Maximizing Efficiency: Why is ERP Vital for Light Manufacturing?

Compare your manufacturing business to one of your own products. You will observe that the separate parts must fit together seamlessly.

For example, can the sleeves, the collar, or the lapels of a shirt be created in isolation? – The answer is no.

Like a shirt, if all systems of a business are disconnected, it will impact optimal functioning.

This is why ERPs are important. An ERP is a fully integrated system that covers every function in your manufacturing business and connects them all together seamlessly.

But how exactly can light manufacturing companies benefit from using an ERP?

Here’s everything you need to know:

Why should light manufacturing companies use an ERP?

With an ERP, your software systems are no longer separate add-ons but are fully integrated together into your business. Think Gestalt: ‘The whole is greater than the sum of its parts.’

In particular, an ERP allows you to:

1. Prevent customer data & sales leads from getting lost
2. Save time with automatic sales quotations & uncover where you are losing sales
3. Reduce production costs
4. Monitor your stock levels & order from suppliers

Here’s how:

1. Improved customer relationship management

In your manufacturing company, constant communication with customers and leads is vital to keep them engaged with your business. But without an ERP in place, customer interactions will need to be manually passed on to a sales team, leading to bottlenecks that can potentially lose leads.

Here’s how an ERP can help with managing customer relationships:

• Automatic recording of customer emails and inquiries - Emails can be captured within the CRM function of the ERP. This ensures that the entire customer’s journey with your company can be easily tracked from start to finish.
• Convenient customer tracking by the sales team - Your sales team can precisely track where your leads are in their customer journey, and all customer developments. This is invaluable. If a member of your sales team leaves, other sales staff can easily take over customer accounts and track their current status and all updates.
• Reduces data errors - There is no need for lengthy handovers of information that may not give a full picture. Crucial pieces of information can easily be forgotten. An ERP eliminates human errors by making sure that all data is current and complete. This can significantly reduce miscommunication and the duplication of work.
• Data that can be used to predict sales trends and improve future planning - Customer inquiries about particular products can be recorded within the ERP. This will include specific items and quantities they want to purchase which can be used later on to create sales quotations. It also provides information on crucial data for future analysis. The same data can be used to track trends and predict future sales cycles allowing you to plan more effectively, save time and be more profitable.

2. Automate financial processes and track lost sales

Once inquiries have been made by a potential customer, this information can be accessed by the sales team to generate quotations.

Here’s how it works:

• Automatic and instant sales quotations - Standardised information including terms and conditions, customer information forms, and product templates can be integrated into your ERP system allowing you to automatically generate quotations on an instant basis. Also, previous quotations by existing clients can be amended to generate new quotations. This capability reduces the time needed to create quotations allowing you to efficiently pursue sales leads. These quotations can be formatted into many document types including PDFs and Word documents, then sent electronically or printed according to client preferences.
• Automatic sales orders - Once a quotation is accepted by your customer, an ERP can automatically generate a sales order based on the sales quotation without the need for complicated administration. This saves significant time, thus reducing administrative costs.
• Detailed insights into the sales journey - If a significant number of leads are not converting into actual sales, an ERP will allow management to track activity in real time. Because all data is real-time, this will help you track exactly where issues are occurring so they can be addressed quickly for increased conversions.

3. Reduced production costs

ERPs ensure effective production planning to reduce production runs and machine set-up costs.

With an ERP, identical items from multiple sales orders across different clients can be grouped together and produced in one run. Alternatively, you can specify that all items from a single client be produced at the same time. This reduces the time and costs associated with setting up specific machinery to manufacture certain items by grouping production runs.

Here are two other ways that an ERP can reduce production costs:

1. Calculate the exact materials and quantities needed for production - At this phase, an ERP can calculate the exact quantity of materials and operations required to produce a specified number of items. This is based on the Bill of Materials (BOM), which is also produced within an ERP.
2. Automatic stock checking - Once you know which raw materials are required to manufacture your clients’ products, it is essential to know existing stock levels and accordingly determine purchase. Properly implemented, an ERP can instantly retrieve this information across multiple geographical locations at the click of a button.

4. Seamless inventory and supplier management

For the production process to operate smoothly, it is vital that raw materials are readily available. If a particular raw material is out of stock, your ERP can check your database of suppliers and generate purchase requests.

An ERP also allows you to compare suppliers based on their delivery times, availability, costs, warranties, and credit terms. Once suppliers send back a quotation, you can compare quotations from multiple suppliers simultaneously through your ERP. This allows you to choose the best suppliers based on your goals, optimize lead times, and reduce production costs.

In addition, you can set the ERP to automatically generate and send purchase requests when stock levels for a particular raw material are at a minimum order level. This ensures a steady supply of materials to avoid bottlenecks in your processes.

Which ERP should you choose for your manufacturing business?

An ERP connects all of your data and activities making them visible. This is crucial if you want to track and optimize all of your processes and take your organization to the next level.

But with so many ERPs to choose from, it can be challenging to choose the one that is the best fit for your business.

To decide whether an ERP works best for your business, it must enable you to:

• Streamline your operations – It automates financial processes and minimizes manual labor to maximize employee productivity
• Reduce waste – It allows you to you identify the best prices with suppliers and distributors
• Centralize processes – It lets you manage multiple business processes from a single unified platform and eliminate data silos
• Manage stock seamlessly – It provides you with real-time visibility and management over your stocks
• Increase customer satisfaction – It gives you a clear perspective of customer relationships and status

Altogether, the best ERP allows you to unlock untapped potential in your business.