Technology | 6 Min Read

How ERP Can Reduce Manufacturing Lead Times

Posted By
Chelsea Carter
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Enterprise Resource Planning (ERP) solutions offer many benefits for manufacturers such as scaling operations and aligning the back office with front office processes. ERP solutions can significantly reduce manufacturing lead times when properly implemented. In this post we’ll examine the many ways ERP can do this across multiple modules, generally by providing each department with real-time data and communication opportunities.

There's no denying. Improving lead times and communicating lead times to partners can no longer be an afterthought. Operational areas with the greatest effect on order lead times include the following:

  • Quoting
  • Engineering
  • Manufacturing

Quoting

Manufacturers use applications like Customer Relationship Management (CRM) systems to assist with managing sales opportunities, including quotes. This strategy can provide the quoting process with the organizational tools and procedures it needs, but many CRM systems aren’t well integrated with the organization’s ERP system. This limitation results in a significant duplication of effort since employees must log in to each system and enter data separately. The solution is to make CRM part of ERP, whether the CRM application is integrated into the ERP solution or CRM is simply an internal function of ERP.

CRM and ERP integration provides the sales team with real-time information, giving them insight into sales activity. Organizations can then predict changes in future demands and plan accordingly to obtain better management over manufacturing lead times. The ability to plan for these changes rather than reacting to them also means manufacturing ERP systems can support delivery dates more effectively.

Engineering

Engineering is often overlooked as a benefit of ERP, although engineering accounts for a good deal of the lead time in manufacturing. The ways in which ERP can reduce the time needed to produce a finished good includes product configuration and computer-aided design (CAD) integration.

Product Configuration

Manufacturers operating in a configure-to-order environment can benefit from using ERP in product configuration. The sales teams in these organizations typically perform a significant amount of engineering by building out a part through its configurator. The end result of this process is a bill of manufacturing materials, routing plans, and specifications, which the sales team can enter into the ERP system.

The engineering team can then review the configuration before releasing the product plan to manufacturing. In some cases, the sales team sends the product plan directly to manufacturing. Either way, ERP greatly reduces lead time while still correcting mistakes during the design phase.

CAD Integration

Virtually all manufacturers with engineering departments now use some type of CAD solution to design their products. However, it’s still rare for such a company to integrate its CAD system with an ERP system or configurator.

Integrating CAD with ERP has many advantages, especially the increase in design speed and accuracy. Otherwise, engineers must create the bill of materials in the CAD system and re-enter that information in the ERP system. This requirement greatly increases the time needed to create a product, especially one with many parts and subassemblies. The ability to directly transfer a bill of materials into an ERP system not only reduces design time, it also reduces the rate of human error from manual data entry.

Manufacturing

Reducing production lead time relies on performing tasks as early in the manufacturing process as possible. This strategy minimizes the amount of rework needed to correct design faults, helping to ensure manufacturers to meet their delivery dates. Once an ERP solution has addressed problems in quoting and engineering, it can begin shortening the manufacturing lead time itself. The primary determining factors in this process include material availability, resource availability, and external processing.

Material Availability

The process of ensuring that the materials needed to manufacture a product is known as material requirements planning (MRP). ERP solutions can provide this functionality, but they still need additional information to be effective. These requirements include accurate inventory counts, lead times from suppliers, and planning policies for parts.

Resource Availability

The availability of resources is also a critical requirement in determining lead time. Manufacturers must understand the range of parameters when calculating their resource requirements, including run rates and shift availability. An ERP solution can help with this by performing tasks such as accounting for equipment that's currently inoperative due to preventive maintenance, thus providing production schedulers with a more accurate view of resource availability.

External Processing

External processing includes products and services that are provided by organizations other than the manufacturer. Many companies manage this aspect of their business loosely, although it can have a major effect on lead time. Some ERP solutions can manage the transfer of processes between the manufacturer and outside organizations. They may also be able to account for the time needed to inspect products coming into the facility and prepare them for additional processing.

Summary

ERP provides manufacturers with a way to support their infrastructure, while still enabling them to take a larger view of their entire manufacturing process. It also reduces lead times by streamlining the quoting and engineering process, allowing manufacturers to base their production schedule on real numbers instead of guesses. Implementing ERP also lets them confidently quote shorter lead times, leading to sales increases.

Despite its benefits, implementing an ERP solution is a complex challenge you shouldn't underestimate. Partnering with an experienced provider can help you operate your business while still integrating ERP with your existing processes. ManoByte can help you streamline your back-office processes to ensure they’re ready to handle your ERP requirements. Contact us today to find out more about how we can help you with your ERP implementation.

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Topics: Technology