Manufacturers need the powerful tools available in ERP systems. When ERP systems first appeared on the market, manufacturers were among the first businesses of any kind to use them. Now, the ERP market is thriving, with software constantly being updated and upgraded. There are many possible manufacturing ERP modules to choose from in systems today. The overload of choice can leave some businesses confused about which features are the best fit for their business, that’s why requirements gathering is so crucial. While it’s important to remember that each business will have unique ERP requirements, manufacturers of all kinds should find the four requirements listed below to be of use in the early stages of requirements gathering.
Match the ERP to your business
There are many types of manufacturers and the ERP you choose must match your type of business. There are ERP systems for process and discrete manufacturers as well as make to order or make to stock businesses. Many of the distinctions show up in inventory and work in process modules. A discrete manufacturer will have components made into a product based on a bill of material. Usually, the quantity of a component is a fixed ratio needed to assemble a quantity of the product. A process manufacturer will use a recipe to combine ingredients and processes to yield a loaf of bread. The ingredients might be fixed per the batch and might be variable based on the expected output quantity.
Inventory and work in process are the largest assets in a manufacturer’s balance sheet, so matching the ERP treatment of these assets to the business will help result in accurate financial statements.
Your manufacturing could practice lean to such an extent that WIP is minimized, but you still need a good ERP.
Connect to your customer
Your manufacturing customer pays all the bills, including payroll. Your ERP should help your business maintain the close connections to those customers that will lead to your success. Use the CRM, (customer relationship management) module to track conversations between your business and your customers. Encourage all of your people to record communications, not limited to salespeople. If accounts receivable makes a call to remind the customer that a bill is unpaid, that knowledge can affect the conversation between other parties later the same day.
Manage sales orders, matching them carefully to customer purchase orders. ERP will allow users to know the current production status and predict that an order will be on time when needed by your customer.
ERP helps ensure compliance with customer requirements. If the customer wants a particular PMS color, the product will be finished in exactly that color to meet the requirement.
Flexibility and agility
Manufacturers today must have the ability to react quickly to changes in supply and demand and continue to deliver products on time and profitably. A flooding river on the far side of the globe can change conditions anywhere around the world. A small semiconductor prototype manufacturer might suddenly receive large orders for well-developed products because the usual supplier’s plant is temporarily out of operation due to the flood. A manufacturer that can react to unexpected events with flexibility and agility can satisfy unexpected customer demands and continue to supply their customers when supplies shortages develop.
Manufacturing ERP systems today have powerful analytic engines that we can use to develop executive dashboards and guide users throughout the business to make decisions that will optimize the results for the enterprise. The same analytical tools are useful for ad-hoc analyses of all kinds helping ERP users identify trends and take advantage of opportunities.
These four requirements are the starting points to making sure your ERP fits your business’ needs. Remember, your ERP should help your manufacturing business be at its very best.
Author: Tom Miller - ERPFocus.com