ERP systems tie together and define a plethora of these business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a “single source of truth.” For this article, however, we’ve focused on the five most common challenges manufacturers can overcome by implementing ERP software.
Regardless of the number of applications a company implements, there will always be one source of data with an ERP system. Without the use of an ERP, companies spend valuable energy and time pulling together fragmented data from different spreadsheets, accounting sources and sales orders to discover the company’s overall financial position. By implementing a fully integrated ERP system, significant amounts of time can be saved by eliminating dual entry of information and needed to perform data searches in various places.
Manufacturers have to resort to manually entering numbers into spreadsheets when they don’t have an ERP system. The issue with this is producing accurate entries in complex manual entry spreadsheets to keep track of raw material lot numbers used in multiple finished goods and shipped to numerous customers. An ERP system offers both forward and backward lot tracking where information can be accounted for from the beginning of the process to the very end. With a lot traceability feature, quality control and quality assurance are added advantages.
Managing Inventory Levels
When it comes to controlling inventory, it’s important to find a balance between having too much or not enough. Maintaining the right quantities of the correct inventory ensures that a company or organization can meet the demands of its customers. Lead time should be factored in when considering inventory because waiting until your material supply is totally depleted can create problems.
The inventory management application of an ERP system provides manufacturers the transparency and inventory counts necessary for enhanced production planning. Starting with a customer’s sales order, the inventory is accounted for and any shortages are noted immediately. If there are deficiencies, the ERP will then automatically change the status of the inventory order to make it unavailable for any additional sales requests. Other functions involve monitoring item usages and reporting on inventory status.
Accurate Reporting and Accessing Real-Time Data
Leveraging the right reporting capabilities in an ERP system can create a tool for data visibility. Database information is automatically updated in real-time with each transactions throughout the system allowing for optimal accuracy. The data allows you to determine precalculated summaries and target projections. The compiled data in an ERP system can be designed to match a company’s personalized requirements and allows for ease of internal and external distribution of reporting data.
Material Requirements Planning (MRP)
MRP is another part of an integrated ERP system that addresses the challenges of managing resources. MRP is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Production planning utilizes manufacturing capacity and material resources using historical production data and sales forecasting. When implemented properly, MRP reduces cash flow and increases a company’s profitability by calculating the optimum production schedule based on the master production schedule, sales forecasts, inventory status, and open orders.
MRP can also reduce waste by providing information about purchasing the right amount of inventory at the right time, and determines the latest possible time frame to produce goods and purchase raw materials while still meeting customer deadlines. With the use of MRP in an ERP system, modifications to the production schedule can be updated immediately for any changes in orders and/or materials.
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