What Is ERP? – Enterprise Resource Planning For Manufacturing

[Guest blog] Written by Jay Snow, Courtesy of MTI Systems
 

It can be easy to agree that ERPs, as with most software, have come a long way, since Y2K. Note the various comments from industry editors and software providers mentioned below:

ERP stands for “Enterprise Resource Planning” and according to Wikipedia is software that integrates internal and external management information across an entire organization, embracing finance, accounting, manufacturing, sales, service, customer relationship management, and more.

“Making Your ERP System Work for You”, an article by Travis Hessman, editor of Industry Week magazine shares his interview with an enterprise business solutions provider. According to Mr. Hessman’s article, ERP development is comparable with automobiles. A decade ago autos lacked high-tech features found today. Rear-view video monitors, Bluetooth communications and GPS navigation systems were just surfacing. In comparison, software technology, has advanced because of more data storage, faster processor speed and other features — which all increase computing performance and user accessibility.

Think about what your car was like back before the turn of the century. Now you get in your car, you have satellite radio, you have GPS, you can see the traffic, the things are green or red on the lanes if you buy that XM add-on. ERP systems are no different [when comparing technology]: You should have a NAV system for your business. — “Making Your ERP System Work for you,” Travis Hessman, Editor, Industry Week

It’s also a fair comment where that article talks about the turn of “Y2K”, adding presumed Apocalypse, as we all recall, engaged fear through the risk of extreme delays or possible systems failure. This fear, likely was a catalyst for premature decisions, influencing many manufacturers to update, upgrade, or simply replace any computer software, specifically their ERP system. While reducing possible issues of aftershock, decisions may have been rushed, and now as manufacturers continue to face economic pressures, it’s not uncommon for many companies to limit investments in software.

As with any technology, manufacturing is ever changing which also changes requirements, customer needs, and opportunities. ERP vendors should keep up with changes, and provide their manufacturing customers with software tools needed for their customers to become and remain competitive.

“In manufacturing, there still tends to be a lot of FUDD (fear, uncertainty, doubt, and disinformation) surrounding ERPs. This can be due to many reasons, but especially if they have been burned in the past by previously failed implementations.” – Jason Rourke, Marketing Manager, of ProfitKey International, an ERP/MES solutions developer and provider.

Manufacturers also need to remain as current as possible and a manufacturers ERP solution, as with other engineering related tools, can help them remain competitive in their respective industries by offering a quick communication and data-exchange, between departments.

“Inter-connectivity, allowing a seamless flow of information throughout your operations from your shop floor to your front office in real time, is critical for future success and long-term customer satisfaction”– Joseph Di Zazzo, President & CEO of ProfitKey International.

While ERP developers continue to add a multitude of features and functionality aiding in communication and performance, much of the manufacturing information is still entered manually. It’s important to note that cost calculations, when referring to estimating the cost of parts and products for quoting, is still mainly performed outside of the ERP system — whether manually via paper, pencil, & calculator, though home-grown spreadsheets, or by the use of integrated cost estimating programs.

“The primary goal of an ERP is to provide decision makers with the information that they need in order to make properly informed decisions. Of course, this visibility is useless if it consists of data that is old. With old data, managers could potentially be making decisions that are not in line with what is currently going on in the organization, costing the business greatly.”  — “ERP in Manufacturing 2011“, Aberdeen Group 2011

Delivering information between departments quickly can make a world of difference as streamlining and lean manufacturing continue to prove a positive goal and effective cost reduction initiative for any manufacturing business. Identifying the true time and cost of parts, part features, and products and what the numbers should be, however, still require effective tools, outside of the system, for the enterprise resource program to be most effective.

“While ERP software excels at bringing together accounting, material plan, inventory and other critical information, manufacturers still have functional needs that extend beyond what ERP systems are able to achieve today. Fortunately, integration tools have become much more advanced and simpler to use so manufacturers can draw data in from standalone systems (such as cost estimating programs) to create a single source of data.” – Derek Singleton, ERP Analyst at Software Advice.

Written by Jay Snow, Courtesy of MTI Systems
Posted by Jason Rourke, Marketing Manager, ProfitKey International
 
[For the original article and other great content surrounding the manufacturing and cost estimating industries, please visit the Costimator Cost Estimating Software Blog site.]
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