Wednesday, March 30, 2011

ERP Solutions Align Manufacturing and Inventory

Enterprise Resource Planning (ERP) solutions were designed initially more than 30 years ago to primarily address manufacturing processing and handle inventory control.  Material Requirements Planning (MRP) is a critical component of any ERP solution. 

The purpose of these "solutions" is even more important today given the lean times we live in.  Lean times mean lean processing.  Reduce the waste and increase profits.  Since ERP solutions have their roots in Manufacturing, they are designed to optimize inventory.  Optimizing inventory, typically but not always a reduction in inventory levels, is the primary component to a Return on Investment (ROI) and increased profitability. 

Even small reductions in inventory levels can translate to big savings.  Imagine your bottom line with a 2-3 percent drop.  Less carrying costs, less space, less time to count, less overhead, you get the idea.  No one can come in and tell you that you will be able to eliminate or cut in half your inventory.  Realistic reductions of a few percentage points is reasonable and quite achievable.  Do a little better job in forecasting demand, add a little bit for better material requirements, add a little bit for simply managing what is on the shelf and you can get the few points you need to stay competitive.  Do the above while reducing the manpower or overhead to manage the inventory and the savings start to accumulate.

Today's systems can give you real-time data, fully integrated with your system.  This translates to cost reductions in more efficient inventory handling.  Management inquiry and reporting in a timely manner (i.e. now, not days later), which enables improved decision making.  Better decisions mean better control.  Reductions in stock levels mean savings.  Better information means streamlined operations and reductions in waste, which means an acceleration in production.  Better production means better planning.

A fully integrated and implemented system enables better business planning activities, which include financial planning, procurement, logistics, supply chain and customer service.  Happy customers mean better profits. 

Microsoft Excel and its equivalents have their place.  They are great tools that enable great analysis, however, mismanaged they often are responsible for creating silos of disconnected information.  A fully integrated ERP system show integrate client tools, not necessitate them.

Dolvin works with Manufacturers to help them look at their operations and find ways to increase their efficiencies, reduce costs and become more profitable.

Click here for Dolvin's contact information.

No comments:

Post a Comment