How Manufacturers Can Unlock Greater Profitability With Dedicated Technology
Whatever the state of the economy, profitability defines the success of your business. Learn how specialist manufacturing ERP can help improve your margins.
The British manufacturing industry is frequently criticised for not using enough automation, and for being too heavily reliant on manual intervention in an industry that is suffering from a severe skills shortage.
The British Chambers of Commerce (BCC) has found that over four-fifths of manufacturers struggled to hire the right staff in the final months of 2018. Manual processes also eat into profits that are already being tightened in order to compete with ROW markets
But these problems are not just on the shop floor. Back office processes that rely on manual intervention are similarly cost inefficient.
Are manual processes eating away at your profit margins?
For a manufacturer that has grown organically, there’s a very real possibility that your data management capabilities have been assembled piece-by-piece on spreadsheets, with a CRM system to manage marketing, sales, and service, an accounts system that tracks finances and forecasting, and a warehouse team that have their own stock management application. The business runs using a collection of tools.
To share data between departments, you might have a collection of spreadsheets, with managers in each department then updating the spreadsheets, which becomes the only way for management to see what is happening across the business.
This process works (up to a point) but is extremely risky. Information is regularly mis-keyed as it is manually copied between sheets – assuming managers remember to perform updates and that the data is 100% correct. Furthermore, the data only represents a specific point-in-time – you cannot see what is happening on the shop floor line in real time for instance, and any forecasts or plans you create could be flawed because they are based on incorrect data.
Time spent copying data between applications affects profits and searching for information is also time-consuming and wasteful – especially if it is out-of-date. Correcting production shortfalls (or overruns) caused by erroneous data is very expensive.
Ultimately, the more human intervention you have in the system, the more costly your operations will be. With margins being so tight in the manufacturing industry, you must do everything possible to reduce costs.
Consolidate, centralise, specialise
To become more efficient, and maximise profit, you must reduce the number of systems in place, and the temptation is to consolidate them into a handful of spreadsheets. After all, spreadsheets are relatively powerful, extremely familiar, and very cheap to deploy. And the disruption to operations will be minimal.
But consolidation and centralisation provide an opportunity to dramatically improve operations. Choosing an ERP system built specifically for the manufacturing industry gives you far greater visibility – and control – of every process and operation.
A major new software project entails some disruption – but the benefits of specialist ERP massively outweigh these problems.
Specialist ERP is about more than “just” cost cutting
By centralising and consolidating data, an ERP system greatly improves the accuracy and availability of your information. No matter who is using the system – sales, service, warehouse, production – information is only entered once, dramatically reducing manual data entry errors.
By becoming a single, central version of the truth, a specialist ERP system also provides granular insight into every process. You can quickly identify process inefficiencies that are increasing production costs for instance. And with the ability to easily view historical data, you can spot trends that will help you better deploy resources and outputs. You may even find that products are being sold too cheaply, offering a chance to increase margins quickly and easily by raising prices.
With the ability to analyse and report on every aspect of operations, you will finally “know” exactly what is making you money and what isn’t.
What should your ideal manufacturing ERP system offer?
With literally thousands of potential platforms to choose from, how do you choose the ERP solution that’s right for you?
A system fit for purpose
No two shop floors are the same, so your ideal ERP system needs to be fit for purpose -- matching your company needs. This can be achieved by considering what business challenges you are facing and what your priorities are -- sourcing a solution that will maximise profit by saving everyone time, identifying potential issues quickly, and creating greater strategic insight.
The most accurate, timely data is captured immediately. If a pallet leaves the warehouse, records need to be updated to prevent supply problems and to trigger re-orders etc. With the ability to update records from mobile devices, employees can keep information current and accurate.
Capturing data on the move is useful. A manufacturing ERP system is capable of recording more than stock and material movements. You will be able to track tool cycles, for instance -- helping to prevent outages and downtime that would dent profits.
Increases process automation
Remember that manual processes erode profit margins? A specialist manufacturing ERP system will automate the creation of work in progress jobs, which will reduce administration, increase real-time insight on job stage and cost, and allow shop floor staff to focus on building high-quality products. As well as saving time and raising productivity, measures that raise the standard of finished products will reduce returns and associated costs.
ERP vendor partnership included
Because ERP will become central to your operations, you will need a strong relationship with the creator. By choosing a “hands-on” ERP vendor who specialises in manufacturing you gain an important partner who will help you maximise return on investment from your system. They will also ensure that disruption is minimised to prevent knock-on effects on the shop floor.
With the UK’s departure from the European Union rapidly approaching, the manufacturing industry is facing unprecedented uncertainty. As a result, efforts to protect profits have become even more urgent.
For manufacturers determined to manage wider economic uncertainty, specialist ERP provides a useful, automated way to ensure that internal operations are fully optimised to protect margins. Can you really afford to continue with manual processes that erode margins despite your best efforts?