What is Manufacturing ERP?

What is Manufacturing ERP?

Manufacturing ERP software, also referred to as an MRP system, have been developed to improve the performance and efficiency of operations in manufacturing firms. They are one of the major aspects of resource management, procedures, and information management, increasing efficiency and growth of manufacturing companies. 

According to Oracle NetSuite, manufacturing companies are the number one users of ERP software, and manufacturers represent the largest portion, at 47% of companies looking to purchase ERP systems. With the advancement in technology, modern manufacturing ERP systems offer flexible solutions that mesh well with a wide range of business processes. Together, these form a complete business management platform that provides comprehensive solutions to managing different aspects of manufacturing operations.

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How does manufacturing ERP software work?

Source: Reveal Embedded Analytics

A manufacturing ERP (Enterprise Resource Planning) system functions as a holistic approach that bridges databases and application systems within a manufacturing organization. Integrating ERP solutions can help organizations move away from manual business processes, thus creating a unified platform that integrates the company’s daily operations and digitizes core functions of the organization, like sales, purchases, inventory control, and production. Understanding how manufacturing ERP software works entails exploring its key modules and functionalities:

Inventory Management:

ERP software for manufacturing provides advanced inventory management functionality for real-time tracking of inventory status, availability, and location of products or materials. It detects shortages and fulfills them in advance to prevent disruptions in production processes.

Business Intelligence:

ERP software provides access to intelligent business dashboards presenting daily and weekly data such as sales orders, purchases, invoices, and more. Such insights allow monitoring of growth in each operational function and enable informed decision-making.

Transactions:

The manufacturing ERP software simplifies the entire accounting process. It allows for instant issuance and monitoring of all transactions—the transparency of transactional data results in better operational Visibility and efficiency.

Production Scheduling:

The embedded advanced planning and scheduling features of the ERP are used for resource manner evaluation along the production pipeline. Manufacturers can achieve greater productivity and avoid downtime by improving their scheduling systems.

Quality Testing and Compliance:

Modules within ERP software are responsible for quality testing and compliance, assuring the quality of products per customer specifications and regulatory standards. Through the identification of quality issues, manufacturers maintain product integrity, cost savings and customer satisfaction.

CRM Integration:

ERP systems in manufacturing usually merge customer relationship management (CRM) features, giving management a complete picture of the client’s activities as well as the sales process. This integration improves customer service as well as support functionalities, thus enhancing customer relationships.

Why ERP Software is Essential in Manufacturing?

The manufacturing ERP software is a managerial tool that ensures manufacturing enterprises run effectively under it. These systems ensure the efficient use of resources, which prevents unnecessary costs while maintaining quality and performance levels. The manufacturing management software also lets the manufacturers have a bird’s eye view of the key points, which include monitoring the shop floor operations as well as the supply chain and inventory planning. The implementation of ERP software into manufacturing procedures enables the best utilization of resources, which leads to rapid business development and profitability.

Who needs manufacturing ERP?

Manufacturing ERP is necessary for all businesses, regardless of the sector or size, that are involved in some manufacturing activities. Here’s how you know who needs Manufacturing ERP for manufacturing here:

  • Mid-sized Companies: These mid-sized manufacturing companies have to face increasing complexity in their operations as they grow. For manufacturing companies, ERP is targeted towards their requirements through pre-built reports, quick implementation, and industry best practices in all their business processes. Features like inventory management, production scheduling and financial management offer mid-sized companies a chance to upgrade their operations, increase their productivity and retain their competitiveness in the market.
  • Large Enterprises: Multinational giants with larger operations need well-developed and scalable ERP software to coordinate multiple divisions, complex supply chains and large-scale manufacturing processes in their business units. ERP systems developed specifically for large companies that specialize in manufacturing usually have features such as artificial intelligence, machine learning, and analytics that enhance intelligent automation and data-driven processes. These solutions can be provisioned on-premise, in the cloud, or a hybrid environment, providing flexibility and customization to meet the specific requirements of the business.

What are the common manufacturing ERP features?

The manufacturing-specific ERP (Enterprise Resource Planning) systems cover a broad spectrum of features oriented to the individual needs of manufacturing companies. A smooth operating environment, improved efficiency, and better decision-making among the various functions of the various manufacturing business processes characterize these features. Here are some common features found in Manufacturing ERP systems:

Bill of Materials (BOM) Management: This feature makes it feasible for companies to design, upgrade, and track the requirements for the parts and materials needed in the product’s manufacturing process. It involves the managing of multiple BOM definitions, revision control, and tracking of changes so that obsolete or out-of-date information can be avoided.

Inventory Management: Supply chain management enables manufacturers to monitor the movement of their raw materials, WIP, and finished goods through all stages of the production cycle. It involves functions like stock-keeping monitoring, warehouse management, inventory tracking, material replenishment planning and inventory evaluation.

Master Production Scheduling (MPS): The production planning function of MPS helps manufacturers set up detailed production schedules using their demand forecasts, resource availability, and production capacities. It enables production plan optimization, which is customer-demand-oriented and cost-and-efficiency integrated.

Material Requirements Planning (MRP): The MRP function performs material and components calculations by considering the production schedules, BOMs, and inventory levels between output and input. It also facilitates materials availability when required to prevent production delays and shortages.

Advanced Planning & Scheduling (APS): The APS functionalities make it possible for manufacturers to plan and schedule supply processes to optimize production procedures, reduce lead times, and improve resource utilization. It has functions of finite capacity scheduling, what-if analyzing, and scenario planning.

Production Management: The production management features allow manufacturers to monitor and control the entire production process in real-time. It incorporates functions such as job order management, shop floor control, labor tracking and performance reporting.

Automated Data Collection: Through automation, industries can capture real-time data from production equipment, sensors and other sources. It ensures the precision of data collection, eliminates the risk of manual mistakes, and offers details on the performance and efficiency of the manufacturing system.

How do you determine if your company is ready for manufacturing ERP?

Let us take a look at some key considerations to help determine if your company is ready for Manufacturing ERP:

  • Growth Trajectory: Think about your business’s growth history and how and where you plan to expand in future. Suppose your company is experiencing significant growth and is planning to scale operations. In that case, the Manufacturing ERP system can provide the scalability and flexibility required to handle the increased demand, manage a larger volume of data, and support more users and locations.
  • Resource Availability: Assess the resources available, including financial resources, human resources and time required to implement and maintain a Manufacturing ERP system. An initial investment for implementing the ERP is needed to purchase software, hardware, training, and implementation services. Also, the continuous support and maintenance that are provided are needed to ensure the system functions at its best and has a long-lasting performance.
  • Data Integrity and Integration: Assess the statistics and accessibility integrity of your current data through different systems and departments. ERP in manufacturing requires having the data from different sources like sales, inventory, production, finance, and procurement synchronized and accurate. When your current systems have data silos, inconsistencies, and manual processes, ERP deployment will centralize the data and make the information flow more seamless.
  • Process Standardization: Think of the level of process standardization and documentation within your organization. Implementation of manufacturing ERP requires the standardization of major processes like inventory management, production scheduling, procurement, quality control and other core ones. In case your company has no standardized processes or heavily depends on paper-based workflows, ERP is a solution to standardize processes, enforce best practices and improve operational efficiency.
  • Change Management Readiness: Estimate the level of preparedness of your organization to change and whether it can adjust to the new technologies and workflows. An ERP system in a Manufacturing context is often implemented in the form of major organizational changes such as reengineering, training, and cultural adaptation. Maintain a change management strategy ready to resolve resistance to change, obtain employee involvement, and smoothly guide your company to the new system.
  • Strategic Alignment:
  1. Ensure that the implementation of the Manufacturing ERP Solution is linked with your organization’s strategic business plans and objectives.
  2. Find out what impact ERP can have on your business and how it can help you achieve your objectives, obtain a competitive advantage, and support growth and innovation.
  3. Think about ERP from a long-term perspective, including operational cost reduction, increased productivity, enhanced customer delight, and enhanced strategic understanding while evaluating return on investment (ROI).

What are the benefits of manufacturing ERP software? 

Source: Sage Software Solutions

Let’s take an overview of the key benefits associated with the implementation of manufacturing ERP software:

Enhanced Productivity and Operational Efficiency: 

Manufacturing ERP’s integration of core modules gives a smooth transaction flow, from order creation to bill generation. This simplification of the processes thus results in increased productivity and operational efficiency while eliminating human errors as well as delays.

360-degree Visibility:

Manufacturing-ERP software creates a single data source within a centralized database, providing 360-degree Visibility on cross-functional manufacturing processes. This Visibility enables better decisions by presenting a holistic picture of the operations.

Agility and Collaboration:

The process of manufacturing ERP software creates common control, promoting better business unit cooperation. Such flexibility is vital for the dynamically evolving corporate needs and quick responses to market conditions.

Risk Mitigation:

For ERP related to the manufacturing industry, the correct rules are provided to detect, forecast, and avert business risks in time. Managers can actually predict and minimize possible risks and disruptions by giving insights into the challenges beforehand.

Regulatory Compliance:

Managing the ERP software systems in a manufacturing company ensures consistent documentation and a record of the system files, which trace the records to allow compliance with the regulatory requirements.

Increased ROI (Return on Investment): 

An effective ERP in the manufacturing industry reduces cost, increases the productivity of employees, and thus results in the highest returns on investment.

Pick the Best Manufacturing ERP Software Implementation Partner

When deciding on the most suitable manufacturing ERP software, a number of factors are to be considered. The ideal choice hinges on a software solution designed specifically for manufacturing companies and trusted by industry peers. Your organization’s size, functions, and specific needs will ultimately determine which manufacturing ERP software suits you best. Evaluating your options involves assessing how well the system aligns with your operational model and integrates with existing business processes.

One notable partner in terms of ERP training and change management is Onboard. With a philosophy of prioritizing people over technology, Onboard recognizes that change is experienced by individuals within organizations, not just systems. We specialize in supporting digital transformations, training initiatives, and change management processes during the implementation or upgrade of prominent ERP systems such as Microsoft Dynamics 365, SAP S/4HANA, and Oracle Cloud ERP.

Here’s an overview of Onboard’s offerings and expertise:

People First, Technology Second:

Onboard understands that successful ERP implementation hinges on the readiness and acceptance of the people within an organization. Our approach emphasizes supporting individuals through the process of change, ensuring smooth transitions and effective utilization of new systems.

Comprehensive Services:

Onboard’s services encompass various aspects of business management, ERP training and change management, including:

  • Training Phase Planning: Developing customized training plans and strategies tailored to the specific needs of each client.
  • Classroom/Virtual Training Delivery: Conducting ERP end-user training sessions in diverse formats to accommodate different learning styles and preferences.
  • Training Material Development: Creating customized training materials to facilitate effective knowledge transfer and skill development.
  • Project Team Training: Offering generic key user ERP training courses to equip project teams with the necessary skills and knowledge.

By partnering with specialists like Onboard, manufacturing companies can navigate the complexities of ERP implementation with confidence and achieve sustainable business transformation. Get in touch for more details.

Common Questions on What is Manufacturing ERP

Q1. What are the primary functions of Manufacturing ERP software?

Manufacturing ERP software serves to integrate and streamline various operations within a manufacturing environment, including production planning, inventory management, resource allocation, project management, and order processing. It provides a centralized platform for managing critical processes and data across the manufacturing lifecycle.

Q2. How does Manufacturing ERP software differ from traditional manufacturing management systems?

Unlike traditional manufacturing management systems, Manufacturing ERP software offers comprehensive integration of business processes across departments. It provides real-time Visibility into operations, enables data-driven decision-making, and supports collaboration among different functional areas.

Q3. What are the key benefits of implementing Manufacturing ERP software?

Implementing Manufacturing ERP software offers several benefits, including increased operational efficiency, improved inventory management, enhanced productivity, better quality control, streamlined workflows, and greater visibility into core business processes.

Q4. How does Manufacturing ERP software help in resource planning and allocation?

Manufacturing ERP software enables effective resource planning and allocation by providing insights into production capacities, inventory levels, and demand forecasts. It helps optimize resource utilization, allocate workforce and equipment efficiently, and minimize production bottlenecks.

Q5. Can Manufacturing ERP software adapt to the unique needs of different manufacturing industries?

Yes, modern Manufacturing ERP software solutions are designed to be flexible and customizable, allowing manufacturing businesses to tailor the software to their specific industry requirements, whether it’s discrete manufacturing, process manufacturing, or mixed-mode manufacturing.

Q6. What challenges should companies anticipate during the implementation of Manufacturing ERP software?

Common challenges during the implementation of Manufacturing ERP software include data migration issues, resistance to change among employees, integration complexities with existing systems, training requirements, and potential disruptions to daily business operations.

Q7. How does Manufacturing ERP software facilitate compliance with regulatory standards and industry requirements?

Manufacturing ERP software, also referred to as an MRP system, helps organizations maintain compliance with regulatory standards and industry requirements by enabling accurate record-keeping, traceability of products, and adherence to all quality management and control measures. It provides audit trails, documentation management, and reporting capabilities to support regulatory compliance efforts.

Q8. What role does cloud-based technology play in modern Manufacturing ERP software solutions?

Cloud technology has revolutionized Manufacturing ERP software by offering scalability, accessibility, and cost-effectiveness. Cloud-based ERP solutions allow businesses to access their systems from anywhere, facilitate seamless collaboration, and provide automatic updates and data backups to ensure system reliability and security.

Jordan Locke
Jordan Locke
Service and Delivery Manager

While Jordan was studying International Business and Politics in South Korea, he gained his first experience of teaching while working as an English teacher at the university. This is where he gained an insight into how valuable to the learner it can be to impart knowledge in a way thatis simple and accessible. He recognised these skills could be transferable to business systems training and hasn't looked back. Jordan has progressed with the business from developing and delivering a variety of training solutions to now taking on the role of Service and Delivery Manager, overseeing the operations of the business.

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