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Solving the ‘black-hole’ problem in manufacturing ERP use

ERP

Many ERP systems do a great job of managing finances but do a poor job of tracking manufacturing operations in real-time.

As a result, there is typically a black hole of information as to the real-time status of all the customer orders flowing through many work-centres in the manufacturing plant at any one time. Deployment of an ERP system is particularly useful for operations managers in the 60,000+ mid-sized manufacturing plants in the USA that specialise in short-run, quick-turn, semi-custom product manufacturing, according to KnarrTek.

ERP systems are often sold on the promise that the system will do work-in-process tracking. But many organisations still use paper forms and Excel spreadsheets to track manufacturing operations and then hand paper forms to their front-office to manually enter into an ERP system.

This, not infrequently leads to customer orders being shipped late or unnecessary overtime or expedited shipping fees being expended to ensure that customer orders get delivered on time. It also requires endless and time-wasting coordination meetings between managers and supervisors to try to avoid these problems.

Even worse is the impact on customers and customer support people. Without real-time customer order status information the best that a customer support person can tell a customer when they call in inquiring about the status of their order, is something like ‘I will send someone down to the floor to look for your order and then call you back.’ This wastes an enormous amount of everyone’s time and destroys customer confidence by implying you have lost their order.

An ERP system integrates varied organisational systems and facilitates error-free transactions and production, thereby enhancing the organisation’s efficiency

ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources such as raw materials and production capacity and the status of business commitments: orders, purchase orders, etc. The system shares data across various departments (manufacturing, purchasing, sales, accounting, etc) and facilitates information flow between all business functions and manages connections to outside stakeholders.

According to Gartner, the global ERP market size was estimated to be worth $35 billion in 2021. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems. Cloud-based applications have grown in recent years and traditional on-premises ERP systems are now considered legacy technology.

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