The demand for the Enterprise resource planning system within the manufacturing industry has increased significantly with the growing need to improve floor efficiency for quicker delivery and to reduce the costs of products and services.
Manufacturers view ERP modules as a means to pursue digital transformation and gain a competitive edge. Manufacturing ERP modules automate tedious manual business processes and provide accurate, real-time information. This helps reduce inefficiencies and redundancies while helping users navigate through complex processes – thereby significantly boosting productivity. Let us take a look at ERP modules for the manufacturing industry and greater detail.
What is ERP System Modules?
Enterprise Resource Planning or ERP modules are software or applications that help integrate and automate core business processes, often in real-time. ERP modules are end-to-end systems that automate and streamline business operations across all departments within an organization. In a nutshell, an ERP solution is used to synchronize the whole business under a single application.
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In 2019, a survey of distributors and manufacturers indicated that after ERP implementation, 49% of companies said they improved all business processes. Only 5% of businesses said that they did not improve business processes. Now that we know why it’s important let’s look at some of the
Key ERP Modules for the Manufacturing Industry
1. Inventory Control
Inventory is at the heart of every manufacturer’s operations. Inventory control is often the key cost factor that processes and discrete manufacturers look to execution. Inventory costs include warehouse storage costs as well as costs associated with movement (delivery and returns). Effective forecasts help ensure that manufacturers meet customer demand without falling short of inventory. A 2017 report indicates that 34% of businesses experience shipment delays because products are sold which are not actually in stock.
However, inventory can also become scrap with time if a customer’s need becomes obsolete or a product’s purpose has evolved. As a result, effective inventory management can ensure manufacturers avoid unneeded inventory and costs associated with storage and movement.
2. Production Management
As mentioned above, a product can become obsolete to a customer over a period. Thus, production management is key to ensure that products are ready on a schedule, available when a customer wants them, and arrives when a customer needs them.
Production management is essential to maintain consistency in product grade as well as manufacturing efficiency. Production management can also help obtain different product grades depending on preset production parameters that can be automated through manufacturing ERP modules.
3. Purchase Management
For any manufacturer, the raw material purchase is the first step to begin the process of manufacturing. Purchase management modules help manufacturers estimate and procure components based on sales orders and forecast demands.
Once the forecasts are established, the module will ensure meeting the demands from a component level based on production schedules. So, the right purchase orders can be raised without stalling the processes.
4. Sales and Marketing ERP Modules
To provide accurate demand forecasts, sales, and marketing management ERP modules are critical. These modules provide functionalities right from contacting customers (pre-sales activities) to tracking sales invoices and sanctioning returns.
The marketing module components help provide key insights on sales trends over different periods, the impact of campaigns and marketing activities through comprehensive reports. This can help to improve the accuracy of sales forecasts as well as act as feedback to product feature enhancements.
5. Order Management
Not only can customers and sales teams effectively track the status of order but also assess production schedules based on customer orders. This helps ensure the management of both supply and demand-side dependencies.
According to a survey, 70% of retailers said it was either crucial or very important to improve “bidirectional communication” with consumers regarding their delivery expectations, package tracking, and resolution of delivery options.
6. HR Module
As would be the case in any labor-intensive industry, the Human Resource (HR) module manages the people processes associated with the large workforce. HR modules help with payroll management (to incorporate pay hikes and benefits into the cost estimates) and skills management (benchmark employee performances and schedule training to improve the overall skill sets).
The module can also assess the right characteristics required for an employee to be successful and help recruit and attract the desired talent in the future.
7. Customer Relationship Management (CRM)
Most customer engagements are ongoing as opposed to one-time sales. The CRM module helps effectively manage communications with the customer by keeping track of different customer conversations, requests, and outbound communications.
Every interaction with the customer is documented so the manufacturer has a much stronger grasp on customer needs and how he/she can keep the engagement going. CRMs are also powerful tools in understanding the success of sales and marketing campaigns.
8. Vendor Management
The suppliers of components are just as important as the rest of the value chain for manufacturers, who often deal with multiple suppliers, offering a variety of quality, quantity, and pricing alternatives.
Vendor management ERPs are critical for manufacturers to keep track of the various supplier options rating them from the quality of their products to their pricing and delivery timelines. An effective vendor management system protects the manufacturer from order non-fulfillment.
9. Business Intelligence (BI)
BI ERP module acts as the brain of the different business processes for any manufacturer. Acting as a ledger of all activities on the system, the BI ERP provides an audit trail for the management of the entire system. It can also be used to define rules or configurations for specific actions (ex: discounts on bulk orders or strategic clients) relieving the burden of approvals and decision making from the floor employees.
BI can also be used to display charts of data available, which can be used to drive insights across multiple dimensions that a management team might need.
10. Project Management
Project management ERPs are critical for make-to-order products as is the case with manufacturers. It enables the planning and tracking of resources to meet customer demands by managing machinery and materials as well as accounting for non-plant resources such as people and information.
11. Accounting and Finance
This ERP module enables a company to effectively manage its accounting and financial data. The component allows specific aspects of accounting and finance to be integrated into the company’s management system so that information can be provided to the appropriate channels, enabling key business decisions through data-driven insights.
The manufacturing value chain comes with a lot of moving parts, traditionally brought together by heavy manual intervention. The various manufacturing ERP modules show us how they can enhance the efficiency of this value chain.
From the first customer conversation to tracking a shipment and receiving purchase orders, ERPs can significantly improve the productivity of a manufacturer.
Originally published September 24, 2020 , Updated : September 24, 2020