The benefits of a ERP system for the Manufacturing Sector

The manufacturing industry relies on the efficient management of inputs and outputs more than practically any other type of enterprise. Companies in the sector must marshal resources from suppliers all over the world, track their current inventory, and adjust their orders according to sales predictions. It’s not easy, especially when done by hand.

Fortunately, you can now get digital solutions that tie the entire process together, automating many so-called “back office” functions and improving reliability and efficiency. These Enterprise Resource Planning or ERP systems take over many formerly labour-intensive (and error-prone) processes and streamline the entire business. Many plant managers find that they shave off a substantial proportion of their expenses.

Microsoft Dynamics 365 is, in many ways, the ideal ERP tool. Not only does it provide fully-fledged CRM functionality with numerous integrations, but it also offers a range of modules designed to streamline workflows for companies in the manufacturing sector. These include Microsoft Dynamics AX for organisations that do business across locations, Microsoft Dynamics GP for those wanting to enter new markets, and Microsoft Dynamics NAV for streamlining industry-specific processes.

For an introduction to the platform, check out the following video:

The benefits of ERP solutions from companies like Microsoft are substantial.

Benefit #1: Cut Costs

The primary driver for implementing an ERP solution in the manufacturing sector is to cut costs.

ERP solutions reduce expenses in several ways.

• Reducing the labour cost involved in processing shipments, ordering products, or communicating with suppliers
• Cutting error rates by automating processes and eliminating errors that might occur in human-to-human communication
• Improving organisational visibility by showing the current resource status in real-time, allowing for better strategic decision-making
• Permitting the evaluation and adjustment of business processes in real-time

Interestingly, Dynamics 365 goes beyond the standard benefits outlined above by providing modules that calculate material usage and reduce stock requirements. Many firms who use it find that they no longer have to hold extensive inventories. Better visibility over demand conditions and the supply chain makes hedging strategies like these obsolete.

Benefit #2: Respond Faster To Market Conditions

ERP solutions provide you with all the data you need at your fingertips to respond to changes in market conditions. Dynamics 365, for example, offers real-time data analysis that lets your company estimate future resource requirements more accurately. It also integrates information from consumer purchasing trends, giving you insight when and exactly how much you should order.

Read more on Production Planning with Dynamics 365 Finance and Operations.

Benefit #3: Manage Your Entire Supply Chain

Pixabay – CC0 License
Companies in the manufacturing industry also need tools that allow them to manage their entire supply chain from a single dashboard. Many, though, still use a piecemeal approach.
Interestingly, the issue with fragmented supply chain management isn’t so much the errors that creep in, but the lack of analytical value. Companies need to be able to make evidence-based strategic decisions, but they can’t without drilling down into supply chain data.
Here again, Dynamics 365 can help. It offers a comprehensive overview of manufacturing supply chains, allowing analysts to spot issues, predict shortages, and fix problems before they affect factory operations.

Benefit #4: Helps Manufacturing Firms Become More Agile

On top of this, ERP solutions help manufacturing companies become more agile and responsive to changes in conditions, enabling them to more robustly manage shocks to their business model and contain fall out.

The reason for this is how Dynamics 365 and other solutions generate high visibility across a range of functions. Analysts, for instance, can monitor:

• Product development status
• Production status in real-time
• Financial data on the companies sales, projected cash flow, profit, loss, and expenses
• Sales data on units shipped and to which third-party vendors
• Procurement information fed by suppliers
• Current inventory status
• Design and development roadmaps

For manufacturing companies, the value here is the ability for different departments to engage in productive cross-talk. Design teams, for instance, can alert the finance department of changing material requirements following product design changes. Similarly, integration of sales data helps firms make good on their commitment to customers higher up the chain.

Find out how Renault Sport Formula One uses Dynamics 365 to make rapid changes for an even faster race car.

Benefit #5: Better Supply Chain Visibility

Manufacturers depend heavily on the quality of their suppliers. Without reliable partners, they can’t deliver quality products on time. Good ERP solutions, such as Dynamics 365, therefore, make visibility a priority, allowing firms to see where problems lie.

Here are some of the advantages that better supply chain oversight could offer your enterprise:

• Give permissions for the relevant people in your organisation to make supply chain decisions
• Monitor costs and price information from vendors in real-time, based on integrated finance data
• Find alternative vendors for input materials, should your existing partners let you down
• Get real-time updates on the status of your orders and current supply levels
• Analyse your suppliers at a granular level to iron out unexpected costs
• Automatically reorder mission-critical inventory when stocks run low to prevent downtime
• Schedule maintenance and servicing to minimise interruptions to your workflow

Better supply chain visibility, therefore, gives you more power to make the right decisions. It allows you to peer into the inner workings of your enterprise and see data on a granular level.

Benefit #6: Enjoy A Host Of Strategic Advantages

Ultimately, enterprise resource planning is all about allowing you and other members of your company to make better decisions regarding the direction of your firm. With more data at your fingertips, new opportunities become available.

For instance, once you have better operational insights, it is easy to improve the productivity of your plants. Furthermore, you can look for systemic issues in your supply chain and compare them to alternative approaches using on-board analytics.

ERP systems help manufacturers automate many of their HR functions too. With the right human resources module, you can easily arrange holiday time around your production needs.

Final Thoughts

For manufacturing companies, products like Microsoft Dynamics 365 and others are a godsend. They provide the visibility that they need to make better decisions regarding their finances, supply chain, workflow, plant operations and human resource usage. Importantly, all these datastreams link up, providing far greater insight than possible through regular monitoring channels.

So, is it time your firm upgraded its operations with a world-class resource planning tool?

Find out more about Dynamics 365 for the manufacturing industry.