What does ERP mean for manufacturing?


This blog was originally published by UXC Eclipse. Since then, UXC Eclipse has become the DXC Eclipse practice at DXC Technology.

Pressures coming from a variety of external sources such as international market conditions, increased competition from overseas manufacturers and a new empowered consumer are affecting the manufacturing industry. New technologies are available to help manufacturers push back against these forces, but manufacturers also need to optimize the use of existing technologies such as enterprise resource planning (ERP).

Manufacturing needs to transform

The supply chain is reacting to new demands. It starts with retailers who need more product to sell faster. In response, distributors must shorten lead times, which cause manufacturers to strive for faster production cycles. Domestic manufacturers need innovation to compete with low cost overseas manufacturers who can often be more competitive in this accelerated environment.

In addition, consumers are driving changes that affect the manufacturing industry. In the past, manufacturing didn’t feel the impact of consumer desires as much as they do now. That fact is changing due to new empowered consumers.

The empowered consumer’s expectations are increasing the speed of the market, meaning that new products need to get to market faster. In addition, empowered consumers don’t want to pay more, but they want fast turnaround and outstanding customer service.

Today’s manufacturers need a transformation to increase efficiencies and reduce cost in order to remain competitive and grow their market shares.

Optimized ERP systems can make the difference

Manufacturers have traditionally been slow to adopt new technologies, but the imperative to manage growth and reduce costs is causing many manufacturers to take a second look at how a modern ERP system can improve their operations.

An optimized ERP system takes advantage of cloud computing to connect core-manufacturing systems together and to access a voluminous amount of real-time data. Manufacturers are using ERP to support the complete lifecycle of their products, including product development, manufacturing, materials and order management and order fulfillment.

The cloud allows manufacturers to develop models that rely on paying only for the resources they need. Companies can now scale usage based on their business needs and reduce IT costs.

Manufacturers are seeing benefits that far outweigh the implementation costs. Here are a few specific benefits that manufacturers are realizing:

  1. Using IoT data in the ERP system

This is one of the most important parts of the optimization of manufacturing. Combining IoT data with ERP data provides the means to do predictive analysis that can be used in a number of ways, including ensuring that equipment is running at optimal levels and scheduling preventative maintenance.

  1. Reducing the time to perfect manufacturing processes

With the ability to marry product specifications to quality assurance tracking to a product’s history, manufacturers can take action to correct issues in the manufacturing process sooner and with less human interaction. Products go from concept to commercialization faster and at a lower cost.

  1. Reducing inventory levels

More people will be able to see real-time reports on inventory levels and order quantities. As a result, better decisions will be made that can reduce inventory carrying costs.

  1. Improved capacity planning

With cloud-based ERP systems, manufacturers can scale their operations much more effectively. Whether it’s handling a sudden increase in orders or taking advantage of new opportunities, a modern ERP system can increase the capacity of the existing employees and equipment because of more efficient planning and operations.

In addition, if a last-minute opportunity requires changing out a production line, management can quickly check whether the staff, equipment and inventory is available to make that happen. Manufacturers, without a cloud-based ERP system that connects diverse manufacturing systems together, would find it difficult if not impossible to even entertain responding to such a request.

  1. Faster and more accurate reporting and decision-making

Preparing financial and operational reports without a streamlined ERP system can require consolidating information from separate systems, ad hoc reports and spreadsheets. Using a modern ERP system, all financial data is available in one location and reports of different kinds can be generated quickly and accurately. With the inbuilt business-analysis tools now available within ERP solutions, intelligent analytics can now become part of the everyday reporting dashboard.

Technology selection is critical

Some manufacturing firms haven’t implemented an ERP system, while others have an ERP system that isn’t providing them with the right combination of capabilities. It’s critical to evaluate a number of factors, which include:

  • The path the vendor has laid out for future development
  • The flexibility of the system to respond to changing environments and business models
  • The ability of the system to integrate with existing systems
  • The pros and cons of cloud technology versus on premise operation

The right platform and applications in an ERP system will allow a manufacturing firm to streamline and automate business and manufacturing processes, reduce costs, improve flexibility and increase their company’s competitive position in the marketplace. With the right ERP, manufacturers can compete effectively with overseas companies, drive higher customer engagement and pursue growth opportunities in today’s changing market.

Matt-McNulty-headshotMatthew McNulty is Senior Director, Consumer and Industrial Products for the DXC Eclipse practice.

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