What Role Does ERP Play in Managing Manufacturing Material Shortages?

Manufacturing organizations across the globe have worked very hard in the past couple of years to mitigate the impact of COVID-19 pandemic and other geo-political events on the supply chain. And all this while, they have found an able ally in an enterprise resource planning (ERP) software.

Overview

Past couple of years have been hard on us all. The Coronavirus pandemic hit the world towards the end of 2019, and since then it has affected millions of lives, and disturbed hundreds of thousands of businesses worldwide.

The pandemic brought with it large-scale supply chain disruption, resulting in material shortages, and hampering the manufacturing operations in factories around the world. Coupled with the other geo-political events such as conflicts and cold war between trading countries, it affected the global supply of raw materials.

Today, the threat of COVID-19 has somewhat subsided, but one can’t be sure if it has gone for good. And even as we write this, materials shortage and supply chain disruption continue to plague the manufacturers worldwide. The demand levels may have gone up, but they continue to struggle when it comes to acquiring the required raw materials to meet that demand.

A look at the process manufacturing industry

Talking about the process manufacturing industry in particular, it also has suffered heavily. Home to the sectors such as pharmaceuticals, food & beverages (F&B), paint, coatings, chemicals, and cosmetics, the industry too has borne the brunt of disruptions to global supply chains.

With the global supply of medical products under tremendous pressure, the pharma manufacturing industry has been witnessing the problem of shortages for some time now. Heavy reliance for sourcing the raw materials on China has also cost the industry dear.

The paints as well as coatings manufacturing industries also have had pretty much the same story, as these industries too have struggled to procure some key raw materials like pigments and certain additives, with China being their key exporter.

Other implications of material shortage caliber

The other major process manufacturing sectors too have faced material shortages for some reason or the other, such as labor shortage, factory shutdowns due to unforeseen circumstances, and logistical issues, etc., forcing the manufacturers to spend time painstakingly waiting for the raw materials to arrive from supply chains that are already stretched to their limit.

This shortage of materials has had implications for all the stakeholders. Both suppliers and manufacturers have more missed business opportunities to show than ever, in recent times. The shortage has also meant decreased availability of required items, and increased cost to manufacturers, who in turn have been compelled to pass that cost on to the consumers.

The frustration is real, but this challenge of material shortage can be successfully navigated with the help of a manufacturing-specific ERP system.

The role of ERP in managing manufacturing material shortages

An ERP software plays a massive role in helping manufacturing businesses manage material shortages by offering them with strong supply chain management and material management capabilities, among others. Comprehensively managing the flow of raw materials, the inventory in use, and the finished goods, it eliminates the possible roadblocks such as inventory shortage, inventory wastage, and wait time.

Let’s take a look at how exactly it makes this possible:

·?Inventory management

A cloud-based ERP software, through its inventory management module, provides the manufacturers with real-time visibility & control over the inventory. It lets the manufacturers know about the on-hand stock they have, the stock that has been consumed, or has been assigned to a specific job, and also about the items that are either low, or out of stock, making it easier for them to make purchase decisions.

By letting the manufacturers know through warnings and alerts when an item is due to get expired, a manufacturing-specific ERP system also allows them to avoid the situation of stock becoming obsolete, and hence leading to material shortage.

·?Supply chain visibility

An ERP software offers the manufacturers a consolidated view of their entire supply chain- i.e. including the inward movement of materials, their storage, movement of work-in-progress inventory, as well as the finished goods from the point of origin to the point of consumption.

This empowers them with the required information to proactively identify the supply chain pain points, including the logistical bottlenecks, and deal with them quickly. This also allows them to respond to the customer orders as well as the market fluctuations with confidence.

·?Materials Requirement Planning

Process manufacturers invariably find it difficult to determine the right amount of raw material needed to meet the demand. While underestimation results in shortage, overestimation brings in monetary and inventory losses. The material requirement planning (MRP) functionality of an ERP can help them in this regard.

It assists the manufacturers with scheduling and placing orders for the required items, and maintaining a healthy flow of materials required for production. With it, they can figure out which raw material needs to be ordered, when to be ordered, in what quantity, and when should its delivery be scheduled.

Besides, a manufacturing-specific ERP system also helps increase the efficiency, by allowing the manufacturers to reduce the number of materials used per product, wherever possible, thereby bringing down their own demand for supplies, and ultimately relieving shortages.

·?Purchase

Based on the data from Material requirement planning module, an ERP with its dedicated Purchase module, helps the purchase managers determine the key materials which are not in stock, or the ones that need to be replenished soon, in real time. With this information at their disposal, process manufacturing businesses can schedule buying of materials with quick decision making.

An ERP integrates the purchasing department with the shop floor, making it easier for the purchase managers to know what is needed and when it is needed, including the items with long lead times- vendor lead-time, Quality Control lead-time, quarantine lead-time etc. This way, the purchasing department can function in tandem with the rest of the shop, and ensure the procurement of material in a timely manner.

·?Supplier management

A manufacturing-specific ERP system also automates several manual tasks such as communicating with the vendors and suppliers, and assessing their risks as well as ability to meet essential supply requirements of right quality standards at right time.

This evaluation can help the manufacturers avoid sudden supply-chain disruptions, like the one caused by the COVID-19 pandemic, and deal with lack of information. It can also help them make intelligent procurement decisions in terms of knowing where to source from (validated vendors only), and when.

In sum

If you are a process manufacturer operating into either of these industries- pharma, F&B, paints, coatings, chemicals, or personal care & cosmetics, you don’t need to go too far looking for an ERP that holds within all the aforementioned capabilities. The ERP solutions offered by BatchMaster?can help you take the issues such as manufacturing materials shortages and supply chain disruptions head on.

Our solution experts would be happy to help you with your queries on this, or any other related subject, or schedule a demo to take you through the features and benefits of our different ERP software products that are tailor-made for the process manufacturing industries mentioned above. Write to them, today!