Modern, just-in-time and “lean” manufacturing principles place great stress on manufacturing managers. Previously, those managers were able to maintain large quantities of raw materials that they could use in manufacturing processes to create equally large inventories from regular production runs. These practices allowed businesses to fill product orders as they came in, but they also tied up significant amounts of cash and assets and reduced manufacturing company profitability.
Rather than creating large inventories of finished products that then sit in warehouses until orders come in, new manufacturing principles call for managers to create a regular trickle of finished products that go immediately to customers with little or no intermediate warehouse time. Enterprise resource planning (ERP) for manufacturing gives manufacturing managers the tools and information they need to track, measure, and monitor every step of a manufacturing cycle, from raw material order and delivery to shipment of a final product. In addition, managers can use ERP for manufacturing to:
- approve purchase orders electronically
- match supplier invoices with accepted purchase order receipts
- connect and coordinate the efforts of multiple manufacturing facilities
- forecast demand, and match production to anticipated demand from those forecasts
- track order status and fulfillment at all stages of a manufacturing cycle
Gamma Vacuum, a small Minnesota-based manufacturer of ion pumps, realized all of these benefits and more through the adoption of its own manufacturing ERP software. Gamma is a small business, yet it has captured more than one-third of the marketplace for its products through intelligent management of its manufacturing processes. Gamma specifically uses ERP for manufacturing to manage supply and distribution channels and to feed information back into its manufacturing facilities to allow the company to quickly respond to customer orders and changes in those orders.
Likewise, H&R Manufacturing, a Texas tool producer, uses ERP for manufacturing to stay competitive with international tool manufacturers. H&R collects data from its manufacturing floor in real-time to measure production time, and it then uses that data to set costs and pricing for its products. Its ERP manufacturing system gives managers a clear picture of order processing time and identifies manufacturing processes where time is used inefficiently or ineffectively.
Depending on its needs and the specifics of its manufacturing operations, a manufacturing company can adopt and install a number of different modules, all of which address different aspects of ERP for manufacturing, including:
- sales and distribution management
- purchasing management
- manufacturing planning and control
- quality assurance
- supply and inventory control
- machine and equipment maintenance
- human resources and manufacturing operator management
Effective use of any of these modules is a function of management’s ability to harness the information that a manufacturing ERP system will collect and generate. The auto parts supplier, Tribar Manufacturing, discovered this after the initial installation and implementation of an ERP system generated so much data both within and outside of the system that its personnel were unable to fully grasp and use all of the data that had been generated. Tribar rebooted its ERP installation and within a short time, realized cost savings of more than $350,000 from better control over its inventory.
Regardless of size, a manufacturing company can squeeze substantial profits out of its operations through better use and understanding of all of the data and information that manufacturing cycles routinely generate. ERP for manufacturing company can improve the operations of a manufacturing company by providing the tools and pathway that the company needs to gain that understanding.