ERP Tackles 5 Challenges Faced by Manufacturing Companies

ERP Tackles 5 Challenges Faced by Manufacturing Companies

Author: | Published: 18 Aug 2016

jp_erp_tackles_5_challenges.jpgChange is everywhere. And it seems to happen at warp speed these days.

Today, from a business perspective, few sectors can escape the disadvantages of economic and/or exchange rate volatility that are a consequence of all this global change. 

Take manufacturing for example. The uncertainty of the current business environment has put manufacturers under increasing pressure to meet customer driven deadlines promptly, configure products to order, manage inventory more effectively and run the shop floor more efficiently.

Here are 5 manufacturing challenges that arise as a result of an unpredictable climate and how I believe they can be mitigated by the right business software.

Remaining Profitable with Fluctuating Raw Material Costs and Margins

  • Manufacturers can count on ERP to ensure that they have enough integrated visibility to accounting, distribution and manufacturing operations to easily identify and track cost elements and target areas of waste for improvement.
  • Labour intensive and time-consuming processes can be automated with an enterprise system.
  • ERP tools enable evaluation of detailed actual-versus-expected costs, as well as targets for cost savings and continuous improvement programs.

Managing Imports of Raw Materials

  • A Blanket Purchase Order facility enables pricing to be specified for an agreed quantity of product.
  • Tools such as Requirements Planning and Factory Scheduling allow manufacturers to implement LEAN principles and ensure contract service levels are met.
  • Enterprise software allows you to hedge against unpredictable supply of long-lead-time items through the use of minimum and safety stock levels.

Effective Prediction of Cash Flow

  • Accounts Receivable forecasts reflect how different customers pay on different terms and include information such as the average number of days each customer takes to pay.
  • Accounts Payable is not only about invoiced purchases. Manufacturers should also pay attention to supplier terms, unapproved invoices and purchase receipts not yet invoiced by suppliers.

Strategic Positioning from Better Information

  • ERP offers constantly updated self-service reports and highly visual access to key performance data that will keep management informed, without draining resources.
  • Financial Ratios provide an at-a-glance assessment of the financial health of a business allowing real-time monitoring for effective decision making.
  • Forecasting modules provide tools to track and evaluate forecasts and can assist to produce the best possible outcome with minimum error.

Improving Time to Market

  • An enterprise system can import customer design data, such as drawings and CAD specifications.
  • Factory Scheduling allows for accurate quotes of lead times and delivery dates based on capacity and existing loads.
  • An Engineering Change Control (ECC) function enables manufacturers to apply control and uniformity over design-to-market processes.

A shortage of qualified and experienced labor, while not limited to any particular sector, is a further challenge faced by most manufacturing companies. In my next blog, I will discuss this industry-wide difficulty and describe SYSPRO’s approach to skills shortages.

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