Why manufacturers need to seriously consider ERP


There is one thing you can be sure of in this world, and that is whatever you (the consumer) buy, it has gone through some sort of a manufacturing process. As far back as anyone can remember, people have made things. Even as long ago as the Ceramic Neolithic period, 6500-4500bc, when the Aztecs created the wheel!

Well, things within the world of manufacturing have changed drastically since then. Making one wheel in those days, I imagine, would have taken a lot of time and physical effort to even get a half decent shaped disc of wood to use as a pottery wheel or secured to a cart. Times have certainly changed and consumers are demanding more products with improved designs, faster delivery times and for as little money as possible.

Therefore, manufacturers, whether discrete or process, need to have much more control over their business processes and operations to be able to meet consumer demands. This is where ERP (Enterprise Resource Planning) comes in.

A BRIEF HISTORY OF ERP

ERP was developed in the 1970s but back then it was referred to as MRP (Material Requirements Planning). It was only used to calculate the precise amount of material required, the timeframe of the production and to calculate the number of items required. It then evolved into MRPII when manufacturers realised that they also needed details of capacity planning, shop floor data capture and production scheduling to better analyse performance, improve processes and achieve greater efficiency.

A further development on from MRPII was the birth of ERP. Companies wanted to manage all business functions using one single system.  In addition to measuring the amount of material or ingredients they needed to make the end product, they also wanted to analyse this against company profitability and customer satisfaction. These days, with many businesses trading all over the world, there is also a need to incorporate the principles of supply chain management and integration with online procurement.

But that’s enough about the past, and here endeth the history lesson, it’s time to focus on the future and the real question that I’m sure you want the answer to.

WHAT ADVANTAGE WILL MY COMPANY GAIN FROM INVESTING IN ERP?

Here are a number of reasons why every manufacturing business needs to be using an ERP system.  Every business is different so the reasons to buy ERP will vary. However, in general, ERP can help you to achieve the following:

  • Increase communication across the company. Integration of department functions, such as financials, production, inventory, customer service, reporting and HR, allows everyone to work to the same standards and deliver the same service levels.
  • Improve business performance. ERP will streamline operations by automating manufacturing processes, providing better visibility across all aspects of operations, from order entry and production, to warehouse management and final delivery.
  • Boost manufacturing efficiency. By using an ERP system, you are able to manage production at every stage of your operation, including bill of materials, scheduling, supply planning, production orders, and capacity planning.
  • Simplify manufacturing processes. If you are a business that is growing, you will benefit from rapid visibility of work-in-progress and order-by-order workflow, providing you with costs at all stages of the manufacturing process.
  • Enhanced customer satisfaction. This is achieved due to the flexible processes and integrated information available within an ERP system, which ensures that promises to customers are kept, last minute orders are responded to and delivered quickly, and new opportunities are realised and acted upon much faster. 
  • Improve tracking methods. Depending on the ERP software you are using, you should be able to automate the generation and tracking of product serial numbers.
  • Develop a wider market. ERP will allow your business to trade effectively with partners across the world. The simple use of the system through a web browser will allow you to share your catalogues, shipment orders and delivery dates.

So, if you are a manufacturing business and want to increase efficiency, reduce costs and improve your customer service, you need to consider implementing an ERP system.

Find out more about how Microsoft Dynamics NAV ERP could help your business.

Article written by Mark Blackmore, Head of Telemarketing at QBS Group

 


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