Considering the growing complexity of interconnected workflows, the role of ERP software in managing an enterprise is now more critical than ever. After all, an ERP brings together disparate work processes and maintains the high level of transparency required to provide high-quality customer service.
The above seems even more relevant if we look at the manufacturing industry. Automating and managing processes, from production to supply chain and inventory management, may be impossible without specialized manufacturing ERP systems in the organizations’ tech stacks.
Despite the value of ERP systems, only less than half of ERP adopters are satisfied with their existing software, according to Panorama Consulting’s 2021 ERP Report. One of the reasons is that organizations often deploy only basic and out-of-the-box functionality that may not be enough to meet all their technical and business needs completely.
This article provides some tips on how manufacturing enterprises can maximize the effectiveness of their existing ERP solutions, thereby increasing the overall value of corporate ERP investments.
Configuring an ERP
Configuration is probably one of the most hassle-free ways to enhance a manufacturing ERP solution. It does not imply coding – any changes in the ERP functionality are conducted with the tools that are already built into ERP systems. For clarity, let us see how such a configuration might look in practice.
For instance, a manufacturer is unsatisfied because its employees spend a lot of time creating financial reports, which negatively affects productivity. In this case, ERP specialists can define and configure rules to enable the software system to automatically generate financial reports throughout the production cycle – of course, if an ERP has the necessary functionality.
Despite the deceptive simplicity, it would be rash to assert that the configuration is a trivial process that does not require specific skills and competencies. At least, an organization may have multiple configuration options – in such a case, the success of a project heavily depends on the ability to prioritize them correctly.
Therefore, teams responsible for the configuration must have a deep knowledge of a particular ERP product.
They also should be able to conduct a business analysis and ensure the configuration is under the organization’s business requirements. For this reason, we recommend that manufacturers who initiate ERP configuration projects first consult with ERP experts and thus ensure that the investments are not in vain.
Running ERP customization
Unlike the previous approach, ERP customization involves working with the solution’s code, which requires more profound technical expertise and technological awareness. However, in practice, customization remains one of the most effective ways to expand the capabilities of an existing manufacturing ERP, solve specific operational issues, or enhance user adoption.
Depending on their business needs, manufacturers can customize ERPs to build new features, tailor ERP functionality to the specifics of organizations’ work, update the design of ERPs, or develop custom integrations to link ERPs with other business systems.
For example, if a manufacturer experiences issues with overstocking raw materials and inventory, leading to customer dissatisfaction, ERP customization may come in handy. In this case, developers can build custom functionality for inventory management to make the ERP automatically audit supply and detect inconsistencies between actual inventory and the figures reflected on the company’s ledgers.
However, ERP customization is a more complicated and challenging procedure than configuration. First, customized software may require high effort in terms of support, maintenance, and monitoring. Second, manufacturers may run into a problem of over-customization. If this is the case, any subsequent upgrades and modifications may become too costly and risky since even small changes may disrupt the work of an ERP or its components.
If the internal IT team does not have sufficient competencies to identify and mitigate these and other risk factors, decision-makers should consider delegating the customization to third-party experts.
Empowering an ERP with cutting-edge tech
Given the ever-growing accessibility of emerging technologies, manufacturers may consider using the latter to improve their ERP solutions. Here are some examples of such technology.
- Artificial intelligence (AI)
Since manufacturing ERPs process and accumulate large data volumes, organizations can use them as fuel for analysis and decision-making. And this is where AI may come in handy.
In particular, manufacturers can implement AI-powered business intelligence (BI) to predict the demand for specific products. It will enable better resource planning, enhance customer satisfaction, and, consequently, profits. AI can also be used for continuous analysis and workflow optimization, allowing manufacturers to improve efficiency and reduce production costs.
- Machine learning (ML)
As a branch of AI technology, machine learning can automatically perform sophisticated tasks but also learn along the way and thus perform even better and more accurately. In practice, ML in manufacturing can have various scenarios involving large data sets analysis for the manufacturers’ needs.
For instance, manufacturers can utilize machine learning to run financial audits. In particular, an ML-powered ERP can analyze financial data to detect errors and inconsistencies or identify suspicious business transactions, thus mitigating fraud risks.
- Internet of Things (IoT)
Amongst other things, manufacturers can connect their ERP systems to corporate equipment via IoT sensors. In this way, organizations can gain greater control over the entire production process, ensuring the fail-safety of equipment and product lines.
For example, if an IoT sensor detects an issue with equipment work, it may use an API interface to send a signal to the ERP. The ERP, in turn, can notify the human workers so that the latter can quickly resolve a problem. In parallel, IoT sensors can gather data on equipment performance for further analysis, workflow optimization, and debottlenecking.
Final thoughts
Today, manufacturing ERPs fulfill the role of technology platforms enabling organizations to automate and manage critical processes, from production and warehouse operations to sourcing and procurement. However, manufacturers can gain even more advantages from their existing ERP systems, thereby maximizing the results of ERP investments. In particular, manufacturers can run ERP configuration and customization or enhance ERPs with AI, ML, and IoT technologies.
