The World Bank June 2020 report predicted a 5.2% contraction of the global GDP due to the Coronavirus pandemic. The pandemic affected various industries, with tourism, finance and manufacturing the most vulnerable sectors. Shipping delays affected raw material supply, while safety guidelines prevented manufacturing plants from operating at full capacity.
With the significant impact of the pandemic on manufacturing, many companies had to cancel orders leading to product shortages. Luckily, stakeholders were quick to devise long-term strategies and plan to spark the recovery of manufacturing and improve its resilience. That’s where enterprise resource planning (ERP) comes in to build digital resilience. ERP integrates business processes into a central system, providing multiple benefits. Let’s explore the benefits of ERP and how it helps the sector.
ERP and the Manufacturing Industry
Technology solutions are expected to help manufacturers navigate uncertain times. For instance, manufacturing industries that have embraced new technology can keep costs down, improve operational efficiency and gather data useful in decision making. Aside from adopting technologies like the Industrial Internet of Things (IIoT) and remote diagnostics, it is important to embrace ERPs to ensure the company has real-time data.
An enterprise resource planning system allows manufacturing companies to collect and organise key business information. This helps businesses run lean and efficient operations that promote expansion. When information required to execute processes or make decisions is scattered in disconnected systems, employees have difficulty locating what they need. The disparate data makes it impossible to keep everyone on the same page, which hinders collaboration and minimises efficiency. In the post-covid world, some departments also work remotely, and without a central system, it’s impossible to find up-to-date information to improve the manufacturing process.
Using ERP improves cross-departmental visibility, which is vital in manufacturing that relies on various departments. The manufacturing team can receive real-time data on production operations, supply chain, order status and shipping services. It also allows manufacturers to maintain operational efficiencies while complying with safety guidelines.
How ERPs Are the Foundation of Post-Coronavirus Manufacturing
ERP Promotes Flexible Supply Chains
During the COVID-19 pandemic, supply chain disruptions were a major concern due to logistical problems. Manufacturers that relied on a single supplier faced shortages of raw materials due to cracks in countries’ supply chains. Supply chain partners could not fulfil orders on time, leaving production teams short on crucial raw materials. With the ERP system, a manufacturing company has a real-time view of the inventory status and can predict the vulnerabilities in the supply chain system.
One key vulnerability was reliance on a single supplier or suppliers from one location. With governments enforcing lockdowns, some suppliers could not provide manufacturers with the required components. Initially, manufacturers were hesitant to work with suppliers from different locations due to the complexity of management. However, cloud ERP systems simplify the monitoring of suppliers from different locations. ERP software provides real-time inventory visibility, distribution requirement planning for multiple locations and vendor location management.
Improves Adherence to Safety Guidelines
The Coronavirus pandemic introduced remote working and additional safety guidelines at workplaces. Even in post-covid recovery, safety guidelines and social distance are also adhered to by businesses. Social distancing heavily impacted the manufacturing industry, which relies on collaboration to improve production efficiency. For instance, social distancing led to capacity limitations, increasing the time spent producing a single product. It also strained manufacturing companies since they had to plan and monitor shifts while containing cases of employees who tested positive for Coronavirus. Front office teams also had to work remotely, which made it difficult to get real-time data without digital assistance.
ERP systems improve collaboration between remote workers and on-site manufacturing teams. For instance, the ERP software allows workers not on-site to provide real-time data to workers on-site. Everyone can access information from a central location. This allows the manufacturers to follow safety guidelines like social distancing without affecting the production efficiencies. The ERP also uses real-time data to predict problems that could lead to production issues and the need for additional on-site personnel. That way, the management can resolve issues before they escalate and lead to an increase in on-site workers.
Traceability Improves Supply Chain Resilience
Improving and distributing supply networks isn’t the only way to increase supply chain resilience. Product traceability is also crucial in improving efficiencies in the manufacturing industry. With many manufacturers adopting variable supply chains to minimise product shortages, tracking what happens to the products in the chain is impossible. For instance, monitoring product sustainability or performing traditional third-party auditing and verification is difficult. There are also issues of non-compliance and increased risks of losing materials on transit since you are sourcing products from a single location.
Fortunately, ERP systems provide the digital assistance necessary for manufacturers to track their products. From the ERP software, you can trace the location of each raw material in the supply chain and stay updated on compliance measures and risks associated with the supply chain. Even with variable supply chains, you can use ERPs to make the procure-to-pay process more efficient and simplify requests for goods and materials from various departments. The real-time visibility of all operations also improves the supply chain process.
Lean Manufacturing Promotes Operational Efficiencies
The COVID-19 pandemic prompted a review of operational costs in manufacturing. Most industries are focused on optimising costs and improving financial security. When introducing a lean manufacturing process for improved operational efficiencies, you focus on minimising waste and costs across operations. That means you have to optimise inventory holdings, raw material pricing and usage, transport and distribution costs and the time involved in production processes. Keeping track of information in this process is difficult without digital assistance.
Introducing an ERP system should be your starting point since it compiles data from various sources. For instance, you can track your inventory holdings and manage your suppliers from a central location. You can also optimise inventory by monitoring the allocation of materials and components based on availability. Since the ERP automates some functions, you can reduce shipping costs and improve customer experience. The enterprise resource planning software is also useful for planning since you can use real-time data to predict industry trends and find strategies to remain competitive in the market.
In the post-covid business environment, it is important to minimise contact between staff and find creative ways to deal with the shortage of workers. Since the manufacturing industry operates shift schedules, it is crucial to ensure the teams don’t come in contact with each other. Minimising workplace infections ensures you have enough workers for the next shift. With shift planning becoming complex, ERP can automate the shift management process and ensure your company isn’t short-staffed. You can keep track of workers on a shift and create smooth transitions from one shift to another without contact. The ERP avails reports online to the incoming shifts on the production progress to ensure smooth transitions. You can also plan for the shortage of workers due to COVID-19 and have some workers on stand-by to cover the extra shifts.
Facilitates Regulatory Compliance
Manufacturing industries have multiple compliance requirements for supply chain management and financial records. Businesses can rely on ERPs to manage their compliance needs and help them focus on growth and expansion. Since financial records are automated, businesses are assured of accurate and validated records. You can also manage your tax functions from the ERP systems and ensure the company complies with the statutory regulations.
ERPs Are the Future of Manufacturing Industries
ERP helps manufacturers on different levels. For instance, it simplifies the supply chain process and ensures the company has enough raw materials for manufacturing. Streamlining workflows also promotes collaboration and operation efficiency by providing access to information from a central location. The availability of real-time data for manufacturers is crucial for business forecasting and finding new ways to expand and improve competitiveness in the market.