At a Glance
The general benefits of using a comprehensive tool like ERP are well known by most manufacturing organizations regardless of size. However, there are still ways with which ERP systems can be used to better overall operational efficiency in manufacturing, streamline existing processes and improve the production line. How solutions like ERP become the catalyst in generating ROI are usually the difference-makers for the manufacturing sector.
Mid-size businesses’ adoption of ERP software will grow at a CAGR of 7.9% from 2014 to 2020.
As more companies modernize their ERP, they want to understand how they can adapt and manipulate their current practices to maximize their technology investments. First, understand how ROI is calculated in terms of ERP in the manufacturing industry.
Figure 1:Determining the ROI of Manufacturing ERP
Every organization has specific short and long term goals in mind when installing an ERP system. While the ROI might be a relative concept for every manufacturer, certain common areas can help decide the benefits an ERP system brings to your company:
Answering these questions lets you calculate the ROI for your ERP.
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In today’s cloud-dominated software world, everything is connected through the Internet. Manufacturers can enhance their ecosystems by making real-time connections between the workforce and machines. When everyone from the top floor to the shop floor can view the entire production line, it lets skilled workers use smart manufacturing techniques to save time and effort.
Using ERP software to adopt smart manufacturing techniques helps manufacturers avoid production delays while efficiently tracking material and equipment. Using these methods will generate significantly more revenue.
Figure 2:ERP in the Manufacturing Industry
Large-scale manufacturers can afford to hire a larger workforce to manage their inventories. Small and mid-scale businesses lack that luxury so inventory problems can cause financial losses. Efficient larger companies are looking for a centralized network that can keep track of raw materials, incoming and outgoing shipments plus maintenance schedules.
A sturdy, modernized ERP system is designed to handle these tasks where older legacy platforms fail.
ERPs allow companies to get real-time data on their inventory, allowing them to better predict and manage inventory. Every manufacturing company—large or small—understands that accurately managing inventory is a must if it wants to avoid stock-outs and related production delays. A robust ERP system improves ROI by helping manufacturers more accurately manage inventories.
Advanced software and or mechanical tools can only help boost ROI when the workforce is trained in how to use them. An ERP system is no exception. When an ERP is integrated with cutting-edge applications like IoT, machine learning, advanced analytics, and artificial intelligence, training becomes critical. Having a well-trained, expert workforce lets companies take full advantage of their ERP. Taking the time and spending the money to train staff reduces problems and provides long-term profit gains.
Making these changes in your manufacturing ecosystem will help you maximize the benefits of your ERP system. They will also solidify your work standards and technical competencies.
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