What is manufacturing ERP? How do manufacturers use it? How do I know which ERP is right for my business? If you’re looking for answers, this comprehensive guide will help you navigate the complexities of manufacturing ERP systems.
Enterprise resource planning combines various technologies and approaches to managing materials, resources, and other systems that companies of all industries, but especially manufacturers, use to run business operations. Over the past few decades, ERP has matured and expanded to include capabilities that can manage an entire business, from finance and human resources, procurement and field service, production operations, and everything in between.
Manufacturing-specific ERP is exactly that: ERP for the manufacturing industry. It’s tailored to the process needs of manufacturers specifically by adding capabilities for engineering, supply chain planning, production, inventory management, field service, order processing, and much more.
Manufacturing ERP enables manufacturers to gain centralized, comprehensive control of end-to-end manufacturing business processes. It can connect with other enterprise systems, such as sales and CRM, and increases manufacturing agility and predictability to navigate changing markets, constrained supply chains, and more.
Critical manufacturing processes such as order management, inventory, and customer service are made more efficient with ERP software, giving all employees access to consistent, accurate, readily available data. This real-time reporting allows decisions to be made faster and with more confidence.
ERP software helps to reduce the risk of human error across all functions of the business and prevent IT security breaches. Sophisticated encryption, access controls, disaster recovery, and more are put in place to protect your data from cybersecurity threats.
With improved operational efficiency comes reduced expenses. For instance, inventory carrying costs are reduced with the use of demand forecasting based on specific costing methods. ERP also enforces the lean manufacturing method to reduce waste, resulting in lower operational costs. Learn more about lean manufacturing and how it’s supported by manufacturing ERP.
Having more accurate available to promise dates, faster response times, and more personalized customer interactions help improve customer loyalty and satisfaction, including improved supplier relationships.
Manufacturing ERP software can be tailored towards specific types of finished products made through discrete, process, or mixed-mode manufacturing.
Converting raw materials into finished goods through discrete manufacturing involves the production of tangible products that can be disassembled. Discrete products are broken down into constituent parts and assemblies in a BOM, which may include various other sub-assemblies, either purchased or manufactured, but each with its own BOM. As parts, products, suppliers, or materials change, managing BOMs can become very complex very quickly. Manufacturing ERP gives discrete manufacturing businesses real-time access to essential data, provides critical visibility for workers, enables end-to-end traceability for quality control and auditing, and uncovers insights that work to continuously improve and scale manufacturing capabilities. >> Learn more about discrete manufacturing ERP
Process manufacturing combines ingredients into a continuous flow of solutions, compounds, or finished products. It’s a method highly dependent upon the recipe: ingredient composition, measurements, mixing times, quality metrics, temperatures, and more. Process manufacturing-specific ERP improves the management of process manufacturing with modern tools to procure and track raw materials, ensure in-tolerance processing, guarantee accurate measurements of volume and formulas, plan equipment and human worker utilization, manage inventories, and enable efficient packaging and shipping.
With the right ERP solution, mixed-mode manufacturers can enjoy the benefits ERP provides to both process manufacturing and discrete manufacturing methods. Manufacturing ERP gives mixed-mode manufacturers the same visibility, control, and planning power across all aspects of operations. The connectivity of mixed-mode ERP brings data from distribution, sales, and service teams onto the same platform so business leaders have complete, 360-degree visibility across the entire business.
Cloud ERP is purchased and deployed with a software-as-a-service (SaaS) model, where the software is hosted and secured in a remote cloud server managed by the vendor. This reduces the load on customers to install or maintain expensive hardware and reduces the need to hire additional costly headcount. Better yet, cloud ERP systems are updated with new features and capabilities frequently, at no cost, and usually with little to no disruption to the customers. Add it all up and cloud ERP provides significantly more value and a lower cost of ownership when compared to other deployment methods.
A recent survey showed that manufacturers who have implemented cloud ERP have experienced significant benefits, including reduced overall costs (56%), improved IT security (46%) and enhanced business agility and resiliency (46%).
Premises are the land and buildings of a business, so an on-premises ERP system is one that is located on business property. This is the traditional, legacy method of owning and using software: software is purchased and then deployed on computer and network systems owned and operated by the customer. On-premises ERP is very costly because of the highly skilled people and expensive equipment required to manage and maintain the system. Furthermore, customizing or upgrading on-premises ERP is typically very expensive, slow, and disruptive.
Learn more about the differences between on-premises and cloud ERP.
Some manufacturers with sensitive data or other business-critical constraints may choose a hybrid ERP system that puts on-premises ERP software on a private cloud server managed by the manufacturer. This combines the decreased costs of cloud ERP with the increased control of on-premises ERP for a total cost of ownership that falls between the two.
If you are likely considering an ERP solution for your business, here are key features any ERP built for manufacturers should have:
Many different types of ERP for manufacturers exist today, from sector-specific solutions to those with different technological approaches like cloud ERP versus on-premises ERP. A good methodology for determining which type of manufacturing ERP solution is right for you is to gather your requirements, identify solution providers that fit your needs and sector, and evaluate your choices.
Some questions to consider along the way to choosing the right Manufacturing ERP include:
Compare cloud ERP vendors by downloading the 2024 Cloud ERP Evaluation Guide.
Choosing an ERP system is only the first step to improving your manufacturing operations. Modern enterprise resource planning solutions, especially cloud ERP, can have implementation times measured in weeks or months, not years.
Successful implementation is easy when you consider these four critical elements:
For more information, read “Basics of a Successful Cloud ERP Implementation.”
Northeast Lantern, located in Exeter, New Hampshire, has been manufacturing and selling handcrafted, solid brass and copper lighting fixtures since 1987. But trying to manage its operations via spreadsheets was adding friction when the manufacturer was seeking growth. Its informal, manual methods prevented visibility into inventory and engineering, and resulted in limited reporting necessary to guide the business forward.
Once Northeast Lantern discovered Rootstock Manufacturing ERP and realized it could access critical information from anywhere, the company chose to move its 25,000 SKUs from spreadsheets into Rootstock. It quickly implemented Rootstock and started transitioning from a make-to-order model to a make-to-stock/assemble-to-order hybrid model with strategically placed inventory.
Now, with its product database and operations in one centralized ERP, it is tracking labor costs, improving order visibility for production workers, and bringing operations information onto a single platform.
Steven Plante, Product Development Engineer at Northeast Lantern, said: “We now have part numbers and BOMs for our entire product line [in Rootstock]. We have inventory locations and control, work order tracking, prioritization of work and the ability to track labor and inventory costs. Just the fact that we have all this information at our fingertips is invaluable.
Learn more about Northeast Lantern and its move to Rootstock Manufacturing ERP.
Rootstock is the leading cloud-based ERP solution for manufacturing, distribution, and supply chain organizations. Built natively on the Salesforce platform, Rootstock can future-proof your business with infinite scalability and agility to support your teams’ specific productivity needs. Leverage Rootstock’s free resources below and check out our manufacturing erp pricing information to grow your knowledge of how Rootstock Manufacturing ERP can help your business.
Manufacturing ERP is used by thousands of manufacturers in all sectors, each with its own requirements and goals. Rootstock customers went through the same process as described above to select the right ERP for their needs and plan for successful implementation.
See the benefits gained by Rootstock customers in these video testimonials and customer success stories:
