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Does ERP support your strategic advantage?

Image: Manufacturing

Blog Written By | ERPFocus

ERP Manufacturers: Does ERP Support your Strategic Advantage?

Do you know why you make a profit? Not because revenue exceeds costs, but why your customers are willing to pay you a premium above costs for your products? If you can’t articulate why you have an advantage, two things are undoubtedly true: 1. If if you ever begin losing money, you won’t know why, and 2. your ERP implementation team will not know what manufacturing of business processes to concentrate on in order to support your strategic advantages.

If your strategic advantages are post-sales support and customer service but your ERP blueprint design emphasizes inventory control and quality monitoring, it is a certainty that you will end up with a system that does not maximize ROI. Even worse, you will hear the dreaded statement – our new computer system won’t let us. Once that statement is permitted, then every managerial problem you can think of, ranging from container ship congestion in the port to the quality of coffee in the vending machines will be blamed on the new ERP system.

After you become convinced of the importance of articulating why you make money, then organizationally, how will you convey that to your project management in a manner that is clear and unambiguous? Because the implementation team is going to be comprised of manufacturing managers, quality managers, supply chain professionals, financial controllers, sales managers, distribution managers, new product development managers, purchasing managers, and customer service managers all of whom who are fully invested in the notion that their functional area is the sole reason the company makes money. In the absence of a clear leadership direction, the ERP solution will be a watered-down version of consensus in which every area receives a little bit of ERP attention, but no area has a world-class business solution.

Put it in writing

So, if you are considering an ERP implementation, take ten minutes and write down the three or four sentences that describe why you make money, and give it to your project manager. This will help the team select the appropriate modules and the vendor with the strongest modules in the important areas. If you are in the middle of an ERP implementation, ask your project manager to write down the same three or four sentences about why they think profit is made, and see how how it compares to your list. If there is a difference, you still have time to make a mid-course correction. If you have already implemented, and there is a difference, keep a close eye on your business performance.

In ERP, an ounce of prevention is worth a ton of cure. Take the time in the beginning to define the big picture. Contact allonline365 to speak to us about the relevant modules you want to include in your ERP solution. Let us help guide you, call us on  +27 (21) 205 3650  or email us on  info@allonline365.com.

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You need an ERP system for process manufacturing

processing manufacturing

Blog Written By | ERPFocus

ERP in Process Manufacturing: Business Benefits

You may call it an accidental benefit, but one thing that an ERP implementation forces on an organization is a thorough examination of its business models and practices, and process manufacturing benefits disproportionately from this examination. By its very nature, process manufacturing tends to be more flexible and dynamic over time. As a result, many business practices are the result of evolution, instead of a thoughtful and well-executed strategy. In a process manufacturing, you can almost always accommodate one more special customer need, until, after a while, your business model hardly resembles what your manufacturing, service, or systems were designed for. The misalignment between how the business was designed to run and how it actually does run will be highlighted in a number of ERP design issues.

Turning Over the Rock

A typical example might be defining a business model as either make-to-order (a specific manufacturing plan for each customer order) or make-to-stock (sell orders from inventory). ERP generally rewards a clear-cut choice between these two with rich functionality, but process manufacturers often have difficulty committing to only one strategy. They want to describe a hybrid strategy and decide, order by order which strategy applies. While this sounds very customer-focused, it is an administrative nightmare. As you begin asking who has the authority to decide, and what the decision criteria are, you grasp that there is no overarching logic to the choices being made, and therefore it is not a business model that is easily programmable within an ERP environment. The conversation which emerges as a result of this ERP question is a vitally important one to the leaders of the business. If the leadership team is collaborative and synergistic, it is possible that ERP will serve as the framework for re-establishing a set of logical business rules. If the leadership team is dysfunctional and does not work together well, at least everyone explicitly understands that the business model does behave according to any predictable rules. This is not an observation in sarcasm; it is an important reference point for helping people understand why things do not go as expected.

Other examples might include how planning and manufacturing scheduling occurs, how a product that does not strictly meet quality specifications is handled, or how much lot traceability is truly required. The benefit in all of these, just like the one in the preceding paragraph, is to hold up the evolutionary decisions that a single functional area has turned into business policy, and examine them in the clear light of the total business process. The results can vary from exhilarating to frightening, depending on your organization.

If your workgroup can agree to operate your process manufacturing business logically, ERP will be a stair-step improvement. allonline365 can help guide you during your implementation of Dynamics 365 Business Central ERP, offering advice on the best modules and customizations need for your business. Call us on +27 (21) 205 3650 or email us on  info@allonline365.com. 

Do you need lot tracking in your ERP solution?

lot tracking in manufacturing

Blog Written By | ERPFocus

Lot Tracking in ERP

As with everything else in an ERP implementation, goals and objectives of lot tracking should be explicitly understood and agreed upon when designing a transaction flow. Not all ERP systems have lot tracking capability the way your process manufacturing may be used to. Because of that, you should be able to compellingly articulate the value you get from lot tracking since, at ERP software selection time, strong financial and purchasing modules might trump a weak or non-existent lot tracking system. If lot tracking is a “just in case” process (just in case you need to research something, just in case there is a quality problem, etc.) and its value to quantify, you could end up without a robust lot tracking system. In that case, some type of workaround has to be created.

Is everyone on the same page?

Careful communication is required to understand the lot tracking capabilities of an ERP package. because most vendors have good faith that they have a strong lot tracking capability. However, unless your ERP vendor has specific experience in your industry, and thoroughly understands your lot tracking problems, you have to be cautious. There are very real philosophical differences that create performance differences.

A subtle but critical difference, for instance, is what a “lot” represents. Almost all process manufacturing defines a “lot” as all production of a single SKU manufactured in the same production run. However, ERP packages that lack depth in lot tracking might stop there. In that case, the lot number represents a group of physical things comprising a total inventory quantity: a group of pallets, a group of rolls, a group of drums, a group of boxes. That lot has a genealogy comprised of intermediate lots created under the same definition. In this case, the “name” of the inventory quantity is the lot number and the attributes of that inventory are associated with that lot number. But in this scenario, there is no visibility of how many things (pallets, boxes, drums) make up that inventory quantity. In more robust lot tracking, however, each discreet piece of inventory – each pallet, each roll, each drum – receives a unique inventory name (serial number), and the lot number is attached to the serial number as one attribute (in addition to things like SKU number, quantity, and quality). The philosophical difference leads to cascading differences in how sales orders are written, how available to promise works, and how inventory can be managed.

Process manufacturing covers a wide spectrum of complexity and not every operation requires a complex lot tracking solution. The complexity of serial numbers may not be needed at all in a specialty chemical process, where homogenous quantities move in batches, but an absolute necessity in a paper and textile mill. The key question for your team to decide in advance is what priority lot tracking will have in making your ERP software selection.

allonline365 offers a comprehensive solution that grows with your business over time. Dynamics 365 Business Central has the capabilities to add a manufacturing module into your ERP solution as and when you need it. If you are looking for an ERP system for your manufacturing business contact us on  info@allonline365.com or  +27 (21) 205 3650.

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