The origins of Enterprise Resource Planning (ERP), a software system designed to meet a company’s needs by merging its operational processes in a single application, can be traced back to the 1960s when software engineers identified a need for companies to centralize their computing systems, which mainly involved automating their inventory management and control systems.
By the 1970s, the tech world gave birth to what would become ERP’s predecessor and prototype, Manufacturing Resource Planning (MRP). A decade later, MRP became MRPII. Then in the 1990s MRPII evolved into ERP. Since manufacturing is ERP’s earliest beneficiary, the two are a natural fit. Manufacturing ERP software has also been used by other industries like transportation and automotive. Here are five ways ERP benefits manufacturing.
An IDC Manufacturing Insights survey reported that 71 percent of manufacturers expect an escalation in market complexity, while 61 percent think it will lead to a jump in operational complexity. Manufacturing ERP systems seek to address the problems that come with an increasingly complex workplace by streamlining operations, improving functions like production, data entry and order fulfillment.
ERP software helps reduce operational and administrative costs using one source of real-time data. Knowing and understanding a company’s Key Performance Indicators, along with other pertinent information, is crucial to boosting manufacturing growth. Manufacturers with ERP solutions can proactively manage operations and prevent delays and disruptions.
ERP systems also benefit the manufacturing industry because of their flexibility, their ability to adapt to a company’s individual needs. In fact, since manufacturing operations constantly evolve, ERP has a feature that allows for seamless adaptability.
Maintaining an Edge Over the Competition
Manufacturers often find themselves caught in a tug-of-war between two conflicting options: investing in an ERP system, which could require a major investment, and doing nothing while their competitors take advantage of the opportunity to improve their operations and remain at the front of the pack.
Companies often call any excess inventory “safety stock“. Too much of it can lead to wasteful practices in such areas as warehouse employees, excessive paperwork, non-verbal communication, actual inventory counts and storage.