As a small manufacturer, you may be wondering if you can benefit from an enterprise resource planning (ERP) solution. The answer is simple: if your business can benefit from data integration across disparate departments such as manufacturing, shipping and receiving, human resources, and finance, then you can benefit from ERP.
Let’s take a look at why ERP is important, and how it can help manufacturers of all sizes. At its most basic, manufacturing involves taking in raw materials, and turning them into a product. This process needs staff to make it possible. It also needs a sales force to sell the product, and process the order, a purchasing staff to procure and receive the raw materials, and logistics personnel to ship out the finished product. And overseeing it all you have management and finance.
How are you currently handling raw material acquisition? Is your raw material purchasing attuned to demand so that you have exactly what you need when you need it without excess materials taking up valuable floor space and funds? What about manufacturing, finished goods inventory, and shipping? Are your products quickly flowing from shop floor to customer?
Using ERP to link together information -- from sales to raw material purchasing to manufacturing -- means you can plan to have exactly the raw materials you need, when you need them, and in the right quantity. By linking together production numbers and product demand, you have the right information you need to plan production schedules and to keep production on track to match demand. By linking this information with staffing information from human resources, you have the ability to schedule the right number of workers when you need them so that you are able to get your production numbers right.
In this way, data integration makes your company leaner, more competitive, more flexible, and more responsive to changing customer and business needs. In fact, many small manufacturers who have implemented an ERP system report a two to five percent increase in profit margins. In addition, they also report a 40 to 60 percent decrease in inventory, and a 10 to 20 percent increase in on-time performance.
Small manufacturers often operate on a razor-thin profit margin that can be easily erased by something as simple as production errors, changing market conditions, surplus stock, or inability to meet customer demand. For those manufacturers, a five percent increase in profit margins or fifty percent decrease in funds tied up in excess inventory can spell the difference between success and failure of the business.
At ERP Solutions, we can help you make the right decisions on ERP that can help grow your small manufacturing company far beyond where you are today. The future belongs to the prepared, and the prepared are using ERP solutions to make the most of their bottom line.
Contact us today to see how we can help.
Mary Jo O'Neill