January 14, 2020

How Can ERP Optimize Your Production Process?

Written by
Karl Heinrich Lauri
Tags: ERP

Production planning is all about dodging the puddles and potholes on the manufacturing road that tend to waste valuable time and resources. By filling them in once and for all, you can streamline the whole process and make the production flow smoother. When the goal is reducing overall manufacturing costs, you should aim for optimal usage of the available resources. Easier said than done? The following guide highlights the core benefits of adopting a ERP / MRP system.

History of Manufacturing and Software

As the orders pile up, manufacturers need something to track the process with—what type of materials were required, how much of each would be necessary, and when would they be available? To answer these questions, manufacturers started keeping ledger books or spreadsheets on paper to optimize the production process.

Once computers were in play, tasks like production planning, sales management, HR planning, and others, shifted from paper to electronic spreadsheets. As the computer industry grew with time, MRP software was introduced to combine data from various departments into one central place. Now we generate MRP reports in just a few minutes and access them through a dashboard on a computer screen.

Modern material planning software, called ERP (Enterprise Resource Planning), lets you view the complete business process from a computer screen.

ERP Cost Benefits

Both small businesses and large corporations should look for ways to reduce manufacturing costs while improving overall efficiency. One way companies can do so is by using ERP to combine their operations in one place. Its precise reporting lays the foundation for more accurate planning. Have a look at some specific areas where production with an ERP can save costs:

  • Balanced Inventory: Keeping inventory is a major headache for every business, mainly because of the occasional overstock that takes up unnecessary space. ERP software provides you data to only order the inventory when needed and create a balance between supply and demand to avoid a stock surplus.
  • Controlled Supply Chain: ERP offers better control over ordering, warehousing, inventory control, and shipping to aid accurate planning and avoid costly surprises. Result? Controlled expenditure.
  • Fewer Operational Hiccups: It is not uncommon for minor problems to occur in business operations, but those issues can delay the whole production. With the help of ERP, planners can recognize these complications at the first sign of them and stay one step ahead.
  • Fewer Tools: Without ERP, businesses would need separate tools and programs to keep tabs on different departments like sales management, manufacturing planning, HR planning, finances, and more. These tools can be quite expensive if bought separately. Since ERP lets you access all the departments from one central hub, you can drastically reduce costs.

With ERP, the information flows more efficiently and smoothly throughout the business, so you cut down on communication delays, improve the accuracy of the information, and, therefore, can better assist planners in making optimal decisions.

ERP Benefits for HR

Manufacturing HR planning, another herculean task, becomes a piece of cake with ERP. An HR module offers tons of benefits that improve overall communication and help managers get a better overview of human resources. Some notable ERP benefits for HR are:

  • Better Management: An HR module in the ERP system connects to a database which holds information about all the employees. Managers can use this to assign tasks and manage their workforce. Employees can use this module to raise any issues they might have and get faster responses from the management.
  • Strengthens Employer-Employee Relationship: ERP allows a direct line of communication between employers and employees, which removes unnecessary hurdles and improves the relationship between both parties.
  • Helps Employees Grow: HR modules can also be used to share the training information employees need to improve their knowledge and skills further. This includes video or text-based online courses.

Without ERP, managers would have to gather data from various sources, whereas with ERP, everything is accessible from the HR module. This alone frees up a substantial amount of time to focus on more important matters.

ERP Benefits for Sales

The benefits of ERP go beyond optimizing the production process and reducing manufacturing costs. It also helps businesses achieve their sales goals faster and allows decision-makers to view the accurate cost of a product in one place.

  • Complete Cost Data: All components of costs for a product can be brought together with the help of ERP. Expenses such as inventory, transportation, manufacturing, and storage can be viewed and modified from a single dashboard. They can be easily shared with the accounting department as well.
  • Fast Payments: ERP speeds up the business cycle through timely invoicing. The faster you send your invoices, the quicker you get paid for every sale.
  • Efficient Ordering: ERP tracks the quantity of inventory in real-time, and as soon as it is near depletion, ERP automatically triggers the order to the supplier. This eliminates any lag in the manufacturing process and enables you to make timely sales without losing customers.
  • Efficient Accounting: ERP software package usually has accounting module, so all financials from manufacturing costs to sales and payments are clearly visible.

Over to You

It’s safe to say a robust ERP could very well be the ultimate solution to optimize most areas of a business. Using a cloud-based ERP/MRP system like the one offered by MRPeasy, you gain access to every tool required for its growth while improving production and manufacturing planning.

Karl Heinrich Lauri is a managing team member at MRPeasy.