Can an ERP benefit manufacturing?

Access to accurate, overarching and consolidated data is a necessity for manufacturers. If you are considering how you can improve and streamline your manufacturing operations and get the most out of the data held across your software systems, then you should consider an ERP.

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Can an ERP benefit manufacturing?

The answer is yes! Enterprise Resource Planning systems (ERPs) enable a manufacturing business to integrate their operational processes and systems and deliver a higher degree of financial and strategic planning.

The ability to adapt to competitive pressures in changing global markets is a prerequisite for modern businesses, from any industry. With the increasing globalisation of markets, and the complex international supply chain, companies have to work more strategically and in closer partnership with external partners.

As a manufacturer, you will know how out-of-date, incorrect and unnecessary data can impact your efficiency. It can send you in the wrong direction, giving you a false idea of the actual state of play. Poor data can impact how effectively you can provide customer service and damage your brand as a result. An accurate and easy-to-manipulate set of data is your best tool for understanding the real costs of your operations, improving efficiency and making your business more profitable.

ERP for manufacturers

ERP is the term used to describe software solutions and systems that links systems through common information architecture. As the ERP links systems up, information to flow freely between them. The systems they bring together will vary, but are often related to business functions such as:

• Accounting
• Finance
• Sales and distribution
• Human resources
• Materials management
• Stock and stores

Different manufacturing companies have reported different outcomes from their ERP implementation. This is not surprising since different companies embark on ERPs with different prime motivators. The size of the business and the complexity of the existing information infrastructure also play a part in determining the outcome and benefits of the ERP for the manufacturer.

Examples of manufacturers using ERPs

Here are some great examples of how Australian and international manufactures have used ERPs to their benefit.

Alcoa

Alcoa are manufacturers that produce bauxite and other materials needed to make aluminum. The company deployed Workday to improve efficiency and enhance forecasting. Their ERP encompassed inventory, sales, accounts and other financial components. This meant that reports about demand and sales were much easier to access through the single source of truth model. The ability to consider future scenarios and trends made it much easier for them to manage uncertainties and plan for risk and worst-case scenarios. Alcoa reported an x4 improvement in demand planning and a 50% reduction in time taken for planning and reporting cycles.

Kurrajong Kitchen

Established in 1993, Kurrajong Kitchen supplies flatbreads to some of Australia's largest supermarkets as well as through the Virgin Airline network. For many years they used clunky and separate systems for accounting, order control and stock. As production demand increased, they needed to reduce the amount of manual data entry that was happening. They also needed to combine information related to manufacturing, distribution and stock in a central repository. They identified that improvements were also needed to customer experience, online presence, procurement and shipping.

An ERP implementation helped them improve efficiencies and allowed them to expand their business. The resulting system also meant they could continue demonstrating compliance with the ever-changing food and beverage standards. They also reported significantly less waste through tighter inventory control.

Guru labels

Printing company Guru Labels used Sage to replace several single software solutions. Guru Labels design and produce self-adhesive labels sold to traders, government and major retailers around the country. They decided to use an ERP because they wanted to see improvements across the board and through all business functions. They needed an ERP that would help them improve customer experience, including through quoting, invoicing and delivery.

Guru Labels reported positive outcomes through their ERP. Their ERP enabled them to use data related to the manufacturing process in direct comparison and relation to other data sets, including inventory, sales, CRM and accounts payable. On important feature was a stock control alert system related to forecasting. This eliminated the possibility of running out of stock.

Threlfall Packaging

The laws and regulations around food packaging have been changing, in light of the need for improved environmental outcomes across the food and beverage industry. Threlfall Packaging in Victoria used an ERP tool to address their longstanding issues with the double handling of data across antiquated systems that had left them with inefficient stock control and use processes. Threlfall used MYOB Advanced Business to take control of accounting, distribution, stock and payroll and maintain compliance. The system even improved the effectiveness of their marketing as they could better track the values of sales promotions and codes.

Emma and Tom's

Popular purveyors of fresh juices, Emma and Tom's used an ERP to make major changes to their business operations. They chose a small business-specific ERP to improve their processes for handling supply chain challenges, along with order management, sales, warehousing and inventory management. In many cases, just like for Emma and Tom's, businesses want an ERP solution that will be able to effectively gather data from existing software. They elected to replace MYOB with Oracle Netsuite to bring their distribution process in-house and better manage their 3,500 customers. The deployment created the opportunity to expand that number with distribution around the world.

Waterco

This Aussie company is a leading manufacture in the water treatment, aquaculture and pool & spa industries, with an extensive customer base in more than forty countries. Waterco integrated the Epicor ERP system with Pimcore , a solution that has outstanding product presentation and management capacity. The combination of these tools led to improved customer experience across their multiple websites and a reduction in time spend updating pages. Read more about what this combination helped Waterco achieve here.

Assa Abloy

Assa Abloy is a major manufacturer of door components, with many subsidiaries making up the company around the world. They used Infor as their ERP to drive efficiencies, especially in their e-commerce environment. The ERP created opportunities for a consistent sales portal for customers, with price management and improved their capacity to handle online orders with in-store collection. Rolling out the ERP across the multiple companies led to increased efficiencies through easy to implement process tools.

 

Innovation in manufacturing operations

As ERPs have evolved and expanded over the last two decades, many industry-specific ERP tools have emerged. There are several ERP systems designed specifically for manufacturers. They are often referred to as manufacturing resource planning software (MRP) tools.

Discrete manufacturers, who create specific and complete products, have specific challenges and requirements to be able to handle supply chain issues and always changing regulations. Manufacturers of fabricated metal, industrial machinery and instruments, in particular, need a software solution that can respond to the unique complexities of the business.

 

 

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Related Questions

What will ERP cost?

How much have you got to spend? There is no single figure for what an ERP will, or should cost. Variables such as number of users and numbers of systems to span will have an impact on what you pay. Some software solutions are available as open-source products, meaning they can be accessed and used for free in some cases. The decision to go for on-premises or cloud based solution can also impact what you will pay. According to this 2022 report, the average cost for an ERP tool is around $9,000 per user.

 

What questions should manufacturers ask before choosing an ERP?

The choices can seem daunting. These questions will prompt your thinking about your needs and goals for an ERP.

• What is the key driver or motivator for implementation?
  • Manufacturing companies may implement an ERP for a variety of reasons, most commonly including a need to replace outdated systems, simplification of processes, cost benefits, improved communication, and improved links to global partners and to achieve competitive advantage.
• To what extend is a return on investment considered necessary?
  • Most manufacturers expect a positive return in in investment in ERP, however for others it is less critical and the benefits expected vary widely. Other strategic goals for manufactures in ERPs may include improved cash flow, improved data handling for use in decision making, improved order management, reduced time to market and improved interactions with suppliers, stakeholders and customers.
• What are the scope and range of exiting software solutions and IT infrastructure?
  • Manufacturing companies may have as many as ten or twenty separate software solutions to manage business components and activities. Businesses with multiple site and locations may also need something unique when compared to single-site factories and warehouses.
• What implementation strategies are realistic and achievable?
  • Some manufacturing companies may elect to carry out a complete, all-at-once implementation while others adopt ERP modules and components more gradually.
• What degree of customisation is likely to be required?
  • There is always likely to need to be some customisation required. Some manufacturers will elect for significant customisation which adds time and cost to implementation but results in a more robust and tailored ERP solution. Larger manufacturers have been found to customise more than smaller and medium size businesses.