What is Manufacturing ERP (Enterprise Resource Planning)?

Manufacturing ERP
Manufacturing ERP

With Enterprise Resource Planning (ERP), you have a system that brings all critical business processes into a single database. It integrates those processes into one system resulting in a connected business. Having a connected business platform means your company can coordinate processes and activities across business functions from a single central place.

Keep reading to get to know more about manufacturing ERP!

Manufacturing ERP Overview 

Manufacturing ERP is a system and software used to plan, deliver, and manage particular functionalities supporting manufacturers and business operations. With modern manufacturing ERP systems, manufacturing companies can get the flexible support and integration necessary for different business processes and create a comprehensive business management platform.

ERP systems help increase manufacturing enterprises’ organizational efficiency by improving and managing how resources are used. Reducing or enhancing the number of resources without compromising performance and quality is critical to effectively enhancing the manufacturing business profitability and growth.

Adopting ERP software enables manufacturing companies to manage key aspects of everything, from floor operation to inventory planning and supply.

Who is Manufacturing ERP for?

Manufacturing ERP software and system is ideal for manufacturing businesses of all sizes. These businesses require a manufacturing ERP solution with industry-specific capabilities and features to automate, collaborate, connect, track, and manage every dynamic step of the manufacturing processes.

Small Business ERP 

Manufacturing ERP designed for small manufacturers eliminates the need for using different tools while providing a single system that works across the business. This end-to-end solution provides the best practice processes for managing business complexities. Most small businesses prefer the modern cloud-based ERP system because of its continuous upgrades, increased security, anywhere access, lower ownership costs, and faster deployment.

Mid-Market ERP 

The manufacturing ERP system for mid-market manufacturing businesses comes with built-in analytics, best practices, and rapid deployment for various business processes. Those processes include HR, accounting, supply chain management, financials, etc. Mid-market manufacturers who choose to use modern ERP software can benefit from tools that will help to be more competitive, agile, and productive.

Enterprise ERP 

Most large manufacturers have global operations, so they need a top-notch and robust manufacturing ERP with analytics, machine learning, and artificial intelligence. These manufacturers need a platform that can support intelligent automation to transform different processes effectively. The system is deployed in the cloud, on-premise, or in a hybrid scenario, which depends on the unique business needs. It is also integrated with the current database or run on an in-memory database.

Why Do Manufacturing Companies Need ERP?

A manufacturing company that uses an integrated manufacturing ERP system offers a lot of financial and operational benefits at micro and macro levels. Below are the most notable benefits that manufacturing companies can get from ERP system:

  • Minimized redundancy and automated processes to ensure increased efficiency
  • Improved inventory, transportation, warehouse, and supply chain management
  • Optimized manufacturing operations to improve productivity
  • Deliver better customer service
  • Lessened risks and the increased confidence around compliance
  • Better ability to adapt when facing disruption or changes in the business environment
  • Centralized financial and operational information to enhance communication and visibility
  • Captured real-time operations reporting with quick access
  • Eliminated multiple systems that do not communicate with one another
  • Unified departments and better comparison of metrics across the business

Generally, a manufacturing ERP system simplifies business operations while providing necessary support to help manufacturers grow their business. It also improves quality and increases revenue.

Other advantages include:

  • Tracks raw materials, plans out manufacturing processes, and allocates resources
  • Manages manufacturing process more effectively and tracks shop floor activities
  • Utilizes quality control checkpoints ensuring products meet the customers’ unique specifications
  • Receives, scans in, and stores products with knowledge about each item’s location within the warehouse
  • Monitors the finished goods’ inventory that comes in and goes out
  • Manages daily finances, tracks job costing and creates custom reports
  • Schedules jobs according to the raw materials by stock, labor hours, and machine time

Different Types of ERP Systems 

When looking for the best manufacturing ERP solutions, it should support Adaptive Manufacturing Enterprises.  like those detailed in Tulips agile manufacturing guide. It should also adapt to changes and disruptions with ease for a competitive advantage.

Different ERP system types and deployment options are available that vary depending on the manufacturing company’s size, needs, and function.

On-Premise ERP System

This ERP system offers ownership, control, and support of the system when implemented. It comes with the cost and risk of managing the system infrastructure and hardware for manufacturers.

Cloud-Based ERP System 

With a cloud-based ERP system, manufacturers can take advantage of the flexible and comprehensive system. It features continual support, training, updates, and flexible customization.

Hybrid ERP Deployment 

This ERP deployment offers a mix of on-premise and cloud-based deployment and hosting services. It provides flexible migration between delivery models. It also integrates functionalities that are not available in the current implementations.

Standard ERP vs. Manufacturing ERP 

Before getting an ERP solution, it is an excellent idea to differentiate between a standard ERP system and a manufacturing ERP system.

Standard ERP System 

This generic ERP software comes with common functionalities for any business type. It is often built as “one-size-fits-all, lacking key functionalities and manufacturing integrations for manufacturing-specific businesses. If there is a lack of integration, a manufacturing firm can experience restricted views of data. The company may also need software customization to meet the business and industry requirements.

Manufacturing ERP System 

This ERP system is dedicated to the manufacturing industry. It offers advanced functionalities to meet manufacturing-specific needs. The software allows the integration of core business processes with various manufacturing processes. In return, there is full control and visibility over a manufacturing business.

When is the Right Time to Consider a Manufacturing ERP System?

Manufacturing ERP systems are specifically envisioned for manufacturing operations management. The ideal time for manufacturing companies to consider implementing an ERP software is when the existing business processes and systems:

  • No longer support the company’s growth
  • No longer functions efficiently
  • No current security measures to mitigate risks

Final Thoughts 

Manufacturing businesses come with distinct business processes. That is why they need an ERP system dedicated to their industry-specific requirements. Hopefully, the above ideas will help you decide whether your manufacturing firm needs a manufacturing ERP system or not.