How Can ERP Help Navigate Manufacturing Material Shortages?
Organizations usually try to find a balance between over stock and under stock. They want to have just enough stock of raw materials for flawless production.
How can they balance It right? And how can an ERP help them? Explore here in the blog.
The world has been passing through unprecedented events and incidences for last 2-3 years. Covid-19 Pandemic, recurrence of waves, Russian-Ukraine war, tension in different pockets of the globe, unlikely weather conditions etc.
All these resulted in sudden surge in global demand. This surge in demand is shackled by shortage of raw material, turning the boon for manufacturers into a curse.
Through this blog we will delve ways manufacturers can combat material shortages with the help of manufacturing ERP software and convert the demand into a real boon for themselves.
In this blog post:
Why Material Shortage Happen:
Material shortage happens due to various reasons.?It may be due to factors in control or due to factors beyond control.
This can be due to poor calculation of requirement, or due to delay in supplies. Whatever may be the reason, the shortage increases blood pressure of manufacturers.
Usually, below are some common reasons of material shortage:?
Supply chain disruption – This may arise due to issues at suppliers’ end, production issues, logistics issues like transporters’ strike etc.
Increased demands – Lot of times there are surge in demands due to season or other factors.
Quality issues – Sub-standard quality in material causes returns and create material shortage.
Poor visibility and communication - This leads to expiration, and wastage of raw material creating shortage.
Lack of anticipation – Due to lack of anticipation and planning regarding material requirement, manufacturers face material shortage.
Sudden instability in geopolitical and environmental conditions- Such turbulence again cause supply chain disruption, resulting in material shortage.
No matter how hard manufacturers try to avoid material shortages, it occurs.
However, by deploying an Enterprise Resource Planning, or an ERP software, manufacturers can mitigate risk of material shortages up to a large extent.
Effects of Material Shortage:
Material shortage is always a nightmare for a manufacturer. With demand in the market, manufacturer always try to procure material well in time and quantity for smooth manufacturing.?
Because material shortage has many effects on the business including-
Very evident from above points, material shortage can cause great trouble to an organization.
Although, all reasons of material shortage cannot be avoided, but it can be dealt up to large extent by deploying a manufacturing Enterprise Resource Planning (ERP) software.
Before knowing how an ERP can help manufacturers navigate material shortages, let us quickly understand an ERP.
What is an Enterprise Resource Planning (ERP)?
An Enterprise Resource Planning is a software which enables organizations to streamline and integrate various business operations.
In manufacturing, ERP optimizes processes by giving real-time visibility into inventory levels and production status as well as providing demand forecast.
Manufacturing is complex. Its supply chain is also complex. With the help of an ERP, organizations can easily manage supply chain and streamline various operations regarding production, demand forecasting, delivery etc.
Talking about process manufacturing, the domain is quite complex as it requires apt formulation.
Its inventory management is more complex because of expiry, potency, hazardous effects, and various other factors involved in its handling and storage.
Therefore, to address these complexities, process manufacturing industry requires specialized an ERP software for process manufacturing, quite like BatchMaster ERP software.
Now, as we have a fair idea of an ERP, let us discuss how an ERP for manufacturers can help in dealing with material shortage.
Role of ERP in Combating Material Shortage:
As discussed above, manufacturers can deploy a manufacturing ERP software to tackle material shortage problems. Here is how it can help.
领英推荐
Provides real-time visibility into inventory levels and supply chain – Manufacturing ERP provides complete visibility into supply chain and inventory.
Right from the supplier to warehouse-in, to production cycle, shipping, and delivery, an ERP can track movements of material.?
This feature is very important for process manufacturing, because if expired raw material is processed, it can deteriorate product.
ERP for process manufacturing like BatchMaster ERP have various ways to classify and use raw material before it is expired.
Likewise, manufacturing ERP software provides inventory visibility so that the inventory manager is updated about the levels. If you are interested in knowing how BatchMaster ERP helps and manages inventory read here.
Maintains uniform information throughout – Organization having manufacturing ERP software have uniform source of information.
Data is disseminated to all departments and at all terminals centrally.
Hence, information related to material availability, projection, in process etc are available to everyone without any ambiguity.
The data points are useful and are processed for analysis. With the real and uniform data, organizations can analyse and pave path for future strategies, ensuring optimum inventory levels at all times.
Streamlines procurement process – ??ERP can streamline procurement process. With a purchase order system, an ERP can automate various critical tasks like vendor quotes, paying invoice, creating purchase orders etc.
With BatchMaster ERP, you can put quality check on procured items, and allow inventory receipt only if the items meet quality standards.
BatchMaster ERP can set reorder point for auto order of the material if inventory level fall below minimum threshold limit.
It can also help with economic order quantity (EOQ) which is the minimum order quantity required for obtaining raw material on discounted rates.
There are many more ways how BatchMaster ERP can help you in streamlining procurement process and avoiding material shortage.?
Click here to know about it. To know about procurement guide and role of BatchMaster in procurement, read this.
Makes production plan more precise - Over production will dry out inventory and under production will waste raw materials.
In both the cases, organization will be at loss and will face material shortage when real demand popup.
Hence, it is always recommended to first analyse the demand, and then plan the production accordingly.
Manufacturing ERP software, like BatchMaster ERP, has MPS/MRP module which decides what to, how to and how much to produce as per demand.
Also, it decides if required quantity of raw materials are available in stock to meet the demand and if necessary, it can procure raw materials.
This planned production avoids wastage and materials shortages while production machines are on.?To understand MPS/MRP i.e., Material Planning & Production Scheduling capabilities of BatchMaster ERP, click here.
Helps with vendor management – To keep production cycle running, organizations must develop an amiable relationship with vendor and to mitigate dependency over one vendor, they must develop a pool of substitute vendors who can provide raw material of similar quality and at compatible rates.
Manufacturing ERP software provides tools for vendor evaluation, performance tracking and collaboration.
By evaluating their performance and streamlining payment processes organization can develop a good relationship with those vendors.
Besides, ERP can help storing valuable information about substitute vendors and explore new vendors for emergency or bulk orders and avoid material shortages.
Final Thought:
Role of a manufacturing ERP software in mitigating material shortage is immense.
A good manufacturing ERP software can ease out a lot of struggles of organizations and maintain optimal stock for production.
For process manufacturers, tracking material account and keeping a stock of it is a big task in this ever changing and disrupting business scenario.
The process manufacturing ERP solution such as BatchMaster ERP can be an ideal solution.
So, if you are a manufacturing organization facing challenges in maintaining optimal material levels in your inventory for seamless operations, consider implementing BatchMaster ERP.
With this solution, you can bid farewell to your material-related concerns and embrace a more efficient inventory management system.
Deploy BatchMaster ERP and let your material worries be a story of yesterday!