3 Benefits of ERP in the Manufacturing Industry You Never Considered

by:
on November 15, 2018

A famous parable describes several blind men inspecting different parts of an elephant—one feels the sharp tusks, one rubs the rough skin, another identifies four sturdy legs. The conclusions they come to, as you may expect, do not match reality.

Six Blind Men Inspect An Elephant

Six blind men inspect an elephant (Source)

Consider your manufacturing business as the elephant. Without a way to view the entire beast, how could you possibly make the best decisions?

An enterprise resource planning (ERP) system brings all these different perspectives and data sources together for a real, holistic view of the operation. This way, you can make decisions knowing how its effects will ripple throughout the company.

Manufacturing managers who understand how seemingly unrelated features of an ERP impact things like visibility, productivity and safety can make informed decisions based on the entire business’s operations.

Forecast Production Demand With CRM

The market for customer relationship management (CRM) software has exploded to become the largest software segment in the world (full content available to Gartner clients). Millions use CRM software every day to track customers and methodically move them toward a sale. That process creates tons of valuable data manufacturers can leverage.

CRM analytics, shown here in amoCRM, provides sales data you need to make demand forecasts (Source)
 

If you adopt a traditional ERP or piece one together for a postmodern approach, it should include some CRM functionality, whether you’re a B2B or B2C company. Those transactions build up over time, and you can easily collect data to illustrate important KPIs, such as:

  • Historical sales and any trends they reveal for different seasons or for a particular product.
  • Historical trends for vendors and suppliers regarding their reliability and flexibility.
  • Historical machine availability and known bottlenecks can be factored in for a more accurate estimate of production capabilities.

As customer expectations and the supply chain itself grow more complex, companies look forward by forecasting to get a jump on anticipated shifts.

Example Use Case for CRM

Review the past two to three years of sales data for a particular product or line of products in the CRM. Even if the sales trends vary over time, analytics features in an ERP can show you a trend line for an average increase in sales over a predetermined period.

If a popular product shows a steady average increase of 2 percent each quarter, for example, you can forecast that it will likely continue next quarter. Based on that prediction, managers can schedule a proportional increase in production to ensure they can meet demand next quarter.

Minimize Delays Using Supply Chain Visibility With SCM

Production is no island. Each part of the supply chain impacts the others, and late deliveries of raw materials or subcomponents will push back your schedules. The best way to avoid these costly delays is to have transparency into the whole supply chain.

Vendor management tools are critical to effective supply chain management, showing you the reliability and costs of purchasing materials from a list of available vendors. Even a very reliable vendor may not be the most cost effective.


Image 1: Halo offers a view of the supply chain with inventory and supplier dashboards
Image 2: Freightview is a transportation system for fleets; an ERP can integrate this type of data to monitor shipments in real time

These features also help you connect with new suppliers by creating requests for information to identify vendors who would be viable alternatives. This capability, coupled with forecasting, drastically decreases your chances of being caught off guard by delays or supply chain bottlenecks.

Example Use Case for SCM

Let’s say you’ve partnered with a third party for distribution of your product to avoid the overhead of managing a fleet. Smart move, but when deliveries are late or missing items, customers are likely to blame your company instead of the driver.

Customers are increasingly sensitive to delivery issues, and consistent customer satisfaction keeps them coming back. Integrate the transportation data into your ERP’s supply chain module and set up alerts for any anticipated delays.

Even if you’re unable to find an alternative distributor, it’s effective to notify customers ahead of time to prevent unpleasant surprises that result in negative reviews or lost business.

Increase Employee Training and Safety With HR

Satisfied employees are productive employees. Human resources (HR) software can help you handle critical tasks of managing payroll and benefits, but also creates opportunities for new skill development and safety training.

As a manufacturer, you know how a safety incident can impact your company—potential loss of life and thousands of dollars in direct and indirect costs. By creating injury prevention initiatives, manufacturers can see a return of two to six times their investment.

Many ERPs include HR and learning management features so management can create courses to address site-specific safety concerns, then track completion for each worker to prove compliance and reduce incidents.

Docebo LMS lets you build training courses for safety compliance and processes for maintenance and operating machinery, then track the progress of employees (Source)
 

A safe workplace is non-negotiable, but a highly capable, upwardly mobile workforce has a huge impact on productivity. The same functionality can be used to create continuous training courses for specific production processes or expectations for new roles.

Hiring capable workers for your manufacturing floor is a challenge, and turnover is actually nearing a record high. Retaining and investing in your valuable workforce keeps productivity at max.

Mentoring, coaching, internships, career development, tuition reimbursement, motivational speakers or volunteering opportunities are all valuable methods to keep your best workers. They also ensure that employees retain important knowledge that helps them become more efficient.

Example Use Case for HR

Create (at least) these three HR components to engage employees during pivotal career points:

  • Day one onboarding: This includes communication through email or an intranet portal including start date and time, address and a contact who they can check in with when they arrive.
  • Employee feedback and appraisals: Solicit anonymous and direct feedback from your workers about working conditions, management and coworkers, as well as scheduled assessments on performance.
  • Continuous learning opportunities: Employees can practice required skills, learn new ones when production processes shift or prepare for new roles.

Everyone wants to feel useful at work, and these HR functions keep employees engaged and loyal because they show that the company values them and is willing to invest in their continued growth.

OK! I’m Ready to Look at ERPs

Perhaps you’ve never considered these less obvious benefits of an ERP, and they could very well be the information to convince your company that adopting one would do much more than just boost production and reduce costs.

Before you begin evaluating systems, gather the leaders from each department and:

  1. Determine your business goals and come to an agreement about the specific features of an ERP contributes.
  2. Define your company structure so the impact and benefit of such a comprehensive new technology for every facet of the business are understood ahead of time.
  3. Understand your data sources to estimate the volume and format of incoming information. Knowing this ahead of an implementation can make it a smoother experience.

Finally, we can significantly reduce your time searching for the best ERP. In addition to our list of more than 150 systems and user reviews, our software advisors can walk you through the selection process based on your specific needs and return a shortlist of vendors in 15 minutes or less. Call (844) 680-2046 to get started.

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