Author: Vincent Bull in: Implementations
As manufacturing heads into “Manufacturing 4.0”, that is smart machines connected to control systems, many companies are coming across problems that must be resolved to improve their bottom line.
Implementing a new ERP system is the best tool to resolve many of these issues.
When you open new facilities, or add a new part or production line to your shops, you must be aware of what standards and local laws you must meet to ensure there are no issues. The laws, standards, and regulations you must abide to impact all areas of your business, like:
Also, these rules vary between locality, country, and industry standards.
While these standards, etc., are usually put in place to ensure a prosperous business environment that makes quality goods that are safe to use, tracking the separate rulings can be a mess. You must have a way to store and reference the relevant documentation quickly and easily.
By having a single-source database, as provided by most ERP systems, as the place to host these documents and standards, you can handle compliance issues quickly and easily for all your operations.
Your IT infrastructure is a crucial component of your business. Whether it is the workstations of your staff, the shop monitors you use to connect your tools, or a tool vision system, all are parts of the whole of your company.
Other items on your list can include software to perform specific functions for your business units, such as: accounting, CRM (Customer Relations Management), HR (Human Resources), Engineering, QMS (Quality Management System), SCM (Supply Chain Management), Timekeeping, Payroll, Document Management, LMS (Learning Management System), and others.
These services are usually managed by a combination of internal staff and outsourced support.
With a new ERP system, you can tie all these various components together while adding the option of cloud computing or access from anywhere for any remote or traveling workers.
You may find that the software tools you started with are no longer enough to get things done.
While constant minor updates, plug-ins, or modifications to systems and processes have kept these legacy systems up and running, you are running out of ways to keep those old tools afloat. These are systems that have many users but few or no champions, no developers, and require a small library to learn to use.
Legacy system issues are solved in one of two ways:
However, even minor changes in large companies can be a problem on day-to-day operations. This means a consideration for legacy systems should always include a speedy and well-versed implementation team.
Lean management tells us that companies of all sizes should regularly review their business processes to ensure they are working at peak efficiency. As your company grows and adds more products and places, you should constantly be looking to improve your workflows.
Ideally, a well set up business process only needs small modifications after implementation to keep working well. Major expansions lead to the original process needing major, and costly, process changes to multiple business units to help you stay competitive.
Implementing an ERP system requires mapping out your business processes. This helps:
By implementing your ERP system based on properly mapped out business processes, you enable the sharing of information and ideas between your business units, removing knowledge silos, and improving communication between all units, clients, and vendors.
Knowledge silos form in companies due to multiple reasons but always come from a simple “us vs. them” mentality. That core, the “us vs. them”, can actually be a benefit to certain operations. The problem starts when the “them” becomes other teams in the company instead of other manufacturers competing for your clients.
Collaboration between your various business units is a crucial component in productive operations. Knowledge silos have a negative impact on your profit margins. Improving collaboration and removing knowledge silos requires and active effort by management but is often the difference between a successfully company and one on the edge of disaster. A company that has open ties between business units often lead their industries in innovation, productivity, and efficiency.
Because new ERP systems integrate all your business units with one database, collaboration becomes facilitated due to transparency, similar processes, and easier sharing.
As mentioned before, ERP systems also come with CRM and SCM systems that improve collaborative efforts with you clients and suppliers, respectively.
Merging/ acquiring companies to expand your portfolio or moving operations to another region are major processes that impact everything you do. Any action taken on the global stage at that level will send ripples down your process chain that will leave you in need to project management professionals that can help smooth the transitions and paperwork required to ensure the short-term negative impact to your major decisions is alleviated and your greater vision is achieved sooner.
In the case of mergers, it is likely that both you and the merged partner already have an ERP system in place that works well for both. The issue will likely be figuring out which system to keep moving forward and if the feature-set available meets the expanded needs.
For global moves, the issue is often related to quality control management, supply chain disruptions, and inventory management.
In both cases, the first step should be to look at your existing ERP vendor to see if their system can maintain the process management quality you have come to expect. Once you are sure of what solution you will need, you can look to your implementation cycle to ensure the financial gains you expect from the global initiative is generating your goal results.
Modern ERP systems help solve some of the problems that exist in manufacturing companies of all sizes.
While ERP implementation can be difficult, with ever-expanding global competition the added benefits that come from implementing an ERP system quickly show themselves with improved productivity and improved profits.
Undergoing the process and practice changes that come with a single source ERP that impacts all business units leads to a more collaborative, adaptive, and agile manufacturing organization that is ready to succeed in the new global marketplace.