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.

Streamlined Processes

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.

Cost Control

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.

Increased Flexibility

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.

Inventory Reduction

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.

3 thoughts on “IT in Manufacturing: 5 Benefits of ERP

  1. Using ERP tool for a business is a good option but the cost associated with this tool is very high and the cost savings/payback may not be realized immediately after the ERP implementation & it is quite difficult to measure the same.

  2. I had not really thought about the benefits that ERP could bring a business. However, you do make a very good point about it encouraging more flexibility. This can be a big deal as a flexible company is something that can really help customers.

  3. It’s nice to know that ERP can help my facility by ensuring that the costs are controlled in producing goods. It would be best if we benefit from such software technology by having increased flexibility as well. I think I would go to a consultant’s service to know how we can integrate it into our manufacturing process so we can maintain edge over competition so we can have more partners in our manufacturing company.

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