Applications of ERP in the Manufacturing Industry

erp in manufacturing
ERP allows manufacturers to be more efficient and flexible
The low cost/high volume ethos that characterised the manufacturing industry in recent times seems to be changing, giving way to new methods of manufacture that confront the need to meet the demand for higher quality and shorter lead time while still retaining the low cost. To successfully achieve these three goals, a well implemented and coordinated information system needs to be in place; ERP systems can provide just this.

With the advent of a global economy, the market is more unpredictable, both in terms of trends, exchange rates, and events that may damage the economy (remember the ash cloud?) These factors and events, while all unpredictable to some degree, can be responded to in a sensible manner through competent processing of real-time incoming information.

Enterprise Resource Planning (ERP) methods have adapted in tandem with the changes that have been seen in trends in manufacturing and with the changes arising from a global economy. The new generation of ERP applications can provide support to manufacturing executives in their quest to increase efficiency, flexibility, and response speed within the processes in place in their company. These changes are causing a move away from the batch based ERP that was characteristic not so long ago, and are leading to a new way of doing things which puts the customer first. We can all agree that this is a direction to be pursued; utilising the information available will allow this customer-first trend to continue, and ERP systems are one such way of doing this.

One example of increased efficiency within the manufacturing process is the removal of unproductive activities, or those which did not aid the customer, from Toyota’s production system. The removal of these activities means the customer gets a more pleasant, more representative experience and end product. This method is flexible and progressive, and should change as customer requirements change in order to remain relevant and useful. The customer focus means that changes to the manufacture process will trickle down the supply chain, from inception to delivery, to ensure that the customers’ needs are the focus throughout. This trickling can take place sideways also, into such aspects of the process of finance, sales and marketing.

This type of manufacturing, known as lean manufacturing, can be achieved through the use of ERP systems. If an ERP system is used which supports demand based flow, mixed mode manufacturing, quality management, collaboration with partners, automated material flow, and automated workflow, then it follows that lean manufacture will run more smoothly. Integrating thesesystems with Customer Relationship Management (CRM), Product Lifecycle Management (PLM), and Supplier Relationship Management (SRM) systems will further increased the coherence of the manufacturing process. The need to create value for the customer at every step of the process means that lean manufacturing principles can be applied at every step of the manufacturing journey.

The holistic nature of ERP systems means that harmony between different aspects of the manufacturing process will increase, which will lead to increases in productivity also. This productivity increase will be seen at all levels of the organisation. To some degree these productivity benefits come from a more efficient user interface, which have been designed to reduce the monotony and complexity of repetitive tasks. The ‘move to anywhere from anywhere’ system, for example, is more efficient and intuitive than moving through menus. Even such simple, familiar features as ‘auto-fill’ have been incorporated into ERP software to ensure maximum productivity gains.

The combination of reduced stock levels, fewer members of staff required, and other cost reducing factors mentioned becomes the focus of initial investment cases, as more meaningful productivity increases are not so easy to define. Thus the overview of productivity provided by ERP systems allows for better decision making in the upper decision making echelons of the company. The time freed up by the ERP system will also mean more time can be spent on dealing with strategic issues rather than more trivial matters.

To conclude, the implication of ERP systems within the manufacturing process will lead to more efficient, responsive and adaptable processes, with greater productivity and effectiveness. The customer based model is also more attainable when greater coherence can be found between various aspects of the manufacturing process, and following this model will lead to further improvements in efficiency through the removal of unnecessary aspects of the process. The resulting increases in efficiency and productivity are definitely to be striven for.

About the Author: Chris is a student and keen blogger who has recently taken an interest in ERP systems and their applications in a range of business contexts. These speculations are the result of his research on behalf of Epicor.

Image: Saginaw Future / Flickr

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