Manufacturing is a highly competitive economic sector. No matter how big or small, every producer must be agile enough to cope with daily changes in the market. But how can we effectively manage machines, materials, and manpower to control costs when our business changes so quickly?
The truth is, many small to mid-sized businesses struggle to manage operations in a seamless, cohesive way due to a lack of integration of operations teams. Sure, they still have an accounting system, warehousing database, customer data, human resources spreadsheet, and more. Yet, little can be done if all these teams remain isolated. Staff are too busy to openly communicate and almost no data sharing happens. This management approach lacks efficiency and leads to a decrease in productivity. It also leads to opportunity loss, due to data silos, a lack of situational awareness, and a general reduced ability to spot and/or quickly respond to opportunity or worse customer complaints.
This is where enterprise resource planning (ERP) systems step in to bridge the siloed gaps. A modern ERP system consists of software capable of managing business operations in each silo in one place. It centralizes all data and shows real-time results of each department, from customer service to distribution channels, every bit of information is available. A complete business software suite democratizes data across a company.
For small to mid-sized manufacturers, you want a broad but shallow ERP that is easy to use and allows the staff to dictate how the business is run. Staff should guide technology. The solutions should provide simple interfaces to get tasks done digitally instead of parking their brain at the door and feeding the ERP elephant.
If you are not convinced that small to mid-sized manufacturers need to adopt ERP to manage their daily operations, don´t miss out on the following list of benefits:
Improved Customer Service
How many times has your salesperson met with a client only to be sidelined by a product quality issue from a previous shipment, or an incorrect invoice, or any other problem that stops them from their job, Selling? New implementations of customer relationship management software are geared to give Executives and Sales teams a clear view of ALL communications between you and your clients. In one simple display, you can see communications from shipping, accounts payable, quality in near real-time. And in the same display, you can see open orders, payment history, product preferences, and more because everything is in one database.
In addition, for your trusted customers, you can open a customer portal, so they can see moment by moment performance on all their orders and they can manage their account directly saving your inside sales team valuable phone time.
Improved Reporting and Planning
Properly implemented ERP Software provides management with accurate, up-to-date, near real-time data. For example, using this information, staff get a real-time view of inventory levels, and managers have better visibility and insight into the business operations. On-demand data is a competitive weapon for any company.
A company-wide enterprise resource planning suite provides your business with a single source of truth for all processes. This makes it easier to generate reports and analytics at any time and anywhere. In other words, multiple spreadsheets and emails going back and forth between departments are completely replaced by the ERP.
Accounting makes good use of reports on a daily basis. Standard financial reports such as cash flow statements can be delivered at any moment with real-time data. This is due to the compilation of all the company’s information inside a single system. Moreover, any custom report can be generated without the need for IT intervention, making daily consumption of information timely and efficient.
Better Data Security and Quality
How many companies have you heard of falling victim to ransomware? The most common entry point of all ransomware attacks is through email. Using ERP to drive communications with customers and vendors prevents your A/P team from opening a contaminated fake invoice in their email.
Too many small-medium companies update their data weekly or monthly. Modern ERP systems update data and reports in real-time. This turbo drives data accuracy and quality, which assures staff have the data they need at their fingertips. If implemented in the cloud, data is securely accessible from anywhere through smartphones, tablets, and other mobile devices.
Data security includes protecting sensitive information from falling into the wrong hands. This is an essential feature of any ERP system to maintain data integrity and protect against unauthorized access. This is achieved by the implementation of role-based security access controls and security features like two-factor authentication. This ensures that only the correct staff can access the areas of the system assigned to them.
Standardized Business Processes
Many ERP systems are pre-configured with best practices that help your company standardize its business processes. Most of them are industry-specific, and all are focused on improving the efficiency of the business’ operations.
That said, there is an old saying in computing, “garbage in / garbage out.” This holds true for ERP systems. If your business processes are incorrect or improperly defined, an ERP system can’t fix that. The system can only do what you tell it to do. Therefore, properly defining business processes and mapping them onto the ERP system is critical to success. Failure in this step can lead to unnecessary modification later on in the deployment.
You may be tempted to implement in small pieces and “start now” and then figure out what you need and make changes later. This can be a reasonable idea, but don’t be fooled. There is another apt saying in project management that applies here: “fail to plan, then plan to fail.”
You may initially think that the current business processes can be immediately applied to the ERP system. However, because the ERP system creates ability that was not available in the past, you need to look at how your new ERP system and your business goals interrelate. This tends to result in new processes or new ways of achieving things. There may even be an opportunity to streamline processes or eliminate them completely. Or you may find that your current processes are incompatible and need to be reworked.
It is when this step is ignored, or an incomplete analysis is performed, that a company finds the need to make unplanned modifications later in the project.
Improved Supply Chain Management
You can ask any manufacturer around you about this topic, and I bet they can’t stress to you enough how important it is to have a well-grounded SCM strategy.
Companies are constantly developing new supply chain strategies to amplify plant productivity, improve product quality and diminish manufacturing costs. As businesses and operations escalate and become more globalized, relying on a solid supply chain strategy becomes crucial. ERPs come in handy to fulfill this purpose, as they can support multiple SCM modes, such as discrete purchasing, contract or blanket purchasing, vendor-managed inventory, consigned line side stocking and even producer delayed purchasing.
ERP suites manage the path that resources and raw materials transit from supplier to warehouse and ultimately from store to the client. As a result, manufacturers can be sure that no supply chain disruption will stop operations.
Conclusion
At this point, you should have a clearer vision of what ERPs are and how they can empower your business. They are without a doubt, one of the best tools for business management available. We discussed how they simplify the work of departments like customer service, supply chain management, data security with a high degree of flexibility and scalability. As soon as you implement an ERP to manage your daily operations, you’ll be pleased as the benefits and increase in capacity and scalability come to bear.
We want to help you to empower your business, that’s why we partnered with Netprofitxl to bring you the best open-source ERP software. Go to get.netprofitxl.ca to schedule a demo
