Since the mid-1990s, enterprise resource planning (ERP) applications have become increasingly popular. This is especially true in complex manufacturing, which is not surprising. Manufacturing has a lot of moving parts. The more people involved in the process, the greater the margin for error and the more opportunities for optimization. ERP activates smoother workflows across the business through a single integrated application. In the 1990s, the industry invested about $300 billion in ERP software, according to Inc.com. Given ERP's reputation for high-cost implementation, it was once the preserve of Fortune 500 companies. Small and medium-sized businesses are shut out by high upfront costs and slow ROI.
This is no longer the case as cloud-based options drive down prices. Thirty years on, more and more manufacturing companies are benefiting from ERP software.
Even if the SaaS option offers lower upfront costs, you still need to know if this is right for your business before investing. Are these benefits aligned with your business goals? How exactly does ERP affect your day-to-day operations?
Let's take a look at why manufacturing companies are turning to ERP for efficiency and competitive advantage.
Are ERP tasks critical to manufacturing?
A carefully selected manufacturing ERP system can manage all aspects of your workflow and cost visibility. Inventory control is just one button in every factory, warehouse, and supply chain.
As you might expect, accounting is an important part of ERP. This is integrated into the system so that the bottom line numbers can be retrieved. In many ways, accounting is at the heart of ERP, with better systems providing data analysis and forecasting modules.
ERP system adopts a modular design. This allows different departments involved in the workflow to manage related modules. The advantage of ERP is that senior management has full visibility into the factory's workflow.
Thanks to automation, many modules can perform tasks in the background. When optimized, ERP provides a huge resource for manufacturing.