Enterprise Resource Planning (ERP) most often refers to the software, systems, platform, or other solutions used by a company to perform various business activities.
For manufacturers and distributors, ERP not only encompasses basic accounting and inventory management, but also handles processes for R&D, supply chain planning, production, warehousing, reporting, distribution, and others. ERP is what businesses rely on to integrate those processes into a more cohesive environment.
How does ERP work?
Traditional ERP solutions are made up of different applications, or modules, that must communicate and share data between one another. Many consider these types of external systems to be “bolt-ons” because they are bolted onto additional software components in order to meet certain requirements.
Centralized ERP systems on the other hand, will take these modules and incorporate them as core functions of the platform, allowing a single database to be the “one source of truth” a business relies on to conduct its activities. This method also significantly reduces the number of required logins necessary to manage processes, consolidate data, and generate reports.
Newer, modern enterprise resource planning systems can often be purpose-built, meeting the more granular needs of a particular type of industry. A white label snack food manufacturer for example, who works with raw ingredients to produce potato chips under different grocery chain brand names, has a much different set of operating needs than say a manufacturer that makes hammers and sells them through a single big box store chain.
What are the functional areas of ERP?
Manufacturers have a number of different business processes that their ERP software must be configured for. Some of the more common areas include:
Accounting and Finance
A modern ERP should handle the transactions associated with various types of accounts used by a business and include the ability to manage assets, liabilities, equity, revenue, and expenses. The ERP software will automate daily tasks and provide reporting tools for financial statements like the balance sheet, income statement, or statement of cash flow.
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Inventory Management
This area of the ERP will be used to manage inventory throughout the supply chain. It systematizes the approach to sourcing, storing, staging, and selling both raw materials and finished goods. For companies with complex manufacturing processes, there are two methods of inventory management the ERP system will support: just-in-time (JIT) and material requirements planning (MRP).
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Manufacturing
An ERP platform designed for manufacturers will include capabilities for managing the bill of materials, running production jobs, planning capacity, enforcing quality control, and managing workflows. The ERP system allows manufacturers to automate daily processes and manage the resources necessary to produce their products.
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Warehousing
Although sometimes treated separately, ERP solutions with built-in warehouse management functions provide the necessary process controls critical to any manufacturing and distribution facility. As an example, using scannable GS1-128 barcodes on finished goods allows the back office to see when inventory is moved between locations in real time.
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What value does ERP bring to a manufacturer?
ERP software can provide you the ability to consolidate solutions and data into a single system, making it possible to reduce the manual work required for activities like performing a month-end close.
A centralized ERP has the innate ability to accommodate growth, where-as trying to use disparate systems to manage inventory, sales, and track costs may not be scalable.
Advanced production planning and scheduling can be accomplished with an ERP system where a single source of data is used to drive business decisions.
ERP can improve compliance with regulatory standards and reduce the risk of product recalls.
Customer experience can be greatly improved by providing a single source of billing, order management, and relationship tracking.
Improved inventory management can be realized with lot tracking and traceability capabilities throughout the supply chain.
How is ERP implemented?
ERP implementations will vary depending on the software vendor or consultant you are working with. It will often involve bringing resources together from project management, to product specialists and solutions architects, as well as subject matter experts on the customer’s side. ERP implementations are most successful when the vendor has laid out a clear project plan which includes the ongoing process of understanding requirements and iterating upon solutions.
Before kicking off an implementation, it is important to understand how process gaps are handled within the ERP system. The simple fact is, no single enterprise resource planning system can do everything a business might require. Defining these gaps during process engineering discussions and laying the groundwork for configuring or enhancing the system will play a major role in the overall implementation success.
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What are the common objectives of an ERP implementation?
Manufacturers looking to implement an ERP system will often have a set of objectives that align with the goals of the company. A properly implemented ERP solution should deliver on these requirements and be flexible enough to handle changes in the industry as well as technology. The intention is to understand how the company will be better off 5-10 years from now assuming the ERP project is done successfully.
Some of the more common business objectives driven by an ERP implementation include:
Process Control
Manufacturers and distributors may be looking for mechanisms to systematically control operations within the warehouse. They are looking for effective and efficient processes which will allow them to get away from manual work and duplication of data, by having all operations controlled within a single system.
Formulation to Shipment
The business may need enterprise resource planning software that will greatly enhance the operational tools available to manage the formulation to shipment process. As many manufacturers are operationally focused, improving speed, accuracy, and data flow within these departments will help drive growth and profit margins.
Consolidation
For companies looking to grow organically or acquire new businesses, there is a need to bring together various processes to reliably control production, prevent plant or machine shutdowns, maximize compliance adherence, meet customer expectations, and eliminate the risk of manual workarounds.
Manage complexity
Aggressive growth expectations require an ERP solution that will effectively manage increasingly complex business requirements and combine customer requirements, quality control needs, warehouse management, and document generation.
Learn more about Deacom ERP
The Best ERP for Manufacturing
From within a single, centralized platform, Deacom ERP software gives manufacturing companies the capabilities they require to run their businesses.
Food & Beverage
Support inbound and outbound EDI transactions, formulate and generate nutritional fact panels, and use the lot tracking implosion/explosion reports in the event of a recall.
Deacom ERP Software for Manufacturers & Distributors
For batch and process manufacturers, discrete manufacturers, and distributors, Deacom ERP provides the largest functional foundation that is critical to your business needs.
Batch and Process Manufacturing
See why batch manufacturers choose Deacom ERP software for total process control.
