10 ways to get the most from your manufacturing ERP
The benefits of ERP in the manufacturing industry are enormous - if you use the software correctly.
All too often, companies splash out on advanced manufacturing software but - due to inexperience and/or a poorly-planned implementation - fail to realize their potential to streamline operations, cut costs and keep customers happier.
This guide will help you avoid common pitfalls and really get the most from your manufacturing ERP modules, turning it from back-office bit of software to a key strategic asset. We’ll cover:
- Going mobile to cut labor costs
- Cutting cycle time through customization
- Automating scheduling and on-time delivery
- Automating your purchasing activities
- Using real-time ERP data to quote quickly and accurately
- Maintaining accurate inventory
- Optimizing your ERP for customer service
- Finding an end-to-end solution to suit your company
- Phasing out legacy paper systems post implementation
- Using your ERP to monitor your business health
To compete globally, especially for North American or European manufacturers, labor costs must be kept to an absolute minimum.
Save on direct and indirect labor costs by going mobile.
Manufacturing ERPs can leverage real-time data on the shop floor using touchscreen graphical interfaces and bar-coded work orders. You can use wireless technology to track raw materials, inventory, tools and finished product from anywhere in your production plant on a mobile device.
This allows you to:
- Speed up setup times
- Streamline key workflows
- Track and measure employee performance
- Reduce indirect labor and redtime
Mobile materials management eliminates the need to record material handling on paper and then manually transfer it to the computer. Use wireless technology to track raw materials, inventory, tools and finished product from anywhere in your production plant using a handheld wireless device. Give your employees the tools to do the best job possible.
Competing means having a short cycle time and compressing the time between the sequences in your manufacturing.
Some companies have been able to cut cycle time by up to 50% by automating processes and leveraging flex schedules within their manufacturing ERP.
For example, the ability to access and analyze capacity data by work center and individual machine allows for sequential scheduling of like jobs to reduce setup and breakdown times. And since every company runs their business a little differently, automation requires a software package that can be customized to your needs.
When selecting a new manufacturing ERP, look for:
- Ability to modify existing screens for enhanced functionality and user capabilities.
- Ability to create custom screens for specific user groups for improved data visibility
Lean manufacturers do it automatically, as it saves time and frees up your human capital to spend more time calling customers, creating new ideas, and proactively managing the business.
Since every manufacturer has different processes, machines, and philosophies, getting increased efficiency from automating your scheduling requires customizing your manufacturing ERP to suit your needs.
Improve customer service – and on-time delivery – by:
- Accurately viewing and scheduling shop resources, outside processes and material requirements while estimating lead times for jobs.
- Using advanced finite/infinite scheduling to create what-if scenarios when moving jobs around to meet customer due-dates.
- Maximizing tools, materials and labor efficiency while offering customers reliable quotes based on real-time data.
The most successful manufacturers rely on automated purchasing so they know when to buy parts and in what quantity. The guessing game disappears, and manufacturers can spend most of their time improving price and delivery, decreasing inventory, and reducing obsolescence.
With the right level of customization, your manufacturing ERP purchasing module can:
- Automatically import and consolidate all work order and inventory information to make smart purchasing decisions with real-time data.
- Easily forecast future purchases based on customer history.
- Instantly see required purchasing actions when entering job changes into the system.
- Save time by managing all purchasing activities from one screen.
The more jobs you can quote and the more accurate those quotes become, the more jobs you win. It’s that simple.
If you are an efficient manufacturer, winning jobs means profit and margin. The most successful and efficient manufacturers take all the guessing out of the quoting process by using an automated system for pricing and quoting anything they are manufacturing.
Make best use of the data collected by your manufacturing ERP modules by using it to inform and automate your quoting process. Here are three sets of data that are particularly useful when it comes to making quoting decisions.
- Quote with confidence by tracking job costs with precision.
- Review comprehensive quoting histories by part number, product or customer.
- Know the estimated versus actual costs and margins for every job that runs through your shop floor.
- Instantly access purchasing data to identify fluctuations and trends in materials prices.
Inventory often represents a black hole for cash flow.
The most efficient manufacturers protect cash flow by knowing their inventory. Moreover, they integrate their inventory with other processes so they can manage it highly efficiently.
This requires a single integrated system that offers all the functionality to keep your production line supplied with the right materials at the right time. From multi-location inventory and history/usage reports to cycle counting and product line reports, material inventory tracking is made easier and more accurate with one point of entry.
A good inventory module in your manufacturing ERP will:
- Track every aspect of your material needs, from detailed inventory data to bill of material (BOM) cost buildups.
- Review and analyze real-time inventory data for accurate management of production materials.
- Integrate your material ordering system with your inventory and usage by setting up automated purchasing based on material requirements, planning functions, and purchase history.
Repeat orders happen when customers are serviced truthfully, quickly and accurately.
When customers call or email to inquire about the status of an order, the last thing they want to hear is “I will have to check on that.”
Use a single integrated system and mobile CRM application to put all the information at the employee’s fingertips so they can instantly answer customer inquiries and resolve problems. This includes:
- Instant access to invoicing, job status, shipments and quoting data in real-time, for all areas of your manufacturing operation.
- Using “what if” scheduling to give customers quick answers when they request job changes or accelerated due dates.
- Helping your customers work more efficiently by safely and securely giving them access to specific data regarding their jobs within your system, perhaps through a customer portal
Maintaining separate payroll, accounting, CRM, inventory control and other discrete programs wastes time and opens the door to inaccurate data.
To avoid this problem, look for a manufacturing ERP that will manage all aspects of your business from quote to cash. Then, data only has to be captured by the system once before all relevant functions have access to it. Avoid time-drains and data inaccuracies by choosing an end-to-end ERP, rather than creating your stack from disparate systems not designed to work together.
An integrated ERP system provides a central organizing hub for all the data required to manufacture your product, get it out the door, and handle the accounts receivable process. It makes all the systems and processes more visible, and puts all employees on the same page at the same time with the same information.
Employees can perform their jobs more efficiently and management can make better-informed, real-time decisions using more comprehensive and extensive data sets.
It’s a little known secret that most manufacturers want to be tree huggers.
Paper on the shop floor is slow. The more paper and spreadsheets on the shop floor, the more hunting, pecking, and lost time. When done right, a manufacturing ERP implementation will phase out a paper-based system due to how much more efficient it can make things.
When done wrong - if you don’t invest in training your users or creating a good change management plan, for example - user engagement with the new system will tail off and they’ll revert back to the Old Ways. So it pays to put the effort in early, otherwise the whole thing will have been a waste of time and money.
Demonstrate how your manufacturing ERP can notify employees which job to run next, or how employees can view real-time dispatch lists on the shop floor. No more asking supervisors for directions or hunting down paperwork - all the information regarding the next job is available at the touch of a button, click of a mouse, or glance at a screen.
Use EDI (electronic data interchange) to electronically receive purchase orders, job changes, job specs and other documents from customers and vendors. The data is automatically populated throughout your system, eliminating the need for manual data entry and paper copies.
A fever is typically an indicator that your body is fighting an infection. If noticed early enough, you can limit the spread of infection and the impact to your day-to-day life.
Healthy manufacturers all require the same awareness in their business. Each of them relies on Key Performance Indicator (KPI) dashboards to get in front of moneymaking opportunities and money-draining challenges before they happen.
Measuring your business health through KPIs enables decision makers to practice evidence-based management, predict future actions and results, eliminate management by fire and encourage changes in thinking and actions through:
- Access to customizable graphs, charts, and reports to reviewed summary and detailed information regarding margins, product lines, sales trends, financial performance, and more
- Creating forecasts based on reliable data rather than gut feel
- Reviewing detailed historical data to determine appropriate product and customer mix
- Analyzing productivity reports to identify opportunities to cut costs and streamline operations
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