Many small to mid-sized manufacturers believe that they can do without an ERP system. They believe that their operation is simple enough that they can control it with a few spreadsheets. Often, this is simply not the case. Here are 10 of the most compelling reasons to implement an ERP system.
1. Real-time information for decisions
Without an ERP system, your team is flying blind. They make decisions based on guesswork and rules of thumb because they don’t have the data they need. Sometimes they are the right decisions, but more often, they are sub-optimum decisions that can cost you money and customer goodwill.
2. Best practice procedures
Software companies often design their ERP systems to support specific industries or verticals. As they add customers, they learn industry best practices and incorporate them into the software. By implementing an ERP system designed for your industry, you automatically make your business processes more efficient.
3. Improved visibility
If customers want to know when their order will ship or if you need to know whether you have enough of a critical component to accept a rush order, an ERP system gives you instant visibility into your operations and your supply chain.
4. Faster month-end close
ERP systems automatically process transactions and generate audit trails and financial reports that can simplify period-end closings. They flag anomalies so you can investigate quickly, and they simplify repetitive journal entries and other activities that make closing so complex and time consuming. Faster closes mean you know the health of your business sooner.
5. Increased customer satisfaction
Customers like accurate delivery dates, and ERP can help you provide them with improved inventory and shop floor visibility. In addition, the increased visibility and accuracy will help you improve your DIFOT rate (delivery in full on time), which helps keep customers happy.
6. Managed and controlled costs
ERP systems calculate and collect costs so you always have an accurate picture of your product cost and margins.
7. Better operational efficiency
By helping you to plan production more effectively, your operational efficiency will improve as you reduce setups and teardowns or unnecessary downtime.
8. Accurate records
The uniformity of record data that an ERP system instills will help ensure that your records are more accurate, which will increase process accuracy across the board.
9. Balance of supply and demand
MRP, a component of ERP systems, will help you balance supply and demand so you can reduce inventory while keeping customers happy.
10. Reduced lead times and increased throughput
Better scheduling and accurate records ensure that your schedules focus on priorities, leading to shorter lead times. Since you won’t have as many orders waiting for tooling or parts, your throughput will increase.