Improve Business Processes in the Manufacturing Industry with ERP Software

Long years ago, there lived a system in manufacturing world. People used to call it manual system. The system was so influential that every other system surrendered. The system was so narcissistic that it did not allow new systems to develop.??

In the regime of this system, chaos in manufacturing processes prevailed, opportunities of progress were lost, and processes were derailed.

Be it production manager, sales manager, shopfloor workers, suppliers, customers, everyone was facing many issues, but they had no other option.??

But as the evil establishes existence of good, and there is always a bright day after a dark night, this problem also had a silver lining.?

Scientists, manufacturers, engineers all united to find a solution of the problem. This union gave birth to the hero of new age called Enterprise Resource Planning System or lovingly known as ERP System.

Was ERP system a solution to all the issues arising of manual and spread sheet-based method? Did it really brough about the necessary transformation? Everyone associated with manufacturing is asking the same question.??

Let’s try to uncover this mystery in subsequent sections.

Overview:??

Manufacturing business processes are very complex. They need an array of set processes, done correctly to get the desired output.??

Often execution of these processes is prone to errors and negligence, which create detrimental effect on overall output. Hence, having a robust system to mitigate errors and identify deviated results is a must for manufacturing industry.??

For example – manufacturing business needs to order raw material. Before ordering the raw material, manufacturer must take stock of available inventory. This helps to identify and ensure order of adequate quantity.??

Many a times organizations avoid new digital system and rely on old manual paper-based system to count inventory and order.

Because of human errors, raw materials are over ordered or under-ordered. Also, in case of process manufacturing where raw materials are subject to expiry, ordering becomes complex.??

There are many such processes where old manual system fails. Manufacturers must introduce new digital technology, like an ERP software, to their day-to-day processes. Introduction of such technology will help them inculcate error free, fast, and accurate business processes.??

Let us delve into the blog to understand the role of an ERP solution in improving the business processes.

What is an ERP Solution??

An Enterprise Resource Planning or an ERP solution is a digital tool to streamline and automate processes of a manufacturing business. An ERP solution system does this with a centralized data centre. This ensures flow of the same information across various departments of the organization.???

Since the data entry is automatic, there is no chance of error.??

Thus, an ERP software provides clean and unified data across the network.

How Old Manual System is Prone to Errors???

Many organizations still follow old manual system of managing their businesses.??

In a modest context where business is starting, transactions are limited, stock volumes are not much, old manual system can work.??

But as the data increase, organization expands horizontally and vertically, managing business with old manual system becomes difficult.

Also, one can easily alter or wrongly enter data in paper based or spreadsheet-based system. This error will generate wrong output.

For example, when business partners are less, production is limited, old system can do the job easily. Since business is modest, data is less, it involves lesser number of people. Although, there are chances of errors in the data entry, but identifying and rectifying the errors will take less efforts.??

As the business and data grow, having long spreadsheet or data sheet to enter details of business partner is tiresome and require involvement of a greater number of persons. Also, finding and correcting the wrong entry in such a huge volume of data is not possible.

How ERP Affects Business Processes?

ERP with its various modules can help manufacturing businesses to streamline and automate various processes. The software helps business to process faster, more accurate to tap every opportunity with due care and customer satisfaction.??

Let us understand this with an example where we draw a contrast between manufacturing processes with old manual system and that with new ERP system.??

Starting with old manual system, suppose an organization gets an order. This order must go to the production department manually.?Therefore, the request must travel via humans or via mail.?

After getting the request, production department checks inventory of raw material. This manual process of stock checking will take lot of time.?

After checking stock, production department raises request of raw material purchase. So, this request goes to purchase department manually.??

?Purchase department verifies this request with production manager and sends a purchase request to the vendor.??

The scenario can go on and on.??

You can imagine time involved in each process. From order generation to purchase request sent to the vendor, every manual task will take lot of time to complete.??

This will slow down the rate of business, and business might lose the opportunity because of the delay in delivery.

Imagine if the information of sales order is real-time and simultaneously communicated to production and Inventory manager. Production manager could check for critical or exhausting material and immediately send his requirement while the inventory manager can check the stocks in some clicks.?

He can generate purchase request immediately against the same production request, which can be reviewed by purchase manager, and this can be further transferred to the vendor again in a click.?

The whole process is fast, requires no need to enter data manually, and therefore it can deliver the product in less time, eventually increasing customer satisfaction and profit of the organization.

This is just one scenario. Consider the complexities of manufacturing business processes. When business work in full circle, it requires an efficient system and an ERP to fulfil the requirement.

Areas Where ERP Can Help Achieving Process Efficiency

There are multiple areas where ERP solution can help businesses in achieving process efficiency. Let us discuss them one by one.?

Purchase – There are various benefits which an ERP can bring in purchase process. These benefits help improving the purchase process.

• Streamlined procurement process –?An ERP can consolidate purchase requisition, purchase order, approvals, supplier selection, on a single platform. This consolidation reduces delays and errors in purchase process.
• Automated workflow and approval control - ERP help automate complete Purchase workflow and approvals. This ensures that purchase follow predefined hierarchies and avoid bottlenecks of procurement cycle.
• Maintaining vendor relationships – ERP helps to maintain good relationships with vendors. It also helps in streamlining communication with them. It organizes all the information of vendor like name, contract, tax information, product line, lead times, quality matrices etc. It even aids in finding the best vendor based on its performance.

Sales - There are stacks of benefits an ERP system offers, which eventually improve sales process. These benefits are like:

• Sales history and records – An organization can see sales history and project sales figures.?This projection and historical data help organization to plan and adjust other processes accordingly.?
• Streamlining ordering – With the help of an ERP system, organizations can streamline orders quickly. This automatic process makes the process error free and fast.?
• Enhancing customer relationships – Fast delivery is key of customer delight. Right product must reach customers at the minimum time possible. This is a perfect recipe of customer retention. With the help of an ERP, organizations achieve this goal by shunning the chances and reasons of delayed deliveries.?
• Manage sales processes – All the sales processes like sales quotation, sales order, delivery, return, invoice, credit memo, settlement of down payment etc, all are done automatically without human intervention in data. This automatic process reduces human errors and enhances productivity.
• Inventory Management – Inventory is the backbone of manufacturing industry. The effectiveness of production largely depends upon the efficiency of inventory management. ERP checks inventory round the clock. Hence, you are never off the stocks. With just simple clicks, ERP can show inventory information for necessary decisions.A manufacturing ERP software can help organizations in:
• Data security – Having inventory details in spreadsheet or paper based manual system can have threats of data corruption or data loss. An ERP – whether on premise or cloud – keeps data backup and enforce security gates ensuring prevention of data loss of inventory.?
• Seamless integration in real time – ERP automatically registers inventory changes and updates it real-time. This means, for example, a shirt manufacturer will see updated data on screen when 100 orders are gone out from the stock of 10000 shirts.??
• Maintaining sufficient inventory – One important feature of ERP is its alerts. When an item goes blow the threshold value, the ERP send alerts to the authorized and assigned people. These signs help inventory managers to refill or replenish the stock of vital item to enable continuous production.?

Besides, ERP tracks inventory in LIFO, FIFO or FEFO fashion, enabling process manufacturers to use items which are near to expire.?

• Identify fast moving critical item – ERP solution lets organizations identify its fast-moving items. With the help of this information, organizations can prepare itself for future requirements.
• Inventory cost- An ERP can calculate inventory cost.?By calculating the cost, organization can determine profits.

Production – Production is a double edge sword of manufacturing business. Over production create wastage, while under production lead to missed opportunities. An ERP can help in production by:

• Scheduling – ERP software helps in backward and forward scheduling. This helps in precise production.?
• Improve equipment process – ERP helps to generate service alerts of production equipment. These alerts help in maintaining efficiency of production machines.?
• Reduce wastage – ERP helps to plan production. This planning helps reducing wastage during production.??
• An ERP can help in product costing, taking all the expenses including that of BOM, raw materials into account.?

QA/QC – Quality is prime important to remain in competition. A quality product is only possible when quality is controlled and assured at every stage of supply chain. An ERP helps organization to do this.

Conclusion

In the complex world of manufacturing business, only an ERP solution can bring a sigh of relief to manufacturers.?An ERP can mitigate risks of errors and improve business processes. Especially in process manufacturing, with perishable raw materials, complexity increases.

No wonder, process manufacturers across the world are transforming to process ERP solution. These are ERP solutions especially made for process manufacturing.?

One such multi-facet and robust process ERP solution is BatchMaster ERP. The solution helped more than 3000 manufacturing clients across the globe to improve their business processes. It is available both on-premises and on cloud.

If you are looking for such a solution and wish to transform your manufacturing business process as per the contemporary business world, move to BatchMaster.