What Is Manufacturing ERP Software? A Complete Guide

To keep up with ever-changing customer demand and rising costs, manufacturers are always looking for ways to improve operations, boost efficiency, and stay competitive. But traditional methods for maintaining that competitive edge may no longer be enough in today’s world of complex global supply chains and economic uncertainty. According to Deloitte’s “2022 Manufacturing Supply Chain Study,” 76% of the over 200 manufacturing executives surveyed listed investing in digital supply chain tools as a top strategy to overcome challenges that can include shipping delays and material shortages.

The key to improving manufacturing operations, however, is to avoid fragmented and disjointed digital tools in favor of a powerful, comprehensive manufacturing ERP system that empowers businesses to build a unified strategy for long-term success. This article explains what a manufacturing ERP is, what benefits it can bring to manufacturers, how to successfully build an implementation plan, and more.

What Is Manufacturing ERP?

An enterprise resource planning (ERP) system is a comprehensive business platform that helps businesses manage their daily operations. Manufacturing ERP systems include specialized features to address the industry’s unique challenges, such as production planning, inventory management, quality control, and order tracking. These systems centralize and streamline manufacturing operations by collecting, analyzing, and reporting on businesswide data. Stakeholders can use this data—often through use of automation and advanced analytics tools—to improve efficiency, increase productivity, and reduce costs. Manufacturers can also leverage this ERP technology to increase visibility into the entire manufacturing process to impart resilience and potentially improve profitability.

MRP vs. ERP: What’s the Difference?

Material requirements planning (MRP) and ERP systems both play crucial roles in manufacturing, but they have different scopes and serve different functions. MRP systems primarily focus on managing the components and raw materials needed to manufacture goods, including such processes as production planning and inventory management. Manufacturers use these systems to effectively balance availability of materials for production with minimization of carrying costs caused by overstocking.

While MRP systems may be more suited to businesses looking for a focused solution to detailed production planning and inventory control, ERP systems tend to be ideal for businesses seeking a panoramic view of businesswide operations. This is because ERP systems are, by nature, a more comprehensive solution than MRPs. ERP systems, for instance, manage resources across an entire organization, including finances, order fulfillment, customer relations, and human resources, in addition to manufacturing-specific processes, such as order management, supply chain management, and procurement. ERPs can also automate routine tasks throughout the company, such as invoice generation and inventory replenishment, which frees staff to focus on strategic initiatives and problems that require human intervention.

Key Takeaways

• ERP systems are robust software solutions that manufacturers can use to better manage operations, reduce costs, streamline workflows, increase productivity, and more.
• Manufacturing ERP systems have specialized features for production planning, inventory management, quality control, and order tracking, plus other customizable tools to help manufacturers boost profitability and gain competitive advantages.
• ERP systems can be a sizable investment, both financially and in time and effort. Manufacturers must fully understand their business needs and budgets to select the right system.

Manufacturing ERP Explained

The modern manufacturing world is complex, often buffeted by headwinds, such as volatile demand shifts and global supply chain pressures. Effective navigation depends on the ability to assess vast amounts of accurate and up-to-date data—amounts that usually exceed what can be reliably obtained without sophisticated technology. Specialized manufacturing ERPs act as a centralized data hub, providing the real-time insights that make smooth navigation possible. In turn, this empowers manufacturers to make more informed decisions. Business leaders can also leverage these systems to manage multiple aspects of facility operations and processes, from kicking off production to running final quality checks and everything in between. Many manufacturing ERP systems are cloud-based, allowing managers and permitted end users to remotely and securely access everything they need, from anywhere at any time.

This centralized hub of real-time data inflows and analyses makes it possible for managers and decision-makers to coordinate across the organization, ultimately leading to more effective management and enhanced operational efficiency. Additionally, with the rise of ecommerce and omnichannel retailers, ERP systems allow manufacturers to offer a more personalized and satisfactory transaction experience, while still maintaining high-quality standards that meet internal benchmarks and external regulatory requirements. With manufacturing ERPs, manufacturers can serve their customers and build a profitable and resilient operation that is well-prepared to face today’s—and tomorrow’s—challenges.

Types of Manufacturing ERP Deployments

Deployment strategies will depend on the business’s desired scope, functionality, staff training needs, integration requirements with existing systems, and implementation timeline. Here are the three main categories:

• Cloud-based systems are hosted by ERP vendors on their cloud platforms; customers can connect to them from anywhere they have an internet connection. This arrangement means the vendor maintains and upgrades both the hardware and software for the duration of the service, automatically or at predetermined intervals.
• On-premises systems reside at the business’s location and typically require more up-front resources and planning for hardware installation and software licensing. The manufacturer is responsible for ongoing maintenance and repairs, so it must either possess the internal expertise or contract with a third party. These systems may give manufacturers more control over their ERPs, but they also demand technical support and infrastructure management.
• Hybrid systems combine elements of both on-premises and cloud-based systems. In this setup, the ERP system is hosted by an external company (not the ERP vendor) and is accessed by the manufacturer via the internet. Unlike exclusively cloud-based models, these third-party systems may require the manufacturer to handle some upgrades or maintenance. Customers often choose which components to keep on-premises and which to outsource based on their needs and existing IT infrastructure.

Key Features of Manufacturing ERP Systems

Manufacturing ERP systems sport a wide range of features designed to streamline and optimize various aspects of manufacturing operations. But before choosing a system, every manufacturer should carefully consider which features would benefit their unique business needs. This includes determining whether some features would go unused—a straightforward way to ensure that the system will be fully capable without wasting resources on irrelevant features. Though modular systems may present additional nuances worth considering, here are core features to look for in a manufacturing ERP system.

• Inventory Management

  Manufacturing ERPs provide tools to manage inventory levels, such as the ability to trigger automatic alerts when levels move below or above a predetermined range. Some systems, for instance, offer inventory modules that not only track the quantity and carrying costs of raw materials, works in process, and finished goods, but also provide managers with visibility needed to minimize the risks of excess stock and stockouts. This ensures that manufacturers will have optimal materials and products available to satisfy demand, while minimizing carrying costs.

• Sales Order Management

  Sales order management capabilities give businesses clear sight lines into the sales process, from initial leads to final sale and order delivery. This lets sales teams proactively identify bottlenecks and troubleshoot weaknesses in the sales process, such as slow order fulfillment or delayed approvals, thereby enhancing operational efficiency. Sales order management can also help sales teams quickly address any issues with existing orders to create a more positive customer experience.

  In addition, sales order management features can automate many mundane and tedious tasks, such as updating order status as raw materials and finished goods move through the supply chain. This frees staff to work on other tasks, such as following up on leads and resolving customer concerns. This automation can also be used to keep customer expectations realistic and up to date—a benefit particularly useful for manufacturers that offer made-to-order or custom products.

• Business Intelligence

  Business intelligence (BI) tools integrated with their ERP systems help decision-makers identify trends, opportunities, and any new or underlying issues. These tools analyze raw data to provide actionable insights to leaders and managers through real-time dashboards and automated reporting. The scope of these insights can be customized to suit the user’s needs, such as department-focused key performance indicators or company-wide profitability reports. For instance, manufacturers can use BI tools to enhance demand forecasts and then use these forecasts to plan future production schedules.

• Quality Management

  Ideally, manufacturers should be able to customize their ERP systems by adding quality benchmarks to ensure that products meet or exceed established internal standards and any relevant regulatory requirements. Many manufacturing ERPs also have built-in tracing features that allow businesses to quickly identify and address defective goods during the production process, either by removing them from inventory or issuing a recall to prevent wider customer impact.

• CAD/CAM Management

  Computer-aided design and manufacturing (CAD/CAM) management software equips engineers and production teams with advanced technology and tools for product design and creation. Manufacturing ERP systems that offer seamless CAD/CAM integration can further enhance efficiency and reduce errors by keeping engineers and production staff on the same page, working with the same design and measurements. These benefits are especially crucial for manufacturers that offer customizable goods or frequently update their product lines, as these scenarios often require quick, precise adjustments before production can begin. With features like automation and centralized collaborative spaces, CAD/CAM systems enable designers and manufacturers to streamline the ideation and creation processes.

  For example, with automated parametric modeling, engineers can link design elements and perform automatic adjustments throughout a design, even when just one of the linked elements is changed. These tools also ensure ongoing accuracy and consistency when the products are manufactured and sold by maintaining consistent standards from one centralized data source, rather than leaving different parties to rely on old and potentially outdated schematics.

• Financial Management

  ERP systems’ financial tools provide more than just basic accounting functions. They also track costs throughout every stage of production; enhance financial management by automatically calculating labor, overhead, and material costs; and manage accounts payable, accounts receivable, and general ledger functions. Furthermore, manufacturers can use these tools to generate detailed financial statements or ad-hoc reports for specific product lines or customer segments, speeding up the financial close. This real-time financial visibility allows businesses to regularly identify cost-saving opportunities and make more timely pricing decisions.

• Bill of Materials (BOM) Management

  After products are designed, engineers list all the necessary components for final assembly in a single document, alongside a list of their associated materials and costs. This document is known as a bill of materials (BOM). Manually generating these BOMs can be time-consuming and error-prone, especially for complex or regularly updated goods. However, by leveraging an ERP with automated BOM management capabilities, manufacturers can speed up the document-creation process and lower the risk of human error. The BOM can then be easily replicated and shared with different departments as needed. Furthermore, both engineers and manufacturers can use the ERP’s BOM features to collaborate in real time, reducing the delay between handoffs and minimizing miscommunications.

• Planning and Scheduling

  Businesses should look for a manufacturing ERP system that comes equipped with tools specifically designed to enhance production planning and scheduling. Such tools include those addressing resource allocation optimization and real-time progress tracking. These real-time data sources allow managers and decision-makers to quickly adjust production schedules in response to changes in customer demand or inventory levels, ensuring smooth operations amid evolving conditions.

  Beyond day-to-day operations, business leaders can use their ERP system’s customizable dashboard features and reports to zoom in on the specific data they need to develop targeted strategies and build long-term success. Manufacturers can set automated dashboard alerts to notify relevant parties when supplies drop below a set value and need to be reordered. Additionally, decision-makers can use customized reporting to track and analyze material levels over time to set more accurate ordering schedules.

  Planning and scheduling are often integrated with other features, such as demand forecasting and benchmarking, to give manufacturers a more holistic view of production needs and to inform future planning and scheduling decisions.

• Mobile Devices

  In the manufacturing sector, decision-makers can rely on ERP systems with mobile capabilities to get a window into the manufacturing process—and make well-informed, real-time decisions—from anywhere. Mobile devices help staff at all levels access critical manufacturing information right from their handheld devices. Such information can include production schedules, inventory levels, quality control data, standard operating procedures, and more. These devices enable staff to stay connected to a single, cloud-based data source, enhancing collaboration and ensuring that everyone works with the most up-to-date and relevant information.

  It’s important to note that ERP systems worth considering should also have robust security features. This way, manufacturers can remain confident that their data is accessible to only authorized users and devices, an especially important feature for hybrid or remote workers.

• Scalability

  Choosing a scalable manufacturing system that can adapt and grow alongside the business delivers more long-term benefits and higher returns than implementing a more affordable—for now—system that the company will soon outgrow. This flexibility allows manufacturers to add new features, users, or locations as needed, while maintaining consistent day-to-day processes for staff, minimizing disruptions. Scalable systems also maintain performance and reliability standards as data volumes and complexity increase, allowing manufacturers to expand their operations without surpassing their ERP system’s capabilities.

  For example, a growing manufacturer might start with basic inventory and production modules, then add more sophisticated features, such as advanced analytics or automation tools. This incremental approach allows businesses to expand their reach as their needs evolve without adding significant deployment hurdles or investments.

Benefits of Manufacturing ERP

Manufacturing ERP systems typically permit a high level of customizability. Therefore, the benefits they bring can be curated to overcome the manufacturer’s specific challenges. Here are four near-universal benefits manufacturers should consider when choosing and implementing an ERP solution.

• Optimize Stock Levels

  Finding the appropriate stock level hinges on striking a balance between raw materials and finished inventory. This approach helps manufacturers meet demand while minimizing storage and logistics costs. Furthermore, as demand and market conditions change, what’s considered an “ideal” stock level today might actually be overstock or understock tomorrow. Manufacturers use ERP systems to optimize their stock levels, based on real-time data and comprehensive demand forecasts. Having this data on hand—and knowing what to do with it—minimizes the risk of holding insufficient or excessive inventory, even in a changing market.

  

• Reduce Carrying Costs

  When products sit unsold for long periods of time, it’s often due to overproduction, a drop in demand, or miscalculated demand. But whatever the reason, excessive inventory leads to increased carrying costs. These burdensome expenses not only reduce profitability but tie up capital that could otherwise be used more effectively elsewhere. However, because production cycles are not instantaneous, accurately determining optimal stock levels can be challenging. Any lag in recognizing a drop in demand can increase the losses when products stop selling.

  Fortunately, manufacturers can use ERP systems to minimize these losses. For instance, an ERP system’s data analytics capabilities allow companies to closely track real-time changes in sales trends, storage costs and inventory turnover rates. Companies can then make pertinent adjustments, and all relevant managers and staff can instantly be alerted to the changes. With this granular degree of regular monitoring and the ability to make real-time adjustments, manufacturers can keep their production schedules closely in line with the most up-to-date and accurate estimates available, minimizing carrying costs without impinging on their ability to meet customer demand.

• Prevent Stockouts or Overstock Situations

  To prevent stockouts or overstocks, manufacturers can set automatic alerts in their ERP systems to flag the point when the values of critical stock—or raw materials—fall outside a preset range. This feature allows managers to proactively monitor inventory levels without the need for time-consuming manual checks. This helps support efficient production schedule planning, not only by freeing managers to focus on vital tasks, such as resource allocation and decision-making, but also because shop-floor workers and order pickers won’t have to waste time searching for items that aren’t in stock.

  More specifically, ERP systems can automate critical tasks, such as reordering materials and shipping supplies, to ensure continuous production and timely deliveries, especially during periods of high demand. On the other hand, if inventory turnover rates fall because products have begun to pile up without a proportional increase in sales, for example, ERP systems can notify relevant parties. These parties may include production managers and sales teams, who can then swiftly adjust production or marketing strategies to minimize any potential financial impact due to dead stock.

• Deliver Products to Customers on Time With Minimal Errors

  Manufacturers can use ERP systems to collect data from anywhere along the supply chain to pinpoint bottlenecks and inefficiencies. For example, ERP systems can evaluate suppliers by tracking delivery time and order accuracy over time. This helps manufacturers determine the fastest and most reliable vendors to work with, minimizing slowdowns when ordering supplies. As a result, manufacturers can build a more resilient and reliable operation that reduces lead times for customers. Even when faced with global supply chain pressures, manufacturers can use their ERP systems to increase supply chain visibility and provide transparency to customers about the status of their orders, especially if there’s a delay or shortage.

  Additionally, these systems can improve quality control and minimize incorrect or missent orders. For example, data validation and automation tools can take human error out of tasks like managing logistics, creating shipping labels, picking goods, and packing orders. This means manufacturers can be sure that each order is accurately processed and dispatched, and customers can remain confident that their orders are in good hands.

How Do You Know When Your Business Is Ready for an ERP System?

There is no universally accepted “right time” to implement an ERP system; it’s up to manufacturers to recognize when traditional manual processes and disconnected software solutions begin to hinder their growth and slow down processes. Common signs that it may be time to consider an ERP system include an increase in data-entry errors, inventory tracking difficulties, delays in financial reporting, communication gaps, siloed information, and rising customer complaints about order accuracy, delivery times, or defective items. Put simply, if employees are spending hours reconciling data from different systems or if managers across myriad departments can’t quickly access the information they need, implementing an ERP system can provide a more efficient and profitable operation.

Before choosing a system and producing a timeline for deployment, manufacturers must first assess their readiness, including available budget, staff capacity to learn new systems, detailed documentation of current processes, defined goals to measure success, and how leaders will support the transition. This preparation allows stakeholders to choose a system that fits with their needs, setting the stage for a smooth deployment and a healthy return on investment.

How to Choose the Best Manufacturing ERP

To select the best manufacturing ERP system, business leaders must first understand what they need. By considering the eight steps listed below, leaders can assess potential ERP candidates based on what would best benefit their operation, rather than evaluating a one-size-fits-all list of criteria.

1. Understand Your Business Needs

A business can’t build and implement an ERP system without having a clear understanding of what the system will need to do. Many manufacturers start this process by collaborating with various stakeholders to create a list of must-have ERP features. They do this by deciding what data to track, what processes to streamline, and what reports and monitoring will be required to continually improve operations. This process involves identifying the business’s operational strengths and weaknesses, growth strategies, and specific inventory and production requirements.

Consider a manufacturer grappling with longer lead times that are diminishing customer satisfaction. To tackle the issue, the company plans to deploy an ERP system capable of tracking production stages to identify bottlenecks. The system will allow managers to monitor specific data reports, such as the delay between order date and the start of production, or to note how long partially finished goods stay at each stage. With this data, managers can leverage additional ERP tools to improve operations. They can use the system’s centralized communication platform and automated order update features to coordinate tasks; workers at all levels will be clearly informed about when to begin the next step, enabling better labor; and they can track planning and scheduling. The result is a faster order-processing and shipping timeline, ultimately enhancing customer satisfaction.

2. Assess Features and Functionalities

Once a business has laid out its needs and goals, these can be matched with the features of an ERP solution. If a manufacturer plans to streamline inventory management, it should seek an ERP system with advanced inventory functionalities, such as product sorting, order tracking, and warehouse controls. They should also evaluate the system’s ease of use, integration capabilities with existing systems, and long-term scalability. Scalability is crucial because it ensures that the type of ERP system chosen can adapt and grow alongside the business, accommodating future expansion and evolving requirements. This foresight can help minimize downtime and frustration during the transition and as the business evolves.

3. Assess Vendors

A vendor assessment should be more than a product evaluation. Manufacturers must also consider such factors as the vendor’s reputation, its experience in the manufacturing industry, and its customer service capabilities. For instance, it’s important to choose a vendor that, in addition to providing a robust ERP system, also offers comprehensive support during implementation and beyond. Additionally, manufacturers might want to consider the vendor’s financial stability, how long its product has been on the market, and whether it’s committed to updating and improving their ERP system from both a technology and security standpoint. Reference customer testimonials, vendor-provided case studies, and independent reviews can be helpful in this regard.

4. Assess Total Cost of Ownership (TCO)

The total cost of ownership (TCO) of an ERP covers the initial purchase price and all costs associated with the system, including implementation, training, operation, maintenance, and upgrades. Consequently, manufacturers must plan and budget for direct costs, such as software licenses and hardware, and indirect costs, such as the cost of temporarily shifting staff from their usual jobs to roles focused on setting up the ERP system during its rollout.

Budgeters should also try to identify any potential hidden cost drivers, including data migration and system downtime. This total cost should be compared to potential cost savings derived from increased efficiency and productivity. If cost savings outweigh the TCO, it’s likely an ERP worth considering.

5. Assess Technological Advancements

Sophisticated technology, including cloud computing, artificial intelligence (AI), machine learning, and internet of Things (IoT) devices, can offer significant advantages in terms of scalability, real-time data analysis, predictive maintenance, and more.

For example, IoT devices can collect and report on equipment status in real time, giving manufacturers insights into performance and efficiency throughout the equipment’s life. Taking it a step further, this data can be combined with AI to analyze energy patterns and performance to optimize use and predict when equipment will fail, respectively. Manufacturers can then use this data to plan downtime and budget for upcoming equipment repair costs and purchases.

When assessing ERP systems, manufacturers focused on long-term success will want to consider solutions that not only satisfy current needs but are also equipped to uphold continuous innovation to meet the industry’s—as well as the manufacturer’s—evolving needs.

6. Manage Implementation and Change

The time and resources required to implement an ERP system should be prominently considered when weighing candidates. Once the ERP solution is fully integrated, business leaders can use the system to break down traditionally siloed processes, such as order processing, financials, and inventory management, to streamline operations and paint a complete view of the company.

However, the shift from a siloed to an all-inclusive process necessitates a well-crafted implementation plan incorporating collaboration among all stakeholders, from senior management and IT to end users. The plan should detail timelines, roles, and responsibilities, as well as contingency plans for potential problems. Key to this major change will be managers’ ability to proactively communicate with staff, address their concerns, and provide targeted training to ensure smooth adoption of new workflows and responsibilities.

Each ERP system will demand a level of commitment that depends on the degree of integration and the scope of its features. The impact of implementation should be a major factor when choosing an ERP system and determining when it should go live. After all, the success of an ERP system relies not only on the technology, but on how well it’s implemented and adopted by all users.

7. Evaluate ROI

Evaluating potential return on investment (ROI) involves comparing the financial gains resulting from implementing the ERP system against the total cost of ownership. Given the significant investment typically associated with implementing an ERP solution, manufacturers must carefully calculate ROI to determine the worthiness of the system as a whole, its specific features, and the modules that will prove most valuable.

The ROI of an ERP implementation can be measured in terms of increased efficiency, reduced operational costs, improved productivity, enhanced decision-making capabilities, or any other metric that a manufacturer values as a worthwhile return. These evaluations should consider both tangible benefits, such as reduced labor costs, and intangible benefits, like improved employee morale.

Though estimated ROI evaluations begin as a step toward determining the right ERP system for a manufacturer, the company should continue to conduct regular ROI reviews even after choosing and implementing an ERP system. This will ensure that the system continues to generate positive, long-term returns.

8. Consider Legal and Compliance Issues

For many manufacturers, especially those offering diverse or sensitive products, tracking the legal and compliance requirements associated with their products can be a challenge. To overcome this, manufacturers should choose an ERP system that allows them to customize compliance requirements to reflect all relevant industry regulations, standards, and laws, and create reliable records showing this compliance. For example, U.S.-based manufacturers will need to be aware of OSHA standards, EPA guidelines, and possibly FDA requirements, while manufacturers operating in multiple regions will need to adhere to individual sets of regulations and tax laws.

By selecting an ERP with customizable compliance and regulation settings, manufacturers can automatically enhance their ability to mitigate risks and avoid penalties, allowing them to remain confident that they are conducting their business properly and effectively. For example, some ERP systems let companies automatically track changes in international trade laws or environmental regulations. This means that as regulations change, manufacturers can more easily update their processes to comply with new standards.

How Much Does Manufacturing ERP Cost?

Businesses investing in a manufacturing ERP system may be presented with a wide array of pricing options, ranging from nearly free to costing hundreds of thousands of dollars or more. Therefore, any true cost analysis will require a detailed understanding of the manufacturer’s needs and goals, number of users, ongoing support and maintenance required, and any other variables revealed during the provider’s initial estimate. Budgeters and financial teams should also include ongoing or hidden costs in their TCO analysis, such as the cost of acquiring new customers or adding users, the cost of additional add-ons or upgrades, and all ongoing training costs.

One important factor to weigh when calculating the cost of a manufacturing ERP system is how it will be deployed. On-premises systems typically require substantial upfront hardware and software investments, plus ongoing maintenance and upgrade costs. Cloud-based solutions generally have lower initial costs but require monthly or annual subscription fees, which add up over time. Hybrid solutions fall somewhere in between, with costs varying based on how the system is split up and who is responsible for upgrades and maintenance.

Manufacturers should strive to calculate the true costs of an ERP system—extending beyond the initial price tag—prior to implementation. Many ERP vendors offer personalized consultations and proposals for interested customers to help manufacturers more clearly understand the costs and potential benefits of their products. By combining vendor information with internal analyses and estimates, manufacturers can set realistic budgets and ensure that they find the right balance of robust and affordable ERP software.

How to Set Up a Manufacturing ERP in Five Steps

By carefully and deliberately implementing an ERP system, manufacturers can remain confident in the system’s effectiveness, as well as the accuracy of the information found within. These five steps can help manufacturers ensure a successful ERP deployment, as illustrated through a running hypothetical example.

1. Customization and Configuration

Adapting an ERP system to a manufacturer’s specific needs is key to enhancing productivity and efficiency in targeted areas. It’s worth noting that customization goes beyond simply choosing which modules, features, and functions are best for a business. In fact, individual ERP functions, such as warehouse management, can address distinct operational needs by adopting different technologies and workflows in each area.

Consider a manufacturer that plans to customize its ERP to incorporate varying approaches to warehouse management, with the specific goal of improving the order fulfillment process. One warehouse equipped with picking robots can integrate its warehouse management system with the ERP. This integration automatically triggers order fulfillment steps as soon as an order is placed. In contrast, another warehouse staffed by human workers might use its warehouse management features to enhance workflow efficiency by connecting to mobile scanners and developing intuitive floor plans. Then, when connected to the manufacturer’s ERP system, staff can quickly locate items for a smooth order fulfillment process.

Such customization allows the ERP to address different manufacturing needs, whether in warehouse management, order fulfillment, production planning, or shop floor operations.

2. Data Migration

Migrating current and historic data from an existing system into a new ERP is a complex and time-consuming task. Manufacturers must meticulously plan this process to guarantee a smooth transition without data loss or oversights. Before migrating data, businesses should first verify the accuracy and completeness of all data to minimize the risk of introducing errors or duplicates into the system. Such inaccuracies can compromise the new system’s effectiveness, leading to operational disruptions, inaccurate reporting, and potential business losses, including decreased productivity or missed sales opportunities. Once clean data is imported, manufacturers can use built-in data validation tools to further verify that the information is accurate and useful.

Say the same manufacturer plans to migrate all sales data into a new ERP system. Sales teams should first analyze the data and make sure all sales stats are accurate, including open/closed status, order numbers, transaction amounts, customer contact information, and any other relevant data. With the manufacturer’s old system, the sales team would have had to manually handle this data analysis. Now they’re able to use automated data migration and validation tools built into the ERP. Any missing, erroneous, or duplicated data is flagged to be addressed. This prevents delayed or missing orders, thus sustaining high customer service standards.

3. Training and Education

Proper training and education ensures that all end users—from top-level management to front-line workers—will understand how to use the ERP platform to enhance their job performance and productivity. Managers should tailor ERP training to each user’s specific needs and roles, prioritizing the features that will directly boost efficiency and productivity. Due to the constantly evolving world of ERP systems, ongoing training will be necessary for staff to stay informed of new best practices and capabilities, even for systems they’ve been using for years.

Using the same manufacturing example, the production team is trained on how to use the ERP system for scheduling and tracking production schedules to meet actual and forecasted order demands. The sales team, on the other hand, learns how to handle customer relationships and to process incoming orders, while an inventory manager learns to use the ERP for tasks like inventory tracking and automated replenishment. By guaranteeing that each team understands how to use and benefit from the ERP system, manufacturers can pave the way to a smooth transition that minimizes downtime and employee frustration.

4. System Testing

The ERP system-testing process requires manufacturers and vendors to regularly analyze the ERP system to be sure that it continues to function as expected. Testing begins before the system goes live, allowing the testing teams to identify and rectify issues before deployment and reducing the risk of operational disruptions and system crashes. Testing allows users to validate that the system’s features and workflows align with their business processes and requirements. It also gives users the opportunity to ask questions and address any knowledge gaps before the system is integrated into their workflows.

Before going live, the same manufacturer conducts various tests to ascertain whether the ERP system is working up to spec. One specific test is to see if inventory levels are accurately tracked to reflect real-time production material usage. If this test reveals that inventory levels are not correctly updated, or if there’s a lag in the system, the vendor or IT team can address these issues before the system is implemented.

5. Go-Live and Deployment

After testing is completed, it’s time for the manufacturer to deploy its new ERP system. Once the ERP solution goes live, it is fully implemented and becomes the manufacturing business’s operational backbone. At this stage, the company can start realizing the ROI. However, managers must carefully plan for and communicate this deployment throughout the organization so that all users are ready on day one. Remember, a smooth rollout isn’t the only way to minimize disruptions to daily operations: Regular monitoring and continuous, iterative testing are crucial to spotting issues and refining the ERP long after deployment.

To ease deployment, the same theoretical manufacturer decides to choose a phased deployment approach in which different modules of the ERP system go live at different times. The company starts by deploying an inventory management module, followed by a production planning module. This approach helps prevent staff from feeling overwhelmed by letting users gradually transition to the new system. It also supports staff by giving them time to adapt to changes, while granting testing teams the chance to be sure everything is working as intended.

NetSuite Is Built to Scale for Manufacturers

The right ERP to transform a manufacturing business isn’t always an obvious choice. But with NetSuite for Manufacturing, manufacturers gain a comprehensive platform for managing complex business processes that cater to the manufacturing industry. NetSuite is customizable to help manufacturers address their industry’s specific and unique challenges, with the flexibility required to continue to adapt as the business grows and the industry evolves—either of which can cause a company to require new tools and features over time.

NetSuite’s Manufacturing ERP can seamlessly integrate powerful tools that streamline order management, planning and scheduling, supply chain management, shop floor control, quality assurance, and even customer relationship management (CRM) and marketing processes. Better yet, businesses have the flexibility to add these features if and as needed. And, with NetSuite’s cloud-based platform, users can securely access everything they need, whether they’re working from home, on the road, in the office, or on the shop floor. Business leaders can leverage this sophisticated solution to give their manufacturing operation a competitive edge—and keep it.

As technology becomes more accessible and global supply chains make manufacturing more complex, ERP systems have emerged as a powerful tool. By breaking down siloed processes, centralizing business aspects, and providing specialized features for the manufacturing industry, these systems offer a comprehensive solution to the unique challenges faced by manufacturers. From improving operational efficiency to enhancing visibility and fostering resilience, implementing a manufacturing ERP system can continue earning benefits for years after implementation. However, finding the right ERP is not without its own challenges. Before picking a new system, manufacturers must first fully understand the challenges they face and determine which tools will best help them overcome them. But once the right solution is chosen, businesses can harness the full potential of their manufacturing ERP system to better deliver goods and services to their customers, seize new opportunities, meet future challenges, and drive long-term success.

Manufacturing ERP FAQs

How does ERP help manufacturing?

Manufacturers use ERP systems to optimize different aspects of their operation, including inventory management, sales, and quality control. These systems help decision-makers find areas for improvement by providing a holistic view of the business through far-reaching data and real-time insights. Such improvements promote efficiency, cost reduction, better customer service, and other benefits that can ultimately bolster profitability and help a manufacturer build a more resilient and successful operation.

What is ERP vs. CRM vs. MRP?

ERP (enterprise resource planning), CRM (customer relationship management), and MRP (material requirements planning) are all systems that aid in managing different aspects of a business. CRM systems focus specifically on managing a company’s interactions with existing and potential customers. An MRP system is primarily concerned with managing inventory and production. An ERP system often contains integrated CRM and MRP functions and is a comprehensive solution that manages many business functions, including manufacturing operations, accounting, inventory management, and more.

What are the three common types of ERP?

ERP systems are typically categorized based on their deployment model:

• On premises. These systems are installed locally on a company’s hardware and servers, offering more control at the expense of higher up-front costs and more rigorous maintenance requirements.
• Cloud-based. These systems are hosted on the vendor’s servers and accessed through the internet, providing a more cost-effective and scalable solution for many businesses.
• Hybrid. These ERP systems have features of both on-premises and cloud-based ERPs, such as one that runs some ERP components on site and others in the cloud. This allows businesses to customize a mix of costs and benefits of both models.

What are five types of software used in manufacturing?

Five commonly used types of manufacturing software include:

1. Material requirements planning (MRP), which manages inventory and production.
2. Customer relationship management (CRM), which manages customer interactions.
3. Computer-aided design/computer-aided manufacturing (CAD/CAM), used to improve design and production processes.
4. Supply chain management (SCM), which oversees the flow of goods and services.
5. Enterprise resource planning (ERP), which integrates various business processes into one centralized solution.