A quality Enterprise Resource Planning (ERP) software package positively alters the way a company manages its back office, enabling it to enhance planning, execution, management, and control over a wide range of critical processes. It is this ability of ERP to organize and integrate core business areas such as manufacturing, distribution, financials and human resources that makes it popular among small and midsize manufacturers. ERP also boosts a company’s productivity and helps it meet business needs with appropriate levels of automation.
With an ERP solution, what was thus far a manual and error-prone process among distributed individuals and departments now gets connected into a collaborative process which enables greater real-time visibility.
Other benefits of introducing an ERP solution are:
- Single system to support rather than several small and different systems
- A single applications architecture with limited interfaces
- Access to management information available across a mix of applications
- Access to best practice systems and procedures
- A reduction in the cost of operations and wastage
- Better management of customer communications and relationships
- Clearer visibility into financial and operational processes
- Improved planning and decision-making
Although an ERP solution is a resource-consuming investment in terms of both time and revenue, the returns can be rewarding. It gives the company a competitive edge and an opportunity to realign its business processes to leverage IT and help them compete effectively with larger competitors.
Streamlining Manufacturing, Distribution and Financial Operations with ERP
The manufacturing sector constantly faces trouble allocating raw materials and streamlining output. An ERP solution could assist by pointing out drawbacks faced by the manufacturing process, such as the problems created by time lags and manufacturing flaws.
An ERP software package consists of a range of tools that help:
- Streamline the manufacturing process
- Enhance the entire end-to-end process of designing and building a product
- Streamline product design, engineering, and configuration
- Improve tracking and management of product parts
- Automate the scheduling of production activities
- Accelerate manufacturing – ERP it self will not accelerate manufacturing but merely assist
- Improve quality assurance procedures – Again, it will help capture and provide analysis
With an ERP software and its manufacturing capabilities, businesses receive an additional capacity to create the best possible product in the most efficient and cost-effective manner.
An ERP solution also helps coordinate the manufacturing process in a better manner by mobilizing resources efficiently.
Packaged ERP software additionally includes tools to support improved inventory management, order management, purchasing and procurement, logistics, supply chain planning, return management, and incentive management. All of this helps businesses to effectively coordinate and control their complex supply chain workflows and activities. With ERP software, companies can better manage all supply chain operations including the sourcing, acquisition, and storage of all raw materials, the scheduling and management of all work in process, and the warehousing and distribution of all finished goods.
Businesses can improve accuracy and accessibility of vital financial data. ERP allows them to do this while streamlining and automating routine, repetitive accounting processes such as budget creation, allocation, and management; cash flow analysis; accounts payable and receivable; management of capital equipment and other assets; performance management; and financial reporting. The financial applications within most popular ERP software packages include functionality for general ledger, cash management, accounts payable and receivable, budget management, and fixed asset management.
There is now a widespread acceptance of the gains that ERP can bring to businesses. The success of any ERP package, however, depends on the ease of customization it offers, and the implementation process.
Interestingly, 70 to 80% of the cost of installing ERP does not come either from the software or the hardware: it arises from the change management and the implementation that comes with it. Many small and medium enterprise buyers focus on software functionalities and fail to adequately address the implementation services or maintenance charges associated with an ERP project.
Due to the large business impact of an ERP system, the implementation team within a company must have strong representation from IT, business and change management experts. If these basic steps are accomplished with the right planning and foresight, quality packaged ERP solutions can deliver on the promise of streamlining manufacturing, distribution and financial operations.