By the mid-1980’s MRP (materials resource planning) had become a blooming software industry expanding in 1.3 Billion dollars in sales throughout American manufacturing. MRP quickly became a necessity amongst major manufacturers in order to stay competitive in the marketplace. Fast forward to 2014, MRP has evolved into what is now coined ERP, or enterprise resource planning. While MRP is still very much alive within the realm of ERP, it has now taken a back seat to advanced functionality and is a must-have for modern day manufacturing.
For a long time, manufacturing software and advanced systems were seen as a commodity, especially for smaller manufacturers and job shops. Whether it is a stubborn mind set or not, the mentality often remains that systems do not make the company money, rather the output of manufacturing does. People do not need a computer to tell them what is going on in their shop and they certainly don’t need them to advise them on how to run their business.
Not only has ERP become an important fail-safe for manufacturers, their customers and suppliers are now often requiring the existence and proper use of an organized system, before even awarding a new contract. There are often instances, especially in areas like aerospace and defense, government, and medical manufacturing, where supplier rating and audit and inspections are dictating the volume of business they will allow you to conduct. The more integrated system you have, the better rating you will receive, and, thus, allowing you to win more business. Same has been seen with audits; a more tight-knit system with quality control will result in a need for fewer and shorter audits, and thus, allowing your shop to focus more on production and less on compliance issues, which of course means an increase in production and cash flow.
Outside of the compliance issues, in this global market, ERP can often help you decide whether an order is even feasible – do I have the materials? Can I get them? Do I have the capacity? What is the proper buy quantity to maximize material availability as well as cash flow? Having historical data at your fingertips can help determine whether it is time to re-quote a job for a customer, or find cost savings while still making a profit.
Whether you are a global manufacturing enterprise or a small mom and pop job shop making custom products, your window of remaining competitive and relevant grows smaller each day. ERP systems continue to evolve, spanning, by definition, across the entire enterprise, and is vital to increasing your on-time delivery, and improving cash flow, inventory accuracy, and supplier rating. While some might be content with a home-grown system they’ve used for years and “works fine for them”, the facade that ERP is simply a commodity is certainly now a thing of the past.Written by: Jason Rourke, Director of Marketing, ProfitKey