September 30, 2024
Manufacturing businesses can be incredibly complex, involving tens of thousands of parts and requiring multi-million-dollar investments. They can also be relatively simple, such as manufacturers producing simple items that can be easily sold via Amazon or Walmart. But one thing they all have in common is the need to earn revenue, satisfy customers, and beat the competition.
An industry-specific enterprise resource planning (ERP) system can make the difference between success and failure. Accordingly, a manufacturing-specific ERP system offers significant advantages, enabling manufacturers to stay competitive, reduce waste, and optimize operations.
Planning Tools are Essential
An ERP system with material requirements planning (MRP) and advanced planning & scheduling (APS) capabilities helps manufacturers manage the materials needed for production based on demand forecasts and inventory levels. The system provides users with true finite capacity by automatically calculating how much inventory has already been released, how much is scheduled for release, and how much new inventory has been ordered. This information, coupled with advanced scheduling tools that allow for precise scheduling of production jobs, including tracking machine availability, optimizes workflow for minimal downtime.
Inventory Is a Big Part of the Plan
An available-to-promise (ATP) inventory tool enables manufacturers to guarantee delivery on a specific date. This is crucial when original equipment manufacturers (OEMs) set tight delivery lead times. For example, automotive industry contracts may require product delivery within a few hours of placing the order. This relieves them of the need to store parts and puts inventory costs on the vendor rather than the OEM. The more efficient the manufacturing vendor can be, the more profit they will see.
In addition to real-time inventory tracking across all locations, a comprehensive inventory management system uses demand forecasting and market trends to predict future demand, helping optimize inventory levels and avoiding overstocking or shortages. Just-in-time (JIT) ordering reduces the number of times a piece of inventory needs to be touched or moved and the amount of time it needs to be stored, thereby reducing handling and carrying costs.
At the same time, the ability to track raw materials and finished goods by lot or serial number enhances traceability and compliance.
Travel Time Matters
Warehouse management is “a big place to save money,” according to Guide Technologies Vice President of Sales Bill Hunt. “An ERP system that facilitates a manufacturer’s ability to have a product on hand when and where a customer needs it yet stock the least amount of inventory possible has a strong impact on profitability.” For example, if many customers are in the West, storing all inventory in warehouses in the Northeast does not make sense. Moving inventory multiple times takes a lot of resources, including people, machines, and time. “It’s all about being able to stage it, pick it, and deliver it with the least travel time,” said Hunt. “And only very robust ERP systems can help optimize that process. There is a whole science around the correct way to manage warehouses efficiently by minimizing touches, movements, and distance,” Hunt added, “Infor CloudSuite Industrial includes very robust warehouse management tools.”
ERP systems such as CloudSuite Industrial also include automation and picking optimization tools that automate bin tracking, barcode scanning, and picking processes.
Every Plan is Subject to Change
Supply chain management is one of the most complex challenges in manufacturing. The right ERP can integrate with logistics providers and factor in real-time data, such as weather events, to proactively manage supply chain disruptions. The ability to proactively keep customers updated regarding the delivery of their order, whether it is on a truck, a train, or a ship, enhances customer relations. The ability to track incoming inventory in real-time makes it easier to keep processes moving on the shop floor.
Gain Key Insights with Shop Floor Controls
Real-time monitoring of activity on the shop floor, including production status, machine performance, and potential bottlenecks, gives supervisors the insight needed to manage scheduling and relay what is happening to the people doing the work.
Capturing data from machines and workers on the shop floor in real time is key to keeping production on track and optimizing labor and machine utilization. An ERP system that offers a mobile app also makes it easier to collect data from employees who must be mobile to do their jobs. Not only does the data they input flow automatically into the ERP system for reporting and analysis, but workers can also use a mobile device to see which task is next on their list.
Drive Profitability with Quality Management
Manufacturers must integrate quality checks into every step of the production process, capturing data on sources, defects, production, and other quality metrics. There are typically multiple levels of quality that need to be maintained, from the quality of materials being sourced to the quality of processes occurring on the shop floor. For example, a smart system will help determine when you need to deploy a higher level of quality management, perhaps checking one out of every ten products delivered by one vendor, but a lower level of quality management for a second, more trusted vendor, checking only one out of every 1,000 products delivered. Managing this process limits unnecessary quality check resources, increases the likelihood that problems will be uncovered and corrected earlier in the process, and assists with better sourcing decisions.
Compliance tracking is another critical piece of the quality management process. Manufacturers can meet regulatory requirements for quality, safety, and environmental standards by automating documentation and reporting in their ERP system. ERP systems that offer non-conformance (NCR) and corrective action (CAPA) capabilities help companies identify issues, track non-conformances, and manage corrective actions to ensure continuous improvement.
Give Customers Options
A product configurator is important to manufacturers who want to give customers the ability to create customized products based on predefined configurable options, such as adding better tires or more chrome to an automobile or upgrading the ice maker or changing the color of a refrigerator. A product configurator can manage configurable options, related costs, and revised production needs in real time. A robust system allows the company to extend that structure across multiple products.
Improve Customer Experiences
Customer relationship management (CRM) tools help manufacturers do a better job of working with their customers. A CRM system facilitates better customer service by tracking orders, storing customer preferences, and integrating customer feedback into production planning. It also makes it easier to manage sales pipelines and efficiently process orders. Regardless of the quality of products produced, poor customer relationship management can limit the success of any manufacturing company.
Capitalize on New Technologies
Internet of Things (IoT) and machine intelligence are true differentiators for Infor’s CloudSuite Industrial ERP (CSI). The ability to connect to machines and other IoT devices on the shop floor provides insights into performance and predicts the need for preventative maintenance, thereby reducing downtime. Any machine with internet connectivity can send real-time messages back to the ERP that alerts employees of the need for maintenance. CSI can monitor even those machines that are not internet-compatible.
“Machine intelligence can be used to automate 85% to 95% of manual tasks related to predictable transactions that occur over a period of time,” said Hunt. He cites as an example the end-of-month process that every financial team must undertake to adjust entries based on how a business runs. Automating these tasks can significantly ease the end-of-month reporting process.
These features enable manufacturers to improve efficiency, reduce costs, enhance product quality, and better meet customer demands, giving them a competitive edge.
Calculate a True ROI
To calculate the real cost of production, a manufacturing finance team requires detailed data that is often not readily available. How much overhead should be calculated regarding time on the shop floor, utilities, labor, etc.? How much did inventorying and shipping out the product cost? How much scrap material was produced? An industry-specific ERP system should be smart enough to calculate a true return on investment (ROI) automatically. This saves the finance team many hours of manual research while revealing opportunities for improvement. The ability to control all costs makes reducing taxes, creating realistic pricing models, and staying ahead of the competition easy.
A fully integrated accounting system ties financials directly into production, inventory, and supply chain processes, ensuring accurate cost reporting and profitability analysis. Project accounting tools are useful for manufacturers working on long-term projects, helping to track project-based expenses, resources, and profits. A robust, smart ERP system can also handle all accounting needs for multinational manufacturers operating in multiple currencies and even across multiple businesses.
Get 360-Degree Product Management
For complex manufacturing processes, managing detailed multi-level bills of materials (BOM), which include raw materials, components, and assemblies needed for production, is critical to maintaining smooth and uninterrupted operations.
An ERP system equipped with this functionality makes it easy to manage everything related to a given product, including what materials were used, how they were sourced, enhancements done over a product's life, and engineering change notices.
At the same time, product lifecycle management (PLM) features integrate product design and engineering processes with manufacturing processes to ensure efficient transitions from concept to production.
Manufacturing-Specific Solutions = Highest Levels of Success
Investing in an ERP designed specifically for manufacturing offers unparalleled advantages and sets the foundation for long-term success in a complex and competitive market. A solid business plan can bring limited success or fall apart completely without the data and reports that enable good, fast decision-making, the insights that highlight necessary adjustments early in the process, and the technical flexibility to accommodate unique requirements and scale your business quickly.
For manufacturing businesses, driving higher profitability and improving customer experiences is a complex equation involving time, equipment, inventory, skilled employees, and quality products. Why not choose a manufacturing-specific ERP system that solves this ever-changing equation every day to help you achieve the highest levels of success?
To learn more about how Guide Technologies and the manufacturing-specific Infor CloudSuite Industrial ERP system can give your company a critical edge, improving efficiency, reducing costs, and ensuring high product quality, contact us today.
