ERP for Manufacturing: A Complete Guide

Whether you are planning to expand your business or your company is facing constant bottlenecks and is unable to grow, investing in an ERP system is certainly a wise decision.

However, choosing the right ERP system for the first time, upgrading the one your company already uses or even changing vendors can be a difficult task for managers. There are many options available on the market and evaluating them is essential to choose the one that best suits your company.

This guide will help you understand what an ERP is, its benefits in manufacturing, how it works and which one best suits your company's needs.

What is an ERP system?

An ERP (Enterprise Resource Planning) is software that helps manufacturers manage a company's day-to-day activities in a single system. This powerful tool can help finance and human resources departments, manage inventory and plan maintenance scheduling, among other company operations.

It is a great solution for companies of all sizes, as it saves costs, time and workload. In addition, an ERP system provides a clear view of all company activities, gathering real-time information that helps managers make more efficient decisions when they need to.

As a whole, an Enterprise Resource Planning (ERP) is a software that helps to manage and automate the resources and business operations of the different areas in real time, making the management of a company more agile and efficient, obtaining better results.

Why do manufacturers need ERP?

There are many reasons why companies of all sizes invest in ERP software. One of the most important reasons is that it streamlines the operations of all areas of a company by combining them into one reliable system. This helps the company to optimize delivery times and become more productive and competitive.

Another justification is that an ERP gathers real-time data from a company's processes, allowing full visibility and helping to avoid miscommunication. It also analyzes all this information, such as past sales or inventory status, forecasting future trends and results. Thanks to them, decision making can be more secure and can help the company grow.

In addition, an ERP system can be customized to the company's needs. This means you can work on specific orders and save time.

How can ERP improve manufacturing?

One way to understand the benefits of having an ERP system in your business is to understand how it works and how its benefits can be applied to your company. This list will provide you with a better picture:

Accurate inventory management: An ERP collects a company's inventory data in real time. This facilitates warehousing, tracking, shipping and purchasing. This helps create more strategic scheduling to avoid production delays and supply shortages.

Improves the supply chain: Managing the flow of goods will be more transparent thanks to the ERP system. A company's supply chain network will have better communication with external partners. This streamlines logistics, saving money and time.

Equipment maintenance and control: Having equipment in optimal condition not only helps the company to be more productive, but also avoids waste of labor and economic losses. An ERP helps the maintenance team by monitoring the overall performance of a company's machinery, tracking preventive and corrective maintenance requests and applying priority-based schedules, reducing bottlenecks.

Better staffing: Human capital is also a key part of a company's success. In addition, ERP can analyze employee reviews, track employee performance and help train new employees. This helps minimize the HR department's workload.

Better communication between departments: Managers and affiliates can have access to ERP information. This keeps departments in sync and reduces waste of resources and manpower.

New business opportunities: The world is constantly changing, and so are its demands. An ERP can take advantage of this information, identifying business opportunities locally or internationally. This helps to prospect and develop new profitable opportunities to expand and grow a company.

What are the most common ERP systems in manufacturing?

There are three types of ERP systems. The two presented here are the most common. Knowing their differences can help you choose the one your company needs.

Generic ERP software

As the name implies, it can work with many types of industries besides manufacturing and the investment is not large. This is a great solution if your company does not need customization. It helps a company to have a better workflow process in daily tasks such as finance management and accounting. However, this software is not the best for floor operations and would need add-ons and extensive modifications to get the most out of it. In the end it would create more costs than benefits.

If you are planning to expand your business and already have this software or if your company is in a specialized industry, switching to dedicated ERP software would be a smart move.

Dedicated ERP software

This tool offers all the advantages of the generic ERP system, but is tailored to the particular needs of an industry. Easy examples are the medical and food industries. Each has specific raw materials, needs particular processes in manufacturing and demands special care for its products. Having the specific ERP will not only make a company work more efficiently and save workload, but it will also help a company to be more competitive and reliable.

On the other hand, this system is more expensive than generic ERP software, but it is a smart investment in the long run, as it doesn't need much customization or upgrading like generic ERP.

Ready to grow your business?

Regardless of which ERP system you choose, both can be great solutions depending on your business needs. Adding some customizations like Skyplanner and AI-driven production planning can be a game changer.

Forget the challenges of production planning in Excel and modernize your business to be more efficient.