Technology | 11 Min Read

How to Determine if Your Manufacturing Company Needs a Better ERP

Posted By
Chelsea Carter
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Companies implement ERP systems to manage both internal and external resources within their organization. ERP systems manage a number of necessary functions through streamlining and automating daily business operations. Implementing these systems can help a business manage their day to day operations accurately and effectively. ERP systems are useful for medium to large size companies that want to scale internal processes, sales growth, and handle data. However, there are many factors that can help determine if your company would benefit from an ERP system.

The Society of Human Resource Management conducted a study on 400 businesses with around 100 employees each and found that each one lost about $400,000 a year due to communication inefficiencies. This loss can take many shapes:

  • Trouble hiring and keeping good people
  • Lost business opportunities
  • Quality control issues
  • Losing customers
  • Unnecessary expenses
  • Bottlenecks and productivity issues
  • Soured relationships with vendors, suppliers, and other partners
  • Costly errors
  • Malicious activity

9 Red Flags that Indicate You Need Upgraded ERP, ASAP

Communication is just one of the many ways a cloud-ERP improves business function. While making the switch to a cloud-based system isn't one that can be made overnight, some definite signs indicate a decision should be made sooner rather than later.

1. Significant Customer Complaints

Customer complaints are just part of doing business, but increasing complaints, or excessive negative feedback, suggests a breakdown somewhere in the supply chain or operations. On top of that, without an enterprise-wide, data-gathering tool like an ERP, it may be challenging to understand where the breakdown is taking place. Many costly improvement initiatives have fixed the wrong problem because leadership couldn't see the whole picture.

A cloud-ERP streamlines communication, operations, and data analytics across an entire organization and centralizes that information to enhance productivity, accuracy, and customer experience.

2. Different Departmental Systems Causing Delay and Miscommunication

It's hard to find software that can be all things to all people, so at one time you needed a different system in every department. However, modern cloud-ERP has made the impossible possible. A modern ERP is customizable and adaptable, so one centralized, module-based system like NetSuite can do everything. All employees work out of one system with modules customized to meet each department's needs. When delays, miscommunication, and duplicate work disappear, you reclaim productivity.

3. Duplicate Data Entry

When we think of duplicate entry, we think of a department that needs two or more programs to manage processes, so they have to transfer information manually back and forth. But it can also involve even more time-, money-, and paper-wasting activities like:

  • Writing things down on a clipboard and then entering into a computer
  • Printing out information from one system to enter it into another
  • Phone calls from people in the field who can't access or enter information
  • Printing piles of paper out for workers who are on the road
  • Walking documents from one department to another

A secure cloud-ERP can be accessed from anywhere with an Internet connection and is compatible with the modern mobile technologies that are making how we live and work better. There is no reason for these inefficiencies to exist in any organization today.

4. The Current System Delays Decision-Making

Does making a quick decision require checking with several people and ensuring information is up-to-date? These delays are common in some businesses, but they do not have to be. An ERP centralizes communications and automatically transfers data to departments, forms, and people who depend on that information, so everyone from the front-line supervisor to the CEO can make decisions on the most up-to-date information.

5. Mystery Inventory Numbers

Have you found yourself shocked when shrinkage numbers are revealed during a physical inventory? Worse yet, management may not have the data they need to determine if it is due to theft, quality control issues, or poor quality raw materials from a particular supplier. Inaccurate inventory also causes delays on various production lines and last minute orders, which may cost more. Incorrect or delayed inventory costs a company time and money. It is one more sign that your business needs to invest in a cloud- ERP.

6. Management Struggling to Measure Individual Productivity and Quality

When management doesn't have the numbers to compare employees in the same role using the same metrics, they end up looking at things like overtime, punctuality, and personality. These are also important factors, but productivity and the quality of work are what matters. The lack of software or the presence of an outdated ERP that has trouble capturing this data can lead to lousy firing and advancement decisions as well as lost opportunities for improvement in these areas since employees may get subjective, unhelpful, or misinformed feedback during employee reviews.

7. Business Projections Are More or Less Guesses

Many businesses lack the analytics, business intelligence, and real-time visual reporting to identify the trajectory of the company. If you cannot see where you are going, it's even harder to take the right steps to get there. You cannot make real data-driven decisions made on limited data. A cloud-ERP has cross-departmental analytics built-in, and an ERP presents this information in real-time and in a usable form.

8. Operational Inefficiencies Killing Productivity

Aside from duplicate entry, companies who have been doing things a certain way for some time find they are not doing it most effectively. Because an ERP is centralized, it can track productivity, bottlenecks, delays, and quality issues to identify areas where management can improve systems and optimize the whole operation.

9. The System is No Longer Supported By the Vendor

Software and server vendors continue to support their products sometimes for 15-20 years, but eventually, it's simply not time- or cost-effective to do so for the vendor or the business. There are newer technologies that can do the job so much better, and many of the newer technologies like mobile capabilities, the Internet of Things, and third-party apps are not compatible with older systems, further increasing integration and maintenance costs.

Solving key Manufacturing Ops challenges with an ERP

Enterprise resource planning (ERP) systems are used by organizations looking to manage their business functions within a centralized and integrated system. ERP stores all entered data into a single database, allowing all business departments to work with the same information. Additionally, this data can be organized, analyzed, and made into reports. ERP brings together customer management, human resources, business intelligence, financial management, inventory, and supply chain capabilities into an all-encompassing system. Allied Market Research reports cloud-based ERPs, such as NetSuite, are expected to see a 13.6% growth in sales by 2023, resulting in overall earnings of $32.18 billion.

Data Management

Every department in a company generates valuable data. Collecting all this data can pose many challenges. Businesses may find themselves having difficulty sharing, accessing, updating, and transferring data between departments. Sharing data without an ERP is time-consuming and labor-intensive. Using an ERPs to share data can alleviate administrative hassles, avoidable errors and security breaches.

Services like NetSuite’s ERP run on a cloud-based platform. This allows data to be automatically backed up, upgraded, and requires zero maintenance of company servers. An employee can access real-time data anywhere simply by using an internet connection. Additionally, data can be shared from anywhere between teams and partners. Cloud-based systems allow for unlimited scalability and access to data which can, in turn, save a company money, resources, and facilitate effective collaboration. 

Time Management 

Using an ERP can save companies time in addition to improving data sharing capabilities. ERP systems were originally built to shorten the time of lengthy manufacturing cycle processes. Over time, ERP systems have evolved into tools to help alleviate cycles of administrative duties and report management as well.    

ERP systems can save time in many different departments:

Sales

Your sales department can save time because they no longer have to pull multiple spreadsheets to compute their sales forecasts or create reports. ERP systems are able to generate complex reporting within minutes. Most ERP systems use dynamic dashboards and report real-time information, including opportunities, lead stages, estimated revenue, and estimated close dates. 

Operations

Operations managers can save time by using ERP systems to order and track inventory. ERPs use automated replenishment alerts and accurately order inventory based on market trends and feedback. ERP platforms can also prevent wasted material and eliminate the need for rush shipping. Being able to access real-time analytics lessens the risk of theft and helps to monitor costs. Not only do these practices save money, but they also save time. 

Finance

Because ERP systems are fully automated, financial departments can also save time. Instead of sifting through data in spreadsheets to reconcile account payable balances, reports are generated within minutes. This frees up financial professionals to spend time on more important tasks and projects.

Production Teams

Production teams will be able to identify potential machine issues using ERP systems. Because ERP systems are cloud-based, Production Managers will also be able to manage assets in real-time, extending the performance of their equipment, preventing downtime, and increasing product quality. By utilizing cloud-based systems, information can be tracked in real-time and shared across the channel. This allows managers and senior staff to not only gauge productivity, but also monitor admin duties like supplier contracts. ERP systems can help you keep track of your service level agreements, identify regular problems, and improve supplier relationships.

Better Analytics

A cloud database allows ERPs like NetSuite to be a useful reporting tool.  ERPs record and store data input, making them a useful business intelligence tool. Reports that usually take days of research to be compiled can now be generated in a fraction of the time using an ERP. ERP systems utilize dynamic dashboards and generate visual reports that can be customized per customer segment. Generated reports can be brief overviews or in depth financial reports.

Increased Productivity

Using traditional methods, tasks like generating reports and timesheet tracking can take hours to complete. ERPs are able to automate tasks and eliminate room for error. For example, data entry traditionally could take hours. Using an ERP, data entry can be completed within minutes. Leveraging an ERP will open your business up to increased productivity, efficiency, and profitability.

Next Steps

Integrating an ERP system, such as NetSuite, is a useful tool for businesses who are looking to focus on growth and streamlining their internal processes. When paired with CRMs and PRMs, companies can utilize inbound methodology to help increase productivity, engagement, and sales. Combined, these tools focus on delighting customers, driving strong results, and offering personalized customer service as effectively as possible. 

Partnering with an agency is a great way to ensure your company's success in implementing and integrating your ERP with your CRM.

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Topics: Technology