Enterprise resource planning (ERP) software has become a tool for many distributors and manufacturers to cut waste and reduce costs. A comprehensive supply chain ERP system has been proven to aid businesses of all kinds in managing resources more economically.
According to an article on ERP Focus, there are three important reasons the “lean ERP” model should be at the top of your list of New Year’s resolutions.
- It provides a common language for the entire organization: Providing uniform language allows employees from different backgrounds to understand one another during the production process while better managing the resources of the supply chain and manufacturing departments.
“People within any business come from a variety of backgrounds and, if all adopt the terms used in their particular ERP system, many language differentiations can be avoided,” the article explains.
- It reduces over-production waste: A supply chain ERP system eliminates waste that can be a damaging byproduct of transportation, inventory, motion, waiting, over production, over processing and defects. The article reminds us that “all of these add cost without adding value and obviously should be avoided. But it might not be so obvious to all.”
It’s been discovered that the cost of overproduction and storage sometimes outweigh the cost of production in line with demand. Supply chain ERP is able to eliminate the costs of overproduction by effectively managing the resources, both human and material, that are on hand.
- It increases efficiency in production itself: A properly implemented supply chain ERP system allows manufacturers to purchase materials based on need and schedule equipment and resources according to actual demand.
“We get rid of manufacturing lot sizes based on an economic quantity and use dynamic lot size based on actual orders. We can go further and set a maximum production lot quantity and allow other customers to flow through the factory so that wastes are eliminated or minimized,” the article notes.
A supply chain ERP system can be set up to match business rules unique to each manufacturer or distributor. With this powerful tool, waste is cut while increasing communication and efficiency within the organization.
Contact us now to learn how ERP can be suited to meet your needs and increase your bottom line.
Source: ERP Focus, January 2014