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The importance of cloud ERP systems in manufacturing

Learn more about how Cloud ERP systems help fulfill the unique needs and challenges of the manufacturing industry.
The Importance of Cloud ERP Systems in Manufacturing

Managing Manufacturing with Cloud ERP Systems

Manufacturing is taking raw parts and materials and putting them together with machinery, human labor, and other tools to create a polished finished product. Though a simple definition, it highlights how complex the manufacturing process is. Recent events have raised that complexity exponentially.

For example, global supply chain issues caused by the pandemic, storms, trade wars, and more, compounded by the fact that the manufacturing industry has moved towards offshoring (transferring operations to and buying materials from overseas countries) in the last few decades, has resulted in lack of components (e.g., chip, lumber, metal, plastics, and more) and major distribution issues.

Dealing with the fallout of these unexpected challenges has taken a toll. Bloomberg’s take: “Manufacturers reeling from shortages of key components and higher raw material and energy costs are being forced into bidding wars to get space on vessels, pushing freight rates to records and prompting some exporters to raise prices or simply cancel shipments altogether.”

Unprecedented circumstances with high price tags damage manufacturing small and medium businesses, possibly to the point of extinction—unless they’re relying on a manufacturing cloud ERP solution.

How Cloud ERP Systems Benefit Manufacturers

Cloud ERP systems are comprehensive business management solutions that help regulate, streamline, and automate their operations as well as collect and analyze business data in real-time for strategic business decisions. Working from a centralized database in which every department, from accounting, finance, and CRM to sales, marketing, and inventory, is integrated, the business has a 360-degree-view of the entire organization. Mobile technology means the solution and its updated, accurate information is accessible 24/7 from the office, the shop floor, the field, or on the road, which enhances collaboration between every employee.

A manufacturing cloud ERP solution provides manufacturers the tools to manage and automate their production planning, scheduling, and inventorying requirements. Its industry-specific nature addresses the complex—and distinctive—processes and workflows found in manufacturing, providing better organization, improved resource management, and increased forecasting accuracy. To top it off, cloud ERP systems can be customized to fit each manufacturing company’s special needs.




Benefits of ERP systems in the manufacturing industry

Cloud ERP solutions provide manufacturers with adaptable solutions and technologies to improve efficiency, decrease costs, generate leads, and increase revenue to grow and transform their businesses effectively in the new digital economy. Here are some ERP strategies that Manufacturing Companies use in order to grow:

  1. Drive Growth through Manufacturing EfficiencyManufacturing ERP Software provides integrated applications designed to eliminate inefficiency through automation and actionable business insights. Artificial Intelligence, Machine Learning, Material Requirements Planning, Inventory Order Allocations, Barcode and RFID Automation and Business Intelligence and Reporting are just some features that ERP Solutions can provide
  2. Streamline Processes with Connected Supply Chains – while many legacy ERP Systems rely on email, fax, phone, and other disconnected systems to collect essential information for decisions or product design, purchases or production, Cloud ERP software provides a collaboration platform connecting businesses with customers, dealers, and partners to improve efficiency in all areas.
  3. Generate more Leads – it is often hard for manufacturers to improve sales because products are complex. Some manufacturers rely heavily on estimates, with only a small percentage converting to quotes or orders. Legacy systems and disconnected commerce applications disrupt processes delaying information required for effective marketing and sales. Cloud ERP Manufacturing Solutions provide tools that manufacturers need in order to sell more products and services. Here are some of the tools: Manufacturing Estimates, Marketing Automation, Matrix Items, Product Configurators.
  4. Provide Exceptional Service – manufacturing has changed dramatically over the past decade. Manufacturers must do more than make great products. Customers choose suppliers based on the services they provide around those products. Consequently, today’s leading manufacturers offer installation, repair, maintenance, and other services to complement core product offerings. With embedded CRM and field service applications, Manufacturing ERP Software provides the ideal platform for delivering world-class services.
  5. Optimize Inventory – features like Inventory Replenishment, Flexible Pricing and Valuation, Lo and Serial Tracking, Material Planning, Warehouse Management or Shop Floor Automation can help optimize inventory levels, automate processes, and implement just-in-time strategies to save time and increase inventory turns.
  6. Manage Compliance – compliance is a huge issue for your manufacturing business. Compliance mandates from customers, vendors, and federal agencies cost time and money. Failure to manage compliance can severely restrict the ability to attract and retain customers. ERP Systems can provide dozens of features to help manage requirements to remain in compliance. Database level security, audit files, security roles, wikis, and document management support quality and compliance initiatives.
  7. Gain Actionable Insights – ERP systems are notorious for capturing data. There is a lot of it. It is difficult, and sometimes impossible, to make sense of it all. Advanced  Manufacturing ERP Systems provide direct integration with advanced business intelligence applications to provide actionable insights.
Tim Patton
"The quote-to-cash cycle is the lifeblood of our business and Acumatica has given us the tools to manage it effectively and efficiently every step of the way."
Tim Patton, ICT Director

Manufacturing Cloud ERP Use Cases

After implementing a manufacturing cloud ERP solution, make-to-stock, make-to-order, engineer-to-order, project-centric, job shop, batch, and repetitive manufacturers can become a lean, automated business by:

  • Making better decisions with greater visibility and communication
  • Controlling engineering changes and fix bill of material (BOM) and routing errors
  • Balancing supply and demand
  • Improving product cost
  • Forecasting sales, scheduling resources, and calculating capacity requirements accurately
  • Improving quality through efficient and automated scheduling/material grouping
  • Integrating with critical third-party applications

Devil’s Peak Brewing Company (DPBC) is a manufacturer that experienced these benefits. Since 2012, DPBC has been producing an incredible variety of American, Belgian, and English-style ales. As their popularity grew, so too did their supply chain and operating system complexities. DPBC needed a comprehensive cloud ERP solution. They chose Acumatica Cloud ERP, and Managing Director Derek Szabo says, “Acumatica was able to handle the full end-to-end functionality, it was cloud-based, and it was exceptionally cost effective.”

He also says, “Full supply chain visibility will enable us to target the areas where we have issues and tackle them, to ensure we are operating efficiently and driving growth across sales, supply chain, manufacturing, and finance.”

Types of Manufacturing ERP features by Industry

Manufacturing ERP is available from larger, general publishers, and smaller publishers focused on specific industries. General ERP solutions support multiple industries with strong cross functional processes and applications. General ERP systems offer more specialized features today than ever before. Smaller ERP vendors focus on niche industries with specialized systems. Manufacturers must choose between the two options. Below is an overview of features common for each industry segment.

Food and Beverage

Manufacturers of food and beverage products can be either discrete or process. They may require batch processing, lot tracking, and recipe or formula management. Catch weights, unit of measure conversions, expiration dates, and variable product packaging are also common. Route management for direct store delivery (DSD) is required for some businesses.

Apparel, Leather and Jewelry

Matrix items are an essential requirement for textile, leather, apparel, and jewelry products to manage pricing and availability across product families where style, color, and size combinations are difficult to manage. Commerce integration, retail sales, and product configuration are also popular. PLM is also a major requirement.

Chemicals and Life Sciences

Chemical, petroleum, pharmaceutical, coatings, cosmetics, and similar businesses are predominantly process-based. Batch production, formula and recipe management, and lot tracking are essential. Advanced features include potency, concentrations, specific gravity, and yield and loss tracking. Compliance for the EPA, FDA, and other regulations are also common.

Wood Products

Few ERP systems support the wood, lumber, and building products industry well. Features such as matrix items are useful for managing items with slight variations such as dimensions or grade. Other requirements common in the industry include co-products, by-products, lot tracking, and point of sale for in-store sales.

Furniture and Home Goods

Product configuration is a must-have for most furniture manufacturers. Commerce and retail sales are also increasingly common for manufacturers of furniture and home goods. Other requirements include CAD or PLM integration and serial tracking.

Paper Products

Paper product manufacturers include paper mills and manufacturers of cardboard, envelopes, and publications. Paper mills have specialized requirements best suited for process-oriented ERP systems. There are specialized ERP systems for the publishing industry to manage writing and layout for books and magazines. Other companies in this industry rely on general manufacturing ERP systems for basic manufacturing capabilities.

Industrial Equipment

Industrial machinery manufacturers rely heavily on serial tracking, engineering change orders, CAD and PLM integration, and product configuration. Many also require warranty and service management for installation and repair.

Electronics and Electrical

Engineering change orders and integration with CAD and PLM applications are crucial for electronics, electrical, and high-tech manufacturers. Product configuration and commerce are both common for commercial and consumer products. Serial and lot tracking and warranties are common as well.

Automotive and Transportation

Repetitive, cellular, and lean manufacturing are common in the automotive industry. Cumulative demand forecasts and EDI are prevalent. Serial tracking and warranties are essential for component traceability to vehicle identification numbers (VIN). Project management applications help manage programs. Kanban, quality, and engineering change orders are also prevalent.

Choosing a Cloud ERP System for Manufacturing

There’s a difference between choosing a manufacturing cloud ERP solution and choosing the right manufacturing cloud ERP solution.

A good Manufacturing ERP System should provide depth and breadth to manage front office and back office operations from financials to sales, inventory to manufacturing, and engineering to planning and scheduling. It should also help grow sales with embedded CRM and commerce, capture data with document management, and extend your business with project accounting and field services. Here are some main factors to consider when choosing a manufacturing ERP:

Industry-specific functionality: Some ERP systems are designed for specific industries, such as manufacturing, healthcare, or retail. If you are in a regulated industry, such as food and beverage or pharmaceuticals, you will need an ERP system that can help you comply with industry regulations.
Scalability: Your manufacturing business will likely grow over time. Make sure to choose an ERP system that can scale with your business. Some ERP systems are designed for small businesses, while others are designed for large enterprises.
Customizability: No two manufacturing businesses are exactly alike. You will need an ERP system that can be customized to meet your specific needs. Some ERP systems offer a wide range of customization options, while others are more limited.
Integrations: Your manufacturing business likely uses a variety of other software applications, such as CRM, accounting, and inventory management systems. Make sure to choose an ERP system that can integrate with these other applications. This will help you to streamline your operations and avoid data silos.
User experience: The ERP system that you choose should be easy to use for all of your employees, from the shop floor to the executive suite. A user-friendly ERP system will help to improve productivity and reduce errors.
Training and support: Make sure to choose an ERP system that offers comprehensive training and support. This will help you to get the most out of your investment.

Businesses in the manufacturing industry should evaluate their cloud ERP options based on the categories of productivity, functionality, technology, value, and risk. This complimentary Manufacturing Management System Evaluation Checklist can help.

See what’s possible when you have a future-proof ERP platform that truly puts customers first.

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