Manufacturing ERP Modules and Their Impact on Productivity

Nikunj Dudhat

Senior Writer

Manufacturing ERP Modules and Their Impact on Productivity

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 reduce product and service costs.

Manufacturers view ERP tools 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 assisting users in navigating through complex processes – thereby significantly boosting productivity. Implementing ERP in manufacturing can face some challenges.

Let us take a look at ERP modules for the manufacturing industry and greater detail.

What is Manufacturing Module in ERP?

ERP manufacturing modules are integrated software or applications that help automate core manufacturing business processes, often in real-time. ERP manufacturing 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. 

Looking for ERP Software? Check out SoftwareSuggest’s list of the best ERP software solutions.

A survey of distributors and manufacturers indicated that after ERP implementation49% 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 execute. Inventory costs include warehouse storage costs and costs associated with movement (delivery and returns). Effective forecasts help manufacturers meet customer demand without falling short of inventory. A 2017 report indicates that 34% of businesses experience shipment delays because products not in stock are sold.

    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, an inventory management system 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 ensuring that products are ready on a schedule, available when a customer wants them and arrives when they need them.

    Production management is essential to maintain consistency in product grade and 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 manufacturing module in ERP 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 and sales and marketing management, ERP modules are critical. For example, the ERP manufacturing module provides functionalities 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 and the impact of campaigns and marketing activities through comprehensive reports. This can help improve the accuracy of sales forecasts and act as feedback for product feature enhancements.

  5. Order Management

    Customers and sales teams can effectively track the status of orders and 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 crucial to improving “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 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 (to benchmark employee performances and schedule training to improve the overall skill sets).

    The module can also assess the characteristics required for an employee to be successful and help recruit and attract the desired talent.

  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 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 they can keep the engagement going. CRMs are also powerful tools for 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. In addition, an effective vendor management system protects the manufacturer from order non-fulfillment. 

  9. Business Intelligence (BI)

    BI manufacturing module in ERP acts as the brain of the different business processes for any manufacturer. Working as a ledger of all activities on the system, the BI manufacturing ERP software modules provide an audit trail for managing 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 and accounting for non-plant resources such as people and information.

  11. Accounting and Finance

    This ERP module for the manufacturing industry enables a company to manage its accounting and financial data effectively. 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.

5 Manufacturing Challenges That ERP Module Solve

  1. Traceability

    Traditionally, manufacturers stuck to ledgers, shipment labels, lists, or Excel sheets to note inventories. However, sharing, accessing, and frequently updating them was a problem. Thus raw materials or finished stock could easily be misplaced without the authorities knowing the same for days.

    With ERPs, organizations could easily access and update their database, making inventory tracking much simpler. With a manufacturing ERP solution, you can gain 360-degree visibility and control over all stocks and their movements. The integrated database provides real-time data and reports, ensuring that each unit is tracked from start to finish.

  2. Planning

    Proper planning of resources is essential for manufacturers. However, amid changing demands in the market and varying customer trends, manufacturers have a tough time procuring and maintaining the right stocks.

    ERPs help businesses plan by forecasting demand and providing timely alerts. In addition, ERP in production planning helps minimize slowdowns and quickly adjust to changing trends through proper planning. Most ERPs, therefore, contain dedicated modules for planning material requirements, production planning, and scheduling, assisting manufacturers in reducing losses and extra expenditures.

  3. Resistance to Change

    ERP solutions for manufacturing challengesThis is perhaps the biggest of all challenges in the manufacturing industry. When your employees fail to acknowledge and adapt to change, you can run into serious trouble. Of course, the change is inevitable, but you can make sure that the transition happens smoothly and that the employees stay active, willing, and motivated during the process.

    One of the most important roles in this respect is the implementation consultant. When an ERP solution for the manufacturing industry is implemented, the ERP implementation consultant has to connect to the employees’ core needs and expectations from the ERP Software.

  4. Transactions

    Manufacturers often have to deal with a high volume of transactions daily. Whether procuring goods from vendors, creating purchase orders, managing unit production, or delivering to distributors, the sheer magnitude of daily transactions can overwhelm manufacturers. However, by using a specialized ERP for the manufacturing industry, such organizations can drastically improve their handling of payments, invoices, and other transactions. Moreover, large amounts of data can be entered, processed, and tabulated to create detailed transaction reports, ensuring that everything is accounted for.

  5. Analysis

    Analyzing market trends and resource utilization can help manufacturers’ business-to-business stay ahead of the competition. Through graphs, reports, and dashboards, managers can track every aspect of manufacturing and receive notifications when problems arise. This helps them streamline processes, point out irregularities, and get them sorted before they become bothersome.

Final Thought

The manufacturing value chain comes with many moving parts, traditionally brought together by heavy manual intervention. The various manufacturing ERP modules show how they can enhance the efficiency of this value chain.

ERPs can significantly improve a manufacturer’s productivity from the first customer conversation to tracking a shipment and receiving purchase orders.

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