Why Manufacturing ERPs Are Considered the Best Option & When to Switch

Manufacturers are the number one users of ERP Software, with 89% openly using some form of manufacturing ERP system.

This end-user market dominance is because manufacturing ERP tools are designed to streamline, optimise, and automate tasks associated only with the manufacturing process, no matter the principle (just-in-time, Kaizen, Six Sigma, or other).

The four leading use cases for ERP adoption among manufacturing companies are to:

1. Replace outdated software systems or manual processes
2. Consolidate multiple and disparate applications from various departments
3. Take advantage of the latest analytics and AI tools
4. Oversee the entire process (from inventory management to production planning) in one shared system

Although there is debate as to whether businesses should opt for a more out-of-the-box ERP to safeguard against complex mishaps (take the Nike i2 malfunction in 2000, for example), successful ERP implementation of a manufacturing-focused tool can deliver immediate benefits.

Most notably, benefits include improving a manufacturer’s supply chain processes, reporting analytics, quality control, and financial management.

The Difference Between Regular ERP Software and ERP for Manufacturing

Most businesses use ERP for their sales, process, and back office needs, but manufacturers have a whole extra level they can take their ERP to. The difference between a general ERP system and an ERP for manufacturers is simple:

• An ERP integrates data from each business function, department and process including finance, HR, and sales, to deliver a broad overview of operations and promote business-wide decision-making.
• A Manufacturing ERP focuses specifically on integrating and managing data associated only with the manufacturing process such as inventory management, quality control, production planning, and supply chain optimisation.

Across the factory floor and production facilities, Manufacturing ERPs – linked by 5G and edge networks or ERP cloud-based services – monitor every stage of discrete or process-based manufacturing systems.

They monitor up and down the supply chain and track human and robotic production, linking manufacturing systems to sales and returns; from temperatures and weights to accurately measuring tolerances and pressures.

Ultimately, a manufacturing ERP removes all the guesswork from the factory.

Manufacturing ERP integrations include the ability to absorb data from MRP, CAD/CAM software, PLM (Product Lifecycle Management), and MES (Manufacturing Execution Systems), and their associated functions and metrics. All to create a better understanding of the manufacturing process and drive improvements across the board.

Why Companies Opt for a Manufacturing ERP Over an Out-of-the-Box Solution

Manufacturing remains the dominant force behind most businesses. Yet, manufacturers face constant price pressure and rapid technological evolution. At the same time, they are dealing with global trade issues, political upheaval and supply chain risk challenges.

Today, they must operate at maximum efficiency to remain competitive, moving from paper-based processes, Excel and other tools that often limit leadership’s visibility into information and hamper performance.

When implemented and integrated with existing data systems, a manufacturing-specific ERP delivers multiple benefits and competitive advantages:

• Increased efficiency as manufacturing runs smoothly, issues are dealt with faster, and the supply chain is optimised
• Improved visibility as leadership and departments can gain insights across all areas of production and the business, typically in real-time
• Support for on-time delivery systems that improve business competitiveness
• Improved product quality which reduces returns, product failures, and increases customer satisfaction
• Reduced costs with tighter control and flexibility over the bill of materials
• Improved collaboration across the business, encouraging product innovation, production creativity, and faster problem resolution

One example of ERP manufacturing success is Wisconsin Plastics. The Plastic Injection Moulding Service decreased the overall total raw material inventory by 17.5%. This is thanks to a just-in-time replenishment program made possible by the accurate inventory count provided by its real-time ERP system.

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6 Unique Features & Modules of a Manufacturing-Focused ERP System

Alongside the typical roster of ERP features, manufacturing ERPs add a range of tools to manage, provide insight, and optimise processes.

These features add value for manufacturers over a generic ERP system. Each one takes data from multiple existing services, combines them for analysis, and outputs results for operators, managers, and business leaders.

1. Total Bill of Materials: Add visibility and flexibility to reduce costs for raw materials and parts.
2. Buying and Procurement: Develop greater buying power through early or on-time procurement processes.
3. Production Planning Services: Improve planning to economise or deliver economies of scale.
4. Inventory and Production Management: Reduce the complexity and improve the flexibility of your processes.
5. Quality Control: Eliminate poor production issues and bottlenecks.
6. Order Fulfilment: Improve your ability to manufacture to order (MTO) or innovate with customisation options.

When Is It Best to Switch to a Manufacturing-Specific ERP System?

As businesses evolve and grow, their needs change. Many manufacturers may have already adopted an ERP for back-office tasks, but now find the need for a manufacturing ERP to deliver broader insights and performance benefits.

The best answer to the question is always yesterday, with today a close second. When it comes to knowing when best to implement a manufacturing ERP, a three-colour-coded system is used; green, yellow, and red.

Manufacturing ERP FAQs

What’s the Difference Between MRP, MRO, and ERP?

Before ERP emerged as a common business practice, there was MRP (Material Requirements Planning and lately Manufacturing Resource Planning [aka MRP II]).

You can consider MRPs a subset of ERP, focused solely on the inventory, materials of manufacturing, and the build processes involved. With a manufacturing resource planning system in place, businesses know where their components or materials are, but need broader insights into productivity and value, ERP widens visibility and speeds up the information flow.

A modern ERP also supports the delivery of Maintenance, Repair, and Overhaul (MRO) services, ensuring that manufacturing hardware systems run most efficiently and that there is a minimum of disruption when a problem arises.

Modern ERPs support predictive maintenance features of factory machinery that deliver performance and fault information live, rather than grinding to a halt at the most inconvenient of times. With a modern manufacturing ERP supporting, boosting or supplanting these older technologies, manufacturers will be up-to-date and better informed about live operations.

What Are the Best ERP Solutions For Manufacturers?

Each manufacturing ERP solution is different and caters to various business needs. It’s also important to consider factors such as vendor experience, users required, budget, and industry.

Some of the best vendors that design ERP for manufacturers include:

• SAP
• Oracle
• Microsoft
• Info
• Epicor ERP