For small and medium size manufacturers, the competition is intense. Growing your business with a smaller market share and fewer resources than giant manufacturers is tough work. You have to do everything better, faster, and with less. So, how is this accomplished? High growth manufacturers have found that by choosing the right Enterprise Resource Planning (ERP) system, they’re put on a path for success and enabled to be competitive in their industry.
For manufacturers, one of the most desirable aspects of ERP is integration, where all the modules work together seamlessly to transfer information to each part of the intricate system. The result is to have automated processes that share information flawlessly: inventory with purchasing, production results with material requirement planning, and sales orders with accounts receivable. I’m excited to tell you that this dream has become a reality for many manufacturers.
Plus, integration via cloud ERP dramatically improves productivity and processes, because everyone can access the same information, whenever and from wherever they are located.
Some manufacturers have old ERP systems in place, but because the business of manufacturing is complex and frequently changing, that legacy system—or multiple systems—simply won’t keep up with their evolving needs. Thriving in manufacturing means always improving your response to customer demand and the competitive environment, while keeping your costs in control. You can learn how to do that by utilizing these three prerequisites for growth.
1. Manage Product Complexity
Manufacturing is complex because you’re delivering products with many different variations and constantly adapting to new manufacturing methods.
Your product line isn’t going to get simpler—in fact, the opposite is true. Thus, you need to have a plan for controlling the growing list of features, colors, sizes, and options your customers want. You can’t afford to get this wrong, because in most industries your current and future customers have a plethora of options to choose from. You don’t want to lose business because you’re not keeping up with the customer’s changing demand.
How you respond to the demand for complexity in manufacturing will make or break your business.
- Inventory – You’ll need the right material and finished goods in stock.
- Options – It must have the correct variety and customization.
- Sales – You’ll have to be able to market and price based on manufacturing costs.
- Support – You must offer excellence in customer services as customers’ support expectations grow. Quality products reduce support costs.
2. Control Total Manufacturing Costs
Your whole plan for how to deliver a product to your customer boils down to how much it really costs to build each product variation. Product costs will control your other execution decisions.
The central challenge in manufacturing is how to control all parts of the cost. You need to balance supply and demand in scheduling production, manage inventories efficiently to reduce material cost, and minimize your total cost of manufacturing.
It starts by precisely tracking your inventory. You need to know what to order, what not to order, and when to order it.
Cloud ERP has been proven to provide total control over your inventory, your ordering needs, and your steps of production.
Modern systems help you plan and predict your needs based on past and projected data. ERP can adapt your purchasing, accounting, production, and all other aspects of manufacturing to your current, specific needs. Using ERP acknowledges that parts of your business will change as you grow.
In addition to accuracy, timeliness is also important. For example, when something arrives broken, late, or in the wrong color (as it inevitably happens), ERP can immediately alert you and the vendor to correct the error.
3. Facilitate Collaboration
In manufacturing, collaboration is essential for saving money and delivering the best possible product.
- External: You have to collaborate with your supply chain, both on timing and on design. For example, if you’ve designed a new product you’ve never built before, collaboration with a supplier can help you modify your design based on suppliers’ components in order to save money.
- Internal: Likewise, internal collaboration between departments in your business is essential to your bottom line. An example is when Engineering consults Manufacturing on a product design in order to ensure it comes together faster and with less cost. It’s the same with Sales—if they can communicate how many times they’re asked for a specific product feature, you can begin the steps to offer it.
To both maintain and grow your business, you need people centric software for collaboration and visibility across the plant and supply chain. This will improve decision making.
ERP can help you with all of these elements: complexity, cost, and communication.
The way manufacturers do business is constantly changing, and those who adapt have the competitive advantage. The challenges you face in a complex environment should not hinder, but stimulate your business growth.
Find out whether you’re prepared to let Acumatica give you an advantage in your industry with a modern Cloud ERP solution.