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Why manufacturing companies should implement ERP
Odoo Manufacturing

Businesses know that they can execute business functions efficiently and effectively with the use of ERP. And, with the implementation of ERP, they realized that by effective functioning of the business, they have increased their ROI. Yet, some companies are still hesitant to implement ERP because of the installation cost. This blog is for such companies that focus on how ERP can be beneficial to their businesses. We will see four reasons as to why ERP should always be implemented in the companies involved primarily in manufacturing.

1. Integration of Supply Chain

ERP helps the management of inflow and outflow of the materials which is important to any organization that involves the manufacture of products. In addition to material management, a sturdy ERP solution can also manage the supply operations across the globe while accommodating various languages and currencies. For instance, when the supply chain is based across the globe, ERP can manage the value-added tax across various countries. Because, there are countries who insist on having VAT, yet with some countries, it is absent. With ERP, these micro managerial tasks can be handled with automation and the employees can focus on other tasks at hand.

2. Improved Product Scheduling

There are times in the manufacturing organizations that the inventory increases than the demand for the product. Hence, the inventory lays in the stock for a long time before it is used up. With the implementation of ERP, you can predict how much inventory is required for the upcoming month. ERP does not only helps you manage the procurement, rates and the payment of the raw materials, it also helps manage the staff and the operation schedule of the manufacturing processes to optimize the production schedules and costs. Some of the manufacturing organizations employ a policy called engineer-to-order, where the raw material is procured just before the product designing and engineering commences. Such organizations benefit highly from ERP software implementation because it incorporates a just-in-time inventory method. In addition to this, the customers are provided with an automated system for order placement. According to the supply chain capability, the customer can place an order on supposing, Monday, and can receive the final product by Friday. ERP can also help you with just-in sequencing procedure where the raw material is ordered and utilized in the production methods as they reach the company inventory. With ERP, it is possible to trace the location and constituent components of the finished product to build other complex products There are times in the manufacturing organizations that the inventory increases than the demand for the product. Hence, the inventory lays in the stock for a long time before it is used up. With the implementation of ERP, you can predict how much inventory is required for the upcoming month. ERP does not only helps you manage the procurement, rates and the payment of the raw materials, it also helps manage the staff and the operation schedule of the manufacturing processes to optimize the production schedules and costs. Some of the manufacturing organizations employ a policy called engineer-to-order, where the raw material is procured just before the product designing and engineering commences. Such organizations benefit highly from ERP software implementation because it incorporates a just-in-time inventory method. In addition to this, the customers are provided with an automated system for order placement. According to the supply chain capability, the customer can place an order on supposing, Monday, and can receive the final product by Friday. ERP can also help you with just-in sequencing procedure where the raw material is ordered and utilized in the production methods as they reach the company inventory. With ERP, it is possible to trace the location and constituent components of the finished product to build other complex products out of it. Hence, with these automated processes, you can eliminate the paperwork up to a certain extent.

3. Improved Customer Experience

With ERP, you can increase the customer's interaction with your business operations. The customers can interact with your portal and inquire about the availability of a specific product, the time is taken for its delivery and the rates of the product. With this interaction, companies can effectively manage their production schedules. If a customer can easily place an order and get the product on time, the chances of a customer being loyal to you increase to a great extent. Hence, the ERP consultants always insist on the business to let the customers place orders online, and not through calls. Because manufacturing companies with global supply chain management need automation to manage the operations across different parts of the planet.

4. ERP improves your financial operations

When a business is into manufacturing operations, it is a customer and a supplier on both sides. A customer because he has to procure raw materials, and supplier as it uses the procured raw materials to prepare finished goods and supply them to the market. In such a scenario, it is necessary to handle both the sides of the business through an integrated and automated system. While looking to implement the ERP system, you need to have automation for order-to-cash procedure for the customer side, and procure-to-pay for the supplier side. Hence, ERP becomes helpful when they have a shared-service model, where customer and supply functions are handled through a centralized system. The suppliers prefer to be paid as soon as possible and the customer tends to hold onto the cash as long as possible. And with these functions completely disconnected, the financial philosophy goes out of the window.

5. Manage staff and resources efficiently

Without appropriate staff management, the automation of the business functions and processes go to waste. An ERP solution can help companies handle their staffing issues like scheduling, hourly wages, vacation/sabbatical, skill set and much more. While keeping margins for certain products being shipped to the customer, an ERP automated manufacture may require only certain staff for the certain production line. Without ERP implementation, the staff management in line with the production management can affect profits, margins and overall availability of the workers and employees.

ERP system is known to automate every business function and process. This leads to automated functions which can help companies focus on other things that require human intervention to run the business. With this, increased profit and ROI are achieved. But it should be imperative to consult an ERP specialist before its implementation to reap its benefits to the maximum. 

Why manufacturing companies should implement ERP
Upstackers Technologies
29 June, 2020
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