Since the ‘90s, businesses have used Enterprise Resource Planning (ERP) to get a better view of what is happening across their organization. It originally evolved as a system of record with the primary driver of tying-in, and producing, a single view of an integrated transaction.
As we enter the fourth Industrial Revolution, it is becoming critical for ERP to transform from a system of record into a system of insight, a system of engagement. As more businesses start to focus on improving planning, for example, it becomes important to ensure that your ERP system incorporates automation tools and real-time visibility of processes.
Identifying the Challenges
Companies in the manufacturing sector face a number of challenges as they attempt to remain relevant in an increasingly competitive environment. As a number of business-consulting companies delve into the potential impact of the Fourth Industrial Revolution on global manufacturing, common risk factors come to the fore:
For CEOs and CFOs, automation offers the potential to mitigate many of these risk factors, and improve on the businesses overall effectiveness and productivity. By integrating automation, businesses can often see relatively rapid results, particularly in the areas of finance, supply chain management, production, and product innovation. The key to integrating automated ERP systems lies in securing the buy-in for automation by the overall business, and then, reducing the bulk of manual processes throughout the business. This frees up key personnel to focus on the analysis of the big data streams flowing into a central point from all areas of the business.
For years, manually-inputted spreadsheets have gone hand-in-hand with ERP, which often result in manual capturing errors, and siloed information. There are a number of benefits in selecting a comprehensive ERP solution that can produce greater insights and negate the need for spreadsheets. Businesses that embrace automation see a reduction in the costs associated with human error, as it relates to data inputs, miscalculated quotations based upon old exchange rate or vendor/supplier information, and procurement among others. As data is centrally stored, operational and financial reporting becomes simpler and more valuable.
By automating order processing, and other supply chain processes, you allow for production plans to be executed using LEAN principles.
Imagine what you could achieve with access to a real-time flow of information across the supply chain to improve tracking of assets and inventory, and inform planning and production. CFOs benefit from a unified view of inventory, with real-time data reflecting stock at each location, whether in transit, at the finished goods warehouse, or on the factory floor. Being able to keep a close eye on expected components and raw material from suppliers, and outstanding orders from customers will not only mean improved customer service, but also better profit management, which is a priority for every manufacturing or distribution business.
As agility plays an increasingly important role in enterprise success, effective ERP means you will be able to quickly identify capacity constraints, and adjust stock holdings across multiple sites and warehouses. Costly line stoppages in assembly plants can also be prevented by synchronizing supply with customer demands.
Visibility Across Your Supply Chain
ERP optimizes processes across the business and enables visibility throughout the supply chain. Quotations based on accurate material, labor, and outsourced services costs could be quickly issued to clients. Planning would be based on more accurate projected demand and supply figures so you could create your production, purchasing and supply transfer schedules with greater efficiency.
As regulatory compliance requirements in the manufacturing industry become more stringent, and customers want to know more about the origins of your product, ERP is able to provide traceability from material origins, through manufacture, to final destination. This makes it easier to trace and analyse the source of a defect.
While the Fourth Industrial Revolution brings many opportunities for the manufacturing industry, it brings many challenges too. For those enterprises that embrace automation, and extract maximum value from their ERP, will keep pace with the changes, and benefit from the insights gained from the resulting in-depth analysis of their business.