly—offering competitive pricing and discounts to your loyal customers will increase customer retention.
In summary, the benefits of having an ERP system running in your organization can mean the difference between success and failure. Automation, supply chain management, interdepartmental connectivity, cost reduction, production efficiency, improvements in decision-making, and increased customer satisfaction are seven of the top benefits of ERP software. Making the decision to evaluate and implement an Enterprise Resource Planning system into your business can seem daunting, but it is certainly worth considering if you want to stay competitive in the manufacturing industry.
To read more articles on ERP software or to see how MIE Solutions customers are using MIE Trak Pro ERP, visit our Resources page.
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