5 Signs Manufacturing Companies Should Employ ERP

We live in an age of cut-throat competition. And if you still rely on paper documents and traditional work-processes to maintain your business, you will reach nowhere. You are paving your way to being non-existent in the times to come. Embracing technology and adopting digital methods to conduct business is the need of the hour. The recent COVID-19 outbreak has virtually cash-strapped businesses that failed to make the move. This only shows that businesses that don’t realize the importance of technology will eventually be left behind.

ERP systems

As far as manufacturing companies are concerned, one of the most formidable and important software that they should implement is ERP system software. It has multi arrayed benefits that range from maintaining good relationships with vendors and customers, speeding up manufacturing speed, reconciling financial data, forecasting sales demands, and many more. A manufacturing company cannot conceive of moving ahead in the competition and emerge as an industry leader without ERP systems.

The following article discusses 5 signs that indicate it’s the right time to employ an ERP system in your manufacturing company.

1. Problems in production scheduling

If you encounter problems in scheduling production activities, then you need an ERP system. Some of the production scheduling activities are as defined below:

  1. You possess no/less information about the availability of labor in your manufacturing facility.
  2. You neither have enough knowledge about the availability of raw materials nor do you know when to place an order.
  3. There is no one to schedule manufacturing activity taking various factors – market demand, sales forecasts, stock levels, and cost price of raw materials – into consideration.
  4. There is no one to take control of fluctuation in demand, adhere to delivery dates, and reduce wastage.

If any/all of the above factors are relevant for you, then you need an ERP system. They have fully integrated Master Production Planning (MRP) that helps synchronize manufacturing activities.

2. Problems with inventory tracking

Are you facing problems tracking your inventory levels? If yes, then it’s a clear sign that you need a manufacturing ERP system.

Having low levels of inventory can impede prototyping services and halt manufacturing lines. It can also lead to a rise in shipping costs and deny you from achieving your preset production level. On the contrary, if you have excess inventory in your warehouse, you will need to have more space to store it and hence pay extra rent. Also, if the inventory is kept unused for a relatively long time, it may get damaged or outdated.

This is where manufacturing ERP plays a role. It is loaded with features such as inventory tracking, Materials Requirement Planning (MRP), and Bill of Material (BOM) that provide real-time inventory levels, calculate materials required for manufacturing products and cost levied.

3. Problems with vendors

Manufacturing and supply chain are interdependent fields. Think of a scenario where you have employed skilled workers, implemented the latest technology, and are government compliant but you haven’t received the raw materials from the vendor yet. Can you run your factory? No. The current COVID-19 pandemic has made the issue of finding suitable vendors even more troublesome. When the government has divided the country into 3 zones – Red, Orange, and Green – those vendors that operated out of the red zone have shut down. What could you have done if your vendor was operating out of the red zone?

This is where ERP systems come as a savior. They maintain a long list of secondary vendors based on set parameters – the cost of material, quality of material, delivery time, etc. – so that you have enough of them to fall on in case your primary vendor is unavailable.

4. Problems with security

Protecting business-critical information is always the highest priority for any company. This is because if important documents/files are leaked, a business not only puts its employees’ personal information at risk but also has to spend a huge amount to recover the stolen data. All in all, the business loses its competitive advantage. Recently, Cognizant faced a major ransomware attack. It’s anticipated that the IT giant will face a loss of $50 million to $70 million.

ERP software can help you avoid such attacks. It does this by creating intranets and extranets. The intranet is the web of data that can be used to share files and documents between the employees of the company. It excludes other entities such as vendors, suppliers, distributors, customers, etc. On the other hand, the extranet is the web of data that allows employees of a company to share files and documents with external entities such as vendors, suppliers, distributors, and customers. Thus business-critical information is kept intact and doesn’t leak outside.

5. Problems with sales forecasting and market research

What factors do you keep in mind before manufacturing products? Do you find out which products are in high demand? Do you conduct first-hand market research for knowing what customers are looking for? Do you employ statistical analysis for determining the sales forecast for a particular product? An ERP software has inbuilt systems that will enable you to notice the change in trends and prioritize the manufacturing of such products that have the highest salability.

ERP systems are a must for any manufacturing company. The synchronize production activities, increase manufacturing speed, help maintain good relations with customers, provide safe IT systems, and forecast sales. With ERP technology at its helm, a business can increase its productivity substantially and clock greater profits.

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