What is an Enterprise Resource Planning Software? Why is having a Manufacturing ERP system important?

Manufacturing companies can be very complex places. There are thousands of details to keep track of every day.  Changes and unexpected events happen daily. Without a good Manufacturing ERP software to help manage the chaos, it can quickly get out of control, causing companies to falter, throw labor at problems, and be in a constant state of fire-fighting. 

Manufacturing ERP software can help manage every aspect of a machine shop, job shop, fabrication shop, OEM manufacturer, and others.  From managing the manufacturing process, finance, sales, quality control, inventory, project management, scheduling and much more, having the right manufacturing ERP software can dramatically improve overall company performance, both operationally and financially.

This allows companies to grow and scale without being constrained by inadequate resources and systems to manage the growth. And cloud manufacturing ERP specifically can ensure that the company isn’t wasting resources on IT systems and staff, is always up on the latest technology and security requirements like CMMC.

What are the benefits of a Manufacturing Enterprise Resource Planning? (ERP)

Improving manufacturing operations for higher productivity and reduced costs.

The ability to grow and scale without adding overhead costs.

Providing real-time reporting for better decision making.

Optimize the entire value stream: manufacturing, warehouse, transportation, and inventory management.

Easier compliance to cybersecurity requirements.

Having a single system for all employees to use without having data silos in other systems and spreadsheets.

Better performance for clients increases client satisfaction and trust.

Minimizing manual processes and spreadsheets and automating processes to increase efficiency.

What are the main functions of Manufacturing ERP software?

Fundamentally, ERP software provides a single source of company information, by providing a consolidated set of features and modules that provide accurate and timely information for employees and leaders to make informed decisions. These modules would typically include:

Order Entry

Job Tracking and labor management

Supply Chain

functions of Manufacturing ERP software

Is ERP Software made for medium and large companies only?

There are ERP solutions for every size company. Even very small ones. We have clients using ProShop with only 1-2 employees, and they love it! So you can definitely never be too small for ERP software. The key is to find a solution that is well suited to your business today, but will scale with you as your company grows. It’s very difficult to change ERP systems when you outgrow your current one, so making sure it’ll be able to handle anything you throw at it in the future is important. Try to find many references for different sized companies that are running the ERP systems you’re considering. (Pro Tip: Don’t just rely on the references the vendors share with you. Find your own through forums, review websites, social media, and other places. By digging deeper, you’ll often find a very different story.)

How does ERP integrate with QMS? How are they related?

Many legacy ERP systems don’t integrate with QMS (Quality Management Systems), or they have such basic QMS functionality that they are not functional enough to be useful. In many companies the QMS system they need to use is totally disconnected from the ERP system, or has very few crossover places, requiring duplication of data between the ERP software and the QMS software. This is time consuming, leads inevitably to incorrect or out-of-sync data, and lots of problems.

In an ideal case, the ERP and QMS software should be one system, and deeply integrated together with no real distinction between them. All the ERP data should flow seamlessly into the QMS modules and features, so they are well integrated to eliminate duplication of data. The types of record control needed to show companies are in compliance with quality standards reside in the ERP, such as clients, work orders, vendors, work cells, employees, machinery, inspection gages and instruments and more. With a well integrated ERP and QMS, all this data can be automatically propagated into the relevant QMS forms such as NCRs, CARs, RMAs, etc. This allows very easy auditing and querying to take place so the best decision can be made in regards to continuous improvement and client satisfaction. When data is siloed in separate systems, the opportunity to leverage the data is significantly reduced and therefore isn’t done as often, which can reduce the overall performance of the company.

What do ERP systems have to do with MES systems?software?

MES (Manufacturing Execution Systems) overlap heavily with ERP software but many ERP software packages do not include any or functional enough MES features to be useful. Just like QMS above, both are very interrelated and rely on much of the same data, so having them in one seamless system can result in dramatic efficiency gains. In fact, having them be separate systems just causes excess labor, duplication of data and almost guarantees that you’ll have discrepancies in the data, causing problems for your shop. An example of this would be providing visual work instructions, inspection integration and similar features which boost productivity on the factory floor.

Most ERPs can’t offer this and you need to manage it separately. But when it’s fully integrated, there is only one source of truth and it’s easy for anyone to see the data to make the best decisions.

functioning System

What do I need to look for when buying a Manufacturing ERP system?

There are many hundreds of ERP systems out there. Finding a Manufacturing ERP system that is the right one for your business is the most important factor. The right fit will come down to the features that are specific to your industry and business, and what industry background the company has. Many “Manufacturing ERP” systems are largely financial systems with very little manufacturing functionality, resulting in many workarounds and other spreadsheets and software to fill the gaps. This results in the most important department in your company being hamstrung by an ill-fitting system. Look for an ERP system that is from a company with specific manufacturing experience themselves. Not just a system made for the industry, because that isn’t enough. Ideally, the leaders and team behind the ERP system will have hands-on experience with your type of company in your industry. That’s the case with ProShop – our team has worked on the shop floor for decades and has highly relevant experience that we offer our clients. We truly understand and speak their language.

How do Manufacturing ERP systems save you money?

A Manufacturing ERP system can save money in so many ways. Better utilization of resources and people can result in savings in the following areas:

Reduction in overhead labor costs.

Reduction in inventory costs.

Reduction in direct labor costs on the shop floor.

Reduction in expediting fees and overnight shipping costs.

Reduction in purchased COGs based on more strategic ordering of materials and BOM items.

Increases in throughput with the same resources which reduces all associated costs.