Beginner’s Guide to ERP

May 21, 2024

Without an integrated business management system, growing manufacturing businesses can struggle to keep up. Managing increased demand, while also maintaining quality standards and on-time delivery can suddenly feel like an impossible task. This guide addresses some of the common pain points faced by manufacturers during a growth phase, and presents Enterprise Resource Planning (ERP) software designed specifically for manufacturers as the solution. When successfully implemented, an ERP solution can help businesses effectively manage their expanding operations, gain increased throughput, and observe real-time insights into their business performance. Whether you’re grappling with production planning or struggling to meet customer delivery targets, this guide will equip you with the knowledge and tools needed to move your business to the next step.

Is your business ready for an ERP?
If you aren’t sure if your business is ready for an ERP solution, here are some common pain points which might signal that you are:

Too many disconnected business systems and data silos.
Managing multiple disconnected systems for inventory management, production planning, procurement, and job scheduling leads to data duplication, inconsistencies, and inefficiencies. Without a centralized system, up-to-date information takes way too long to access, and it might not be very accurate. A comprehensive ERP solution tailored for manufacturers can solve this problem.

Reliance on slow paper-based processes. 
Operating with manual and paper-based processes for order entry, inventory tracking, and production scheduling is time-consuming and prone to mistakes. Manual data entry increases the risk of delays and inaccuracies, impacting productivity and customer satisfaction. This might have worked when the business was small, but not anymore.

Crummy inventory management. 
Maybe you’re overstocked, or perhaps you’re out of stock. Maybe even both at the same time! Both usually result in increased costs, reduced cash-flow, and sometimes lost sales. Without real-time visibility into current inventory levels and future allocations, manufacturing businesses won’t be prepared to meet customer demand like they should. The right ERP can provide this visibility.

“Shoot-from-the-hip” production-planning and scheduling. 
We routinely hear this as one of the biggest challenges facing precision manufacturers. Inefficient production planning and scheduling processes can lead to production bottlenecks, underutilized resources, and terrible on-time delivery metrics. When managed poorly, this costs the business an absurd amount of money and lost opportunity. Manufacturers need proper coordination between production, procurement, quality, and sales teams in order to meet production requirements and avoid delays. Many ERPs struggle with delivering a comprehensive solution for this, but the right ERP software can make a big difference.

Customer regulatory compliance and traceability. 
In industries with strict regulatory requirements, such as aerospace or medical, ensuring traceability and compliance to regulatory standards is paramount. Without robust traceability capabilities, manufacturers risk non-compliance fines, product recalls, damaged customer relationships, or missed opportunities to serve certain markets. A manufacturing ERP solution with integrated quality management (QMS) capabilities provides a comprehensive solution here. 

Weak job-costing and financial reporting. 
If you’re dealing with inaccurate job-costing information and fragmented financial reporting, it’ll be hard to understand the health of your business, or where to make improvements. This makes it challenging for manufacturers to track production costs, analyze profitability, and make informed business decisions. Without real-time financial insights, businesses lack the visibility needed to optimize profitability. Complex relationships on the shop floor, like how to cost fixtures related to multiple jobs, operators running many machines at once, or jobs with shared setup times, will often stump a traditional ERP. But the right ERP solution for your business will the nuances of your business and present it in a way that can be easily understood and interpreted.

What to look for.
There are many ERP solutions out there. It can be hard to know which one is the right fit for your business. Here are the top three things to look for in a manufacturing ERP solution:

Tailored Functionality.
Don’t suffer with a generic ERP that wasn’t designed for your business. Ensure that the software offers specific functionality tailored to your unique requirements. You might look for features such as integrated quality management,  work order & tooling management, and resource scheduling to streamline your operations.

Scalability and Flexibility. 
Manufacturing businesses are dynamic entities that can change and grow over time. Therefore, it’s essential to choose an ERP system that can scale and adapt to your business’s changing needs. Scalability and flexibility are critical to future-proofing your investment and ensuring long-term success. Too many companies have had to switch ERPs because their needs outgrew the system they initially chose.

User Experience. 
The usability of an ERP plays a significant role in the adoption and success of that ERP within the business. Choose an ERP solution with streamlined workflows that mirror the actual shop-floor process. This also includes role-based features and controls for various departments. This might include features specific to sales, purchasing, production, quality, shipping teams, and shop-floor staff.  

Plan for success.
Not every ERP implementation goes according to plan. Here are three important aspects that will determine the success of your ERP implementation:

Allocate sufficient time and resources.
There can be challenges with ERP implementation when businesses fail to allocate sufficient resources, both in terms of time and personnel. This can lead to delays, dissatisfaction, and a poor ROI on the ERP solution. To avoid this mistake, it’s crucial to conduct a thorough assessment of your organization’s implementation readiness. Engage key team members early in the process, set realistic timelines, and allocate adequate resources for training and support. 

Embrace change management to maximize adoption. 
Too often, manufacturing businesses overlook the importance of change management and user adoption, focusing solely on technical aspects of implementation. As a result, employees may resist the new system, leading to decreased productivity, morale issues, and ultimately, ERP implementation failure. To avoid this mistake, it’s essential to engage employees early in the process, communicate the benefits of the new system, provide comprehensive training and support, and address concerns and feedback proactively. Foster a culture of collaboration while empowering employees to embrace the change.

Align ERP implementation with business objectives. 
If the driving force behind ERP implementation is not aligned with the organization’s goals, it may fail to deliver the expected outcomes. Evaluate how the ERP solution aligns with your business priorities, whether it’s reducing costs, increasing productivity, improving customer service, or expanding into new markets. It’s important to consider the needs of every department.  Don’t let one department, like finance, overshadow the needs of manufacturing and be left with a system with poor operational or quality controls. By aligning ERP strategy with business objectives, you can maximize the value of your investment and drive growth for your manufacturing business.

If you’re on the hunt for a fully-integrated ERP solution designed for manufacturers, consider booking a call with our sales team. We’ve helped 100’s of shops take the next step in driving growth for their business. 

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