Manufacturing agility is the ability to respond quickly to unpredictable changes in demand. In today’s market, agility is not only the hallmark of the most competitive manufacturers, it’s also a requirement for day-to-day survival. With a few exceptions, those manufacturers that survive in this market must be able to change direction at a moment’s notice, without encountering significant loss in production quality.
Enterprise resource planning (ERP) applications can help small and mid-size manufacturers respond with unprecedented agility no matter what customers might demand. ERP can help organizations reach lean manufacturing capabilities and just-in-time production principals, as well.
Clear, Cross-Organizational Process Visibility
Many small and mid-size manufacturers use accounting software as their main method of managing what’s going on in the organization. The problem with this approach is that, although valuable, accounting software won’t provide the clear, cross-organizational view necessary to help decision makers respond to current and future demands. A well-integrated ERP application, however, can provide insight into customer purchasing history, real-time sales order processes, and production levels so decision makers can respond quickly to changes in customer demand or in general market conditions.
Flexible Production Scheduling
The trademark of an agile manufacturer is the ability to switch gears quickly between production runs, shortening or lengthening the run or even changing products, as necessary. An ERP application makes it easier for organizations to adopt this type of flexibility by providing scheduling strategies to handle unexpected orders or order changes through features such as capacity planning, work order management, and materials requirements planning.
Automating Manufacturing Capabilities
One area in which ERP can really pay off for small and mid-size manufacturers is in the ability to automate processes and functions that don’t require human interaction. Nearly two-thirds of small and mid-size manufacturers still use manual tracking processes, which can introduce errors and duplications that interfere with the agility of the manufacturing processes. By automating manufacturing processes and transactions, those manufacturers can free human resources for more lucrative activities, such as product design, innovation, and sales.
Improve Inventory Visibility
To be an agile manufacturer, companies must have the ability to move from manufacturing one product to another with minimal delay and manufacturing time lost. Companies that don’t have clear and accurate visibility into the inventory necessary to manufacture a product or fulfill customer orders will spend more time making that switch. ERP provides organizations with a single source for accurate data about inventory availability across the organization. Instead of trying to maintain spreadsheets and paper logs of which materials or products are available, an ERP application can maintain that data in real-time, making it more accurate and current than manual inventory management.
ERP Can Contribute to Customization
The reason small and mid-size manufacturers often reach for agility is to be able to serve more customers with customized, short-run (and sometimes single-run) manufacturing services. This customization can be accomplished with an ERP application that helps organizations streamline the manufacturing process so that the interchangeable components of the process are monitored closely, and those components that aren’t interchangeable can be switched to create a custom product when necessary.
Small and mid-size manufacturers of the past functioned perfectly fine without an ERP system. Some used financial applications in place of ERP; others just used manual methods for planning and resource management. In today’s market, however, small and mid-size manufacturers need to have a solid ERP application in place that will help to create visibility, improve scheduling, and enable the automation and customization that are the true benefits of being an agile manufacturer.