Enterprise resource planning (ERP) solutions are no longer a preserve for multinational organizations. In fact, they’ve now become a necessity even for SMBs. They help integrate various business functions throughout the organization, enhancing efficiency and performance.
This is why ERP system adoption is skyrocketing. As a result, projections indicate the sector will grow at a compound annual growth rate of 8.1% over the next half-decade. This will see it reach $78.4 billion by 2026, up from $39 billion in 2019.
What Are Your Options?
Essentially, ERP systems are a data reservoir for business information. Initially, they were for large-scale manufacturers. However, they’re now essential for all organizations. By integrating data, they make it easier to manage key processes. These include finances, manufacturing, and supply chain.
To collect such data, you have the following options:
- Spreadsheets – The spreadsheet model is ideal for organizations on a budget. It’s a simple and manual method of organizing data. As such, it’s susceptible to errors.
- Conventional ERP system – Conventional ERP systems can help you control and manage various manufacturing functions. However, they offer limited functionalities and integration in comparison with modern solutions.
- Modern ERP solutions – Modern ERP systems offer holistic solutions to manufacturers. This includes a centralized database which enhances operational efficiency. Another key feature is their integration capacity with other enterprise tools. These include accounting systems, e-commerce, etc.
What are the Benefits of Modern ERP Systems?
As a manufacturer, adopting a modern ERP solution or MRP system will give you a significant competitive advantage. This is because it offers the following benefits:
- Automation of Manufacturing Processes
In manufacturing, automation is arguably the most significant benefit an ERP solution offers, helping you to increase productivity by automating various tasks. Due to the increase in production speed, you’ll:
- Reduce the time it takes to reach the market
- Increase your supply ability
Moreover, automation minimizes errors at critical stages of production. This reduces potential defects and product recalls, which translate to losses. Another key benefit of automation is increasing workplace safety. This is because you can reduce the involvement of workers in dangerous environments.
2. Reduces Costs
One of the key elements of manufacturing success is effective cost management. Other than the cost of raw materials, there are other easy to miss elements that can make it expensive. These include the time it takes to finish production and errors.
With an ERP solution, process efficiency will increase. In turn, the duration of production and errors will reduce. This will translate to a reduction in operational costs. In addition, the solution will provide the necessary information to enhance efficiency further.
3. Improves Interdepartmental Communication
Besides the manufacturing plant, there are other departments involved in the business. These are management, finance and accounting, procurement, human resources, research and development, etc.
Although each department is independent, their coordination is essential. Otherwise, there will be bottlenecks across the enterprise. ERP solutions have communication tools that can facilitate collaboration.
For example, teams can share and access progress reports virtually. This accelerates processes and significantly reduces errors due to miscommunication.
4. Enhances Decision Making
With an ERP solution, you will gain full visibility of the manufacturing process. This allows you to identify challenges, trends, and opportunities quickly. As such, you can respond swiftly to minimize the impact or maximize returns.
Digitalization in Manufacturing
Undoubtedly, manufacturing is a lucrative sector. However, it also comes with a high level of competition. As such, there is a need to enhance efficiency and reduce costs. This is why manufacturers are fast turning to digital solutions and automation. As a result, digital transformation in the manufacturing market is growing at a CAGR of 19.48%.
A key part of this digital transformation is having the right tools. Therefore, the question is not whether you need a manufacturing ERP solution but whether you can make it without a reliable one.