ERP Software for Manufacturing Industry: Importance, Features and Benefits

With the emergence of Industry 4.0, ERP solutions have a more critical role in streamlining various operations for optimum efficiency. Similarly, the growing adoption of the Industrial IoT (IIoT) enables connected devices to communicate with the central ERP systems and deliver real-time insights.

This blog will discuss the importance, benefits, and features of ERP implementation in the manufacturing industry.

Why do manufacturing businesses need ERP?

Be it a small-sized manufacturer or a global manufacturing company, they can benefit immensely from the manufacturing module in ERP solutions. An ERP tool is a natural fit for any manufacturing business. ERP manages and integrates manufacturing, procurement, supply chain, and distribution processes.

Besides improving production efficiency, manufacturing ERP solutions provide 360-degree visibility into daily operations. Effectively, ERP for manufacturing acts as the single “source of truth”, which provides updated information to any business department or process. With increased visibility, business stakeholders can coordinate and collaborate more efficiently.

Key features of ERP software for the manufacturing industry

ERP solutions comprise multiple manufacturing modules with functionalities to improve business functions. Here are some key features of manufacturing ERP software:

1. Manufacturing Modules

Manufacturing modules are a key component of any manufacturing ERP system. Starting from materials requirement planning (MRP), ERP solutions have evolved to add more manufacturing-related modules like production management and manufacturing execution systems.

2. Inventory Management

Every manufacturer needs a healthy inventory stock to manufacture their products on time. With the inventory management ERP module, manufacturers can control their available inventory stock and raw materials. Additionally, just-in-time and MRP help manufacturers streamline their inventory purchases.

3. Automated Processes

With ERP-driven automation, manufacturers can automate their manual processes and reduce human effort and errors. With manufacturing ERP, Industries can automate various processes such as sales invoicing, procurements, and HR functions.

4. Quality Control

Poor product quality can be detrimental to any manufacturing company. Manufacturers can ensure that their finished product meets quality standards and regulations with quality control. On its part, ERP tools can monitor the quality of the manufacturing processes right from start to completion.

5. Accounting and Finance

Besides the manufacturing module in ERP, the accounting module helps manufacturers keep track of their financial transactions and accounts. Effectively, this feature enables manufacturers to improve their profits and reduce their business expenses. Through integration, accounting managers can also allocate the right budget for procuring raw materials, labor, and transportation.

6. Supply Chain and Distribution

Inefficient supply chains and distribution can delay production and finished product deliveries. ERP solutions’ supply chain management feature tracks the real-time movement of goods and supplies across the entire supply chain. This includes suppliers, manufacturers, distributors, retailers, and end customers. Additionally, this module enables manufacturers to easily manage products and/or materials for refunds or replacements.

How can ERP Improve Manufacturing?

Next, let’s discuss the key benefits of ERP software for the manufacturing industry.

Key Benefits of Manufacturing ERP Systems

Here are some of the key benefits of ERP software for a manufacturing Industry:

1. Improves Productivity

Through its integrated approach, manufacturing ERP solutions provide a centralized solution to optimize available resources. With an effective ERP solution, manufacturers have real-time information that can help in better decision-making. This can improve productivity in the long run.

2. Eliminates Process “silos”

Without ERP integration, every manufacturing process works as an individual silo. Process silos create an “invisible wall” between business functions, resulting in uncoordinated efforts and inefficiency. ERP eliminates process silos by providing visibility across all manufacturing operations and processes.

3. Reduces Business Costs

In the face of growing competition, ERP solutions enable manufacturers to optimize their operations and reduce business costs. With a centralized ERP implementation, industries don’t need to invest in function-specific tools. Through process automation, ERP tools reduce manual errors and improve employee efficiency.

4. Improves Forecasting and Reporting

Manufacturing companies often face critical situations with a sudden increase or drop in demand for a product. With real-time ERP data, manufacturers can forecast demands by understanding market trends and factors. Manufacturers can generate accurate forecasts and reports based on historical data and trends.

5. Improved decision-making

Most manufacturing leaders base their decisions on old and outdated information. With manufacturing ERP, business leaders can now access real-time data, providing accurate insights into their business operations. ERP solutions also allow them to generate customized reports and use dashboards to check out areas of improvement.

Even better, ERP solutions can create reports in minutes so managers can take immediate action.

6. Enables remote working

During the global pandemic, many manufacturing companies shut down as they could not switch to the remote working mode for their workforce. A connected ERP solution can connect a distributed workforce anywhere, thus minimizing business disruption. Additionally, a mobile-friendly ERP solution allows professionals (like sales executives) to perform transactions, such as creating a sales order while moving.

Choosing the right manufacturing ERP tool

An ERP for the manufacturing industry primarily comprises custom ERP and off-the-shelf ERP. The right ERP solution is suited to the manufacturing company’s business needs.

For instance, based on how they are deployed, ERP solutions can be categorized as:

• On-premises ERP solutions are implemented on your local systems. This provides complete control and ownership of the ERP implementation. On the flip side, on-premise ERP is expensive to operate and has limited scalability for business growth.
• Cloud-based ERP offers more flexibility and scalability than on-premises ERP. It is run and maintained on an external cloud platform; hence is more cost-effective.
• Hybrid ERP combines both on-premises and cloud ERP. It helps manufacturers leverage the best of both worlds.

Besides the right ERP tool, manufacturing industries must also determine the right manufacturing ERP modules that can add value to their operations. Depending on their business model and current processes, manufacturers can choose which modules are the right fit to automate their processes.

For instance, every manufacturer needs a Finance and Accounting module to track financial transactions and generate real-time accounting reports. For companies with a growing customer base, the Customer Relationship Management or CRM module is essential to retain and grow their customer base. Similarly, every product manufacturer requires inventory, supply chain, and order management.

Conclusion

The manufacturing industry must continue digitalizing its operations to adapt to changing business environments. With an efficient ERP solution, manufacturers can streamline operations and reduce business costs. In the long run, manufacturers can boost their business revenues and profits through automation enabled by ERP solutions.

ERP solutions for manufacturing, such as SAP, enable manufacturers to achieve operational agility and process efficiency. For general manufacturers, ERP solutions like SAP Business One can reduce operational costs while delivering improved productivity.

Praxis Info Solutions is an award-winning SAP ERP service provider that has delivered customized solutions for its manufacturing customers. At Praxis, we work closely with our customers to understand their business requirements and design ERP solutions to address their business problems. Here is a starter guide to the use of ERP for small business.

Are you looking for a reliable ERP implementation partner for your manufacturing company? We can be of assistance. Contact us with your business queries and details today.