What’s the use of an ERP system in manufacturing?

Tuesday October 4, 2022
5 min read
erp software
Nowadays companies have to take advantage of all the tools at their disposal to stand out from the competition and ERP software is essential to guarantee the quality and costs of your manufacturing process.   In this article you will learn what an ERP is, what its main advantages are, and why you need one in your business. 

What is ERP software? 

An ERP (or Enterprise Resource Planning) system is a platform for effectively managing the operations related to the creation of a product, its manufacturing process, commercialization, and distribution. ERP is manufacturing management software that is essential in any type of company. This is because by automating systems, you reduce costs and ensure that production is carried out on time and with the expected quality.  An ERP system in manufacturing is a digital system for structuring and organizing information regarding all the aspects that make up the manufacturing process. It is ideal for industrial manufacturing companies of any kind: valve manufacturing, metalworking, metallurgical, heavy machinery manufacturing, industrial equipment manufacturing and FMCG to name a few. 

How can an ERP system in manufacturing help your company? 

First, with ERP software, your company will be able to ensure a more accurate and faster manufacturing process. This considerably decreases your production costs. In addition, all manufacturing orders are automated, which frees up administration time, allows for better stock control and greater traceability throughout the product processing.  Second, by having better control over your manufacturing processes, you will be able to better manage both your human capital and your machinery. This way, you will be able to distribute workloads smarter, plan equipment maintenance and avoid overproduction.  Finally, you will have access to all the statistics, reports and analysis on each process in your company, its current status and evolution. With this information, you will be able to make more informed decisions, as you will know the work rhythms of all your employees, the performance of each machine and the production costs that can be controlled. 

ERP software allows industries to have all areas of manufacturing under control. These include

  • machinery and equipment inventories
  • raw material inventory
  • assembly lines
  • line production per product
  • movements and deviations.

An ERP system in manufacturing, allows you to control the management of production personnel, through the planning of people, movement, and time – more specifically:

  • schedule planning
  • clocking in and clocking out
  • production times per employee
  • times and movements
  • manufacturing quantity
  • employee presence and absence.
ERP software provides resources and tools for planning and control of personnel and production. In addition, ERP software allows you to plan projects and budgets. The system also allows you to plan your operations by work projects or by production lines and batches. It also offers the tools to maintain total control of each production area.  Cost information provided by an ERP system in manufacturing per project/batch: 
  • raw material 
  • by item and unit prices 
  • machinery 
  • equipment
  • assembly
  • personnel and task and activity assignments
  • suppliers and order status
  • purchasing vs. inventory vs. production vs. costs 
  • total production costs including service consumption per line and per production batch. 
The advantages of having a production ERP platform are extensive. To begin with, you have at hand the tools that provide you with complete information of the company's production processes, so that you can prevent stoppages due to the lack of raw materials or lack of machinery maintenance at a given point in time.  With ERP software, you can always verify the existence in inventories, know the quantities and costs required by production lines or batches and with this information, schedule orders to suppliers and maintenance of equipment in advance. An ERP system for manufacturing enables you to design the planning of materials, machinery and equipment, suppliers, budgets and costs by items and units, scheduling of machinery maintenance, inventory stock and dates of receipt of raw materials and materials. With ERP software, your company will not only increase profits and decrease costs by large margins but will also obtain the highest productivity and efficiency from your workers. 

Why should you use ERP software to manage your manufacturing processes 

Here is a list of the points in which an ERP system in manufacturing will help your organization:  Planning and controlling production processes  ERP will establish an optimal work plan according to existing orders and sales, in order to always manufacture the quantity needed at any given time. This automatically considers the number of available workers, the production capacity of the machinery and the available raw materials. Once you have a well-designed plan, you need compliance with it. Here, an ERP oversees verifying that stocks are always available, the machinery is working properly and suppliers do not fail.  Tracking  An ERP in manufacturing is responsible for tracking all the processes and accumulating all the data generated in real time.  Outsourcing  You can also automate all the processes where you must outsource to a subcontractor during your production process.  Managing inventory  ERP software can be configured to place orders for raw materials. You can also perform other tasks such as authorizing stock transfers and estimating future stock. 

How to choose the best ERP for your company? 

First, the ERP you choose must be able to automate all processes as well as unify all your systems and applications to improve your company's administrative management. This includes warehouse, accounting, sales, manufacturing, and invoicing. This integration also facilitates data analysis to identify the KPIs for each area. It should be possible to connect it with other third-party systems, such as customers and suppliers.  You need ERP that is configurable to your needs to perform automatic actions in specific cases or emergency situations, such as when a raw material or a warehouse product is running out.  It has to be easy to use, fairly secure, and with an intuitive interface. The ERP you choose should be tailored to your organization.  There are a number of ERP systems in manufacturing. At XPLUS, we know a thing or two about them. So, if you have any specific questions about ERP software, please write them here – we promise to address them in no time.  Check our implemenation offer on: Microsoft Dynamics 365 Implementation Services

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