What is an ERP System and what can it do for my Manufacturing Business?


SAP Business One for Manufacturing

When most people hear the term ERP, they often think of a vast complex system only capable of running Fortune 500 companies. Yet, the most common ERP implementations happen with small to midsized businesses, usually because those companies tend to outgrow systems like QuickBooks. A good ERP (Enterprise Resource Management) system combines all facets of business operations. Accounting, finance, sales, purchasing, and production are all under one system and integrated with each other. This creates efficiency with automated processes and allows for a much better overview of the company as a whole.

When companies start to see their separate systems like accounting, inventory, job planning, order planning, and other activity being done separately, they create a lot of disparate information . They go through the process of turning that information into data that needs to be transferred from one system to the other, often by hand. This becomes a major problem over time and causes many challenges when trying to make real time business decisions.  ERP packages like SAP Business One have the capability of managing these business activities under one roof without the steep price of a Fortune 500 company system.

Some of the improvements that Small and Medium Size Manufacturing Companies experience when investing in a new ERP are related to:

Inventory Management

Whether your company uses a warehouse management system (WMS) from your ERP solution, or your company needs a more sophisticated 3rd party add-on solution, maintaining precise accounts of your inventory requires much more than regular Excel spreadsheets. To free up cash flow and minimize labor costs with physical inventory counts, an ERP solution can track the changes in seasonal sales to see the pace at which items move in and out of inventory. Thus, giving a company a better handle on the management of their inventory.

Order Processing

Since there are two sides to order processing, purchase and sales, an ERP solution can alert purchasing if items fall below a certain level or alert sales that certain items are out or on order. This prevents items from running out which leads to missed sales and delivery times and prevents sales from selling items that are not in inventory or cannot be delivered when promised.

Job Planning

ERP systems can manage how long an item takes to be manufactured, the bill of materials, the labor needed, and the equipment used to produce that item. Usually the job planning is done by estimation but with an ERP system it takes all the guesswork away. It ensures your resources are being used to maximize shop floor efficiency and meet production demands. Other benefits from this include shortened delivery times, reduced labor costs, reduced machine run times and improved customer relationships, all of which help save money in the process.

Lot Control

Since product recalls do happen and you never want to lose your whole inventory because of one, ERP systems have the capability to track certain manufacturing runs by their lot, batch, and serial numbers. Depending on the complexity of your operation you can see which items were made on a particular day, on a particular machine, and the specific materials from a certain vendor that were used. This visibility can greatly reduce any losses and minimize liability.

These are only some of the ways an ERP system can improve not only your manufacturing process but your business as a whole. There is much more to streamline your manufacturing process and have your business running as efficiently as possible.

Contact us if you would like to learn more. We’d be happy to help you find out what solution might be the best fit for your company.