6 reasons manufacturing companies need integrated ERP solutions
Historically, the enterprise resource planning solutions (better known as ERP systems) have developed for the needs of manufacturing companies and even though today they are used widely in all sectors of the economy, manufacturing is still their N1 user. The manufacturing companies comprise a total of 47% of all businesses oriented toward implementing ERP solutions, followed by Retail (18%) and Logistics (12%).1
In today’s dynamic and highly connected world, it is hard to even imagine a manufacturing organization managing its business without the help of an ERP solution. A study conducted earlier this year by NETRONIC, a company specializing in the development of software applications for production planning, revealed the six main reasons that push manufacturing companies towards implementing comprehensive ERP solutions:
- Need for more cohesion in Business
- Need for a higher overall transparency of business
- Need to enhance the efficiency of admin and core production processes
- Need to be able to handle the growing number of orders
- Issues managing capacity
- Missing customer delivery dates too often
Source: The State of Microsoft Dynamics 365 Business Central & Manufacturing Report
Download the complete report here
Cohesion and interconnectivity of processes
Modern ERP systems occupy a key place in the management of any business. They manage not only the accounting and finances of the company, but also the planning of production, warehousing, ordering and deliveries of raw materials, shipment of finished products to customers, quality control and many other processes, key to the successful operation of the organization.
Each of those processes is directly connected to the rest and the information exchange between them helps the business tick like clockwork. Any interruption to the information exchange can cause delays and increased expenses and have negative impact not only on business itself but also on its engagements with customers and suppliers.
Having a software solution capable of managing each individual aspect of the business within a single system, directly eliminates the possibility of siloed operations and information. Every operation that takes place within the company is immediately reflected in the ERP system and is available to the departments that depend on it in their daily work.
Transparency and a 360-degree view over the entire business
It is no coincidence that the need to have higher overall transparency of business is among the main reasons for companies implementing an ERP solution. Managing a complex business model in today’s dynamic market, rich on opportunities and challenges, requires reliable and timely information.
The centralized role of the ERP system allows it to accumulate and provide information about the state of the company in real or near real time. This not only helps improve the decision-making process, but also serve as a basis for identifying inefficient processes and activities in the organization. ERP software provides rich analytical information that can lead to optimization of entire business lines, making the company more competitive and better suited to meet ever-evolving market requirements.
Better management of manufacturing processes
The precise management of production processes is key to the success of any manufacturing organization. Regardless of how the manufacturing process in organized (with or without orders, or mixed), every company’s aim is to increase work efficiency, achieve full load of available capacity and reduce the production costs. The detailed information and reports that the ERP system is able to provide give a solid ground for even more precise production planning and lead to a number of improvements in the overall management of the production process, such as:
- Optimization of raw material stocks and elimination of surpluses or risks of interruption of the production process due to lack of materials
- Better control over the supply chain, planning, tracking and ordering the right quantities of products and materials at the right moment
- Better control over the production process itself, the ability to anticipate potential problems and fewer situations leading to downtime
- Better capacity planning for production facilities
- Overall traceability of the implementation of manufacturing operations and many others.
Strict commitments to customers, higher customer satisfaction
In today’s highly competitive market, where customers have information on their fingertips and lots of alternatives, high customer satisfaction can distinguish an enterprise and become a significant competitive advantage. In this regard, the opportunities that ERP solutions provide for precise planning of the production process, allows sales departments to have all the necessary information to make realistic commitments to customers and fulfill them strictly. ERP solutions allow planning both forward from a set start date of the production process as well as backwards from a fixed date on which the order must be ready.
As an example, due to using the leading ERP solution Microsoft Dynamics NAV (predecessor of MS Dynamics 365 Business Central), our client VSK Kentavar – IZ Dinamika, a leading Bulgarian manufacturer of wide range of precision tools for metalworking and equipment for CNC machines, managed to achieve a significant increase in the efficiency of its production, the accuracy of order fulfillment and customer satisfaction. After the successful implementation of the system, the company was able to reduce its production cycle by 4 weeks and increase the deal of orders completed on time from 34% to the impressive 95%.
Microsoft Dynamics 365 Business Central
Business Central (successor to Microsoft Dynamics NAV – NAVISION) is one of the most widely used ERP solutions worldwide. The system can manage all key business processes in an organization and offers interconnected modules for management of:
- Manufacturing
- Purchases and payables
- Sales and receivables
- Projects
- Accounting and finances
- Services
- Customer relations and more
The system features a familiar and easy-to-use role-based interface which gives users quick and convenient access to the resources they need in their daily work.
Microsoft Dynamics 365 Business Central is trusted by over 160,000 companies around the world, and soon we expect the cloud version of the solution, available for business in Bulgaria. If you want to learn more about Business Central and how it can benefit your manufacturing company, contact our team.
1 – Research of SelectHub among 225 companies