Many manufacturers perceive ERP as an inventory management and production planning tool, but ERP actually touches every aspect of your business. A well-functioning ERP system will have just as great of an impact on the front office as it does on manufacturing operations. Here’s how:
Increases collaboration and communication
An integrated ERP system covers nearly all of your company’s business processes, and it automatically updates tables and files as it processes transactions. That means that cross-department communication and collaboration is not just “nice to have” — it’s absolutely necessary.
Accounts payable and purchasing must work together to ensure smooth operations in both departments, for example. Supplier information must be structured and maintained to support the needs of both groups. The same mutually beneficial relationship holds true for order management, shipping and accounts receivable; manufacturing operations and cost accounting; and marketing and sales forecasting and master scheduling.
As information silos break down, the entire organization functions more cohesively and processes run more smoothly.
Eliminates non-value added steps
Often with manual or ineffective ERP systems, several departments keep paper files or spreadsheets of essentially the same information. Occasionally departments include activities purely designed to protect them from being blamed for errors or process failures. Maintaining duplicate data or files and adding unnecessary steps to processes adds no value to the organization and wastes time and resources.
In contrast, a well-functioning ERP system eliminates the need for files and spreadsheets or protectionist activities. As a result, resources are free to focus on more important activities, and processes run faster and more smoothly. Time that was formerly wasted on arguing about which department’s data was correct is now available to spend on improving customer service or manufacturing throughput.
Enforces best practices
Modern ERP systems are in use at hundreds of thousands of locations, and the processes they include have been honed to reflect the most efficient and best practices of all those companies. In addition, a company may configure a process to conform to its own unique practices. As a result, the ERP system reflects the best, most efficient ways to accomplish a task for the particular business, and your company can be assured that it is following industry best practices when it uses the standard system procedures.
Supports fact-based decisions
ERP systems provide insight into activities and operational and financial activities that help employees to make better decisions quickly. Rather than rely on guesswork or rules of thumb, they can use the facts the ERP system presents.
ERP systems also present exception reports and messages, so employees can take action to avert problems such as late customer deliveries or excessive scrap quickly and proactively before the problem reaches crisis proportions.
Far from being a simple production operation or inventory management system, an effective ERP system is actually the lifeblood of your entire business. It effectively moves information between front and back office groups, supports fact-based decisions, enforces best practices and increases interdepartmental cooperation. The result is better operational procedures and better front office operations.
