ERP systems are essential to helping job shop manufacturers achieve the level of operational efficiency that helps reduce costs. Built-in reporting makes it possible to analyze business and to see processes in a new light. For example, manufacturing variances can be identified in real time, which can help ensure the accuracy of bills of material. In this way, raw materials can be more efficiently utilized and inventory can be kept at the level needed, as opposed to having too much on hand or running into outages. Overall, an operation can continually tighten standards, reduce costs and improve efficiency, leading to shorter cycles. Actual costs can be measured against a standard, creating a snapshot of the result. When jobs are compared, variances can be identified. Then materials, processes and techniques can be adjusted as needed. This kind of visibility into operational efficiency is only possible with the comprehensive, integrated perspective an ERP system provides.

ERP system

Why would anyone manufacturer anything today without an ERP system? (Part 2 of 3)

ERP systems are critical to the all important goal of delivering products on time and on budget, too.  When a new project is opened, all the administrative steps of doing so are automated. Data is entered once and made available to accounting, procurement, inventory, customer service and, of course, the factory floor.

Paperwork is eliminated, error reduced and time saved. Taking time off the very beginning of the job by having to enter information only once and not have to transfer actual pieces of paper from one stage to the next cuts the lead-time for a job. In addition, by being able to analyze production standards as mentioned above, bottlenecks and inefficiencies can be continually reconciled, and materials and manpower utilized efficiently. All of this contributes to delivering product on time and within budget.

Maintaining a positive cash flow requires insight into every detail. The reporting capability on an ERP system is vital to gaining this insight. Knowing the true picture of the business allows inventory to be maintained at appropriate levels so that an excess of cash does not end up committed to inventory. It also allows you to know how much a job will cost to produce. The impact of pricing and sales increases relative to expenditures can be predicted.

ERP systems help improve customer service. Customer service is mostly about giving customers the information they need in a timely manner. A fully integrated ERP system means any customer-facing employee has at their fingertips every bit of information about every customer and any project.  This means employees can check the status of a job and accurately answer a customer’s questions on one call; no more, “I’ll get back to you on that.” With secure Internet portals for customers, an ERP system allows customers to check status themselves, review estimates, invoices and other information themselves, 24/7. Customers get the information they need when they need it, without having to depend on someone else to give them that information. Likewise, the company is able to provide good customer service without having to devote specific staff or time to the task.

Concluded in Part 3