Managing Inventory with ERP Manufacturing Solutions 

It may not be the sexiest use of a hot technology, but helping companies align manufacturing and inventory processes is one of the most critical applications of ERP manufacturing solutions. In fact, according to Aberdeen Group, ERP systems, and their MRP (Material Requirements Planning) predecessors have been around for almost three decades. But never before has there been such a need for ERP manufacturing solutions, as more businesses respond to the economic downturn by attempting to reduce waste and establishing "lean" manufacturing practices.

"ERP systems have their heritage in manufacturing, so they're really designed to optimize inventory," says Paul Hamerman, a research analyst with Forrester Research.

So how does it work? By providing real-time data regarding inventory information and the production process, an ERP manufacturing solution delivers numerous benefits including:

• Cost reductions through efficient inventory management with ERP manufacturing solutions
• Detailed reports on business-critical inventory information in ERP manufacturing
• Improved decision-making based on real-time information with ERP manufacturing solutions
• Reduction in stock on hand with fast access to inventory information
• Streamlined production process with established goals
• Elimination of waste in the manufacturing process with ERP manufacturing solutions
• Accelerated production cycles with ERP manufacturing solutions

Yet one of the greatest perks of an ERP manufacturing solution is in its capacity to help companies in demand-planning. Without the necessary real-time information, many companies are forced to maintain large, costly inventories based on projected future sales or supply-chain contingencies. However, a top ERP system can cull information from customer requests, sales figures, and inventory levels to determine the real need for raw materials and production levels with ERP manufacturing solutions.

"ERP can provide you with better demand-planning tools that help ensure you're taking a more just-in-time approach to purchase raw materials and components rather than having to stockpile because you can't predict your demand," says Eric Kimberling, president of Panorama Consulting Group in Denver.

Hamerman agrees: "ERP can be a closed-loop system that controls the production capabilities based on demand and capacity."

In addition to being able to accurately predict future demand, an ERP manufacturing solutions system can also serve as a foundation for many other business planning activities, such as purchasing, financial planning, managing resources, logistics planning, and even customer satisfaction. Suddenly, manufacturing department heads no longer need to depend on Microsoft Excel spreadsheets to determine workflow. Rather, ERP manufacturing solutions allow them to base their decisions on real-time information, as well as tweak production planning in accordance with economic fluctuations.

Ever since ERP manufacturing solutions introduction, the lean system of inventory management and continuous improvement manufacturing (CI), has been sought after by all. Businesses want a system in place that minimizes, if not eliminates, the inventory on hand. Leaner processes encourage the disposal of waste at every stage of the manufacturing process, lowering the cost and time of production while providing better quality using ERP manufacturing solutions. 

When a plant carries more on-hand inventory than the minimum requirement for production, that inventory proves to be inefficient and is a waste for the business. Lean methods are entirely contradictory to the traditional batched, push-production methods that required the maintenance of huge volumes of on-hand inventories for potential future sales or the likelihood of issues in the supply chain. Rather lean methods make use of pull-production systems. These ERP manufacturing solutions systems make use of just-in-time (JIT) inventory, which is kept briefly until pulled in for the production of orders placed by customers. 

From the idea of leaner processes and greater efficiency has emerged the concept of total enterprise resource planning ERP manufacturing solution. These solutions incorporate and integrate concepts of labor productivity, inventory, system flow, quality of performance, purchasing and materials management, and shipping in terms of procedure as well as communication. ERP manufacturing solutions improve cross-departmental collaboration and coordination and reduce any uncertainties in the production process by providing real-time data updates. A modern and agile ERP manufacturing solution enables lean inventory management and manufacturing processes by improving all operations and workflows through real-time updates and a consolidated view of progress. 

Here are just a handful of ERP manufacturing solutions with a manufacturing component.

• Epicor

Epicor lets companies plan, schedule, execute and monitor the entire manufacturing business. From raw materials to final product, the ERP manufacturing solution provides increased flexibility and agility.

• Sage

Designed to automate ERP manufacturing input measurements and calculate production outputs, Sage Pro delivers the accuracy required to achieve the quick-turn adjustments so critical to staying ahead of the competition and to growing profit margins. The ERP manufacturing solution can synchronize manufacturing with purchasing, sales and receivables, and accounting.

• SAP S/4 HANA

This solution helps coordinate operations with partners and suppliers to improve production performance across the manufacturing network. The ERP manufacturing solution also delivers real-time visibility into plant and enterprise operations to detect and resolve exceptions and performance deviations in real-time.

All those in the ERP manufacturing solutions world are familiar with lean practices and the scheduling system of lean manufacturing called Kanban. With the principle, of changes brought about by ERP manufacturing solutions, and those brought about by lean processes such as lesser waste and the use of just-in-time (JIT) manufacturing, businesses are beginning to enjoy improved manufacturing efficiency. 

Organizations opting for ERP manufacturing solutions are experiencing significantly reduced waste too, while those with lean manufacturing only produce inventory at the time of demand. In modern manufacturing practices, the focus has shifted from efficient production to efficiency throughout the entire manufacturing process. The main conflict between the two lies in the planning of materials and the scheduling of production scheduling. If ERP manufacturing solutions suit your business better, you will be dependent on data generated from demand forecasts to survive in these lean times.