This Article will give you tips from Harshad‘s (CEO, Bassam Infotech) 20+ years experience in the industry and clear all your doubts in choosing ERP Software for Manufacturing Industry.
Why Manufacturing Industry Needs ERP
Manufacturing is a niche process hence longterm effort produces the perfect product. As far as a manufacturer is concerned, he needs to make sure that the product is of perfect quality and should be financially viable for him to run with the business. Human errors are bound to happen and automation is the solution to reduce such errors. So the first step towards bringing the automation is to have an ERP in the first place. Manufacturing ERP will help companies to calculate exact raw materials required, exact manpower needed, helps to identify optimized production plan, minimum wastages, and minimal downtimes thus accurate costing and precise production cost. Best manufacturing ERP helps to track the process in each and every stage, to take inventory of raw materials, semi-finished goods, and finished goods along with scrapped and reworked quantities at any point of time. Also, it helps in material requisition planning, to accurate the production time required and to do better Quality Control.
Benefits of ERP in manufacturing industry (increase productivity etc)
Adopting ERP for manufacturing increases Productivity (This is possible by identifying the production downtimes and idle times of the machinery, load balancing and load handling in multiple stages versus the product capacity of each stage.)
Proper material planning, reduced rework, reduced or nil wastage due to a flaw in the process can achieve increased productivity.
Can track Accurate material usage.
Can identify the exact quantity & cost before semi-finished goods and finished goods.
What are all the available modules,- Key Manufacturing ERP Modules and Its Functions for the Manufacturing Industry
Production – Whether it is, make to stock or make to order, Production module controls the end to end production process.
Inventory – Inventory module will take of material planning, purchase, stocking, issues, transfers, adjustment, and any other stock related activities.
MRP – MRP helps to precisely plan and procure raw materials and thus optimized stocking can be done.
Quality control (QC) – QC controls the quality aspects of the production and will make sure the desired quality of the produced product.
Maintenance – Maintenance module helps to set the periodic maintenance calendar, adhoc maintenances, spares inventory and normal wear and tear.
Time Sheet Management – This helps to accurately clock the manpower usage for the production modules.
Fixed Assets – a module used to manage Machinery and other such assets.
ERP Manufacturing Lifecycle
There can be two types of manufacturing, Make to Stock or Make to Order. Make to stock means, Production done in a plant and stocked in warehouse and then sales made for the available stock whereas Make to Order means, any production against the Sales ORder from the customer. In both cases, create a Production Order First. Production order will have the details such as required finished goods output quantity, raw materials required for the production, details of work centers and production lines, and details about different stages and QC required. Once the production is started, the raw materials are issued to the shop floors, output quantity of each stage can be reported, QC readings are entered and the system will decide whether to accept or reject or rework and finally the finished goods are reported and final quantity is moved to the warehouse.
Opensource or Paid, Pros and Cons
There are hundreds of thousands of ERP software available in the market, both Opensource and paid as well. To choose the right one among this is indeed an arduous task. But this choice can be made simpler. It purely depends upon your requirements and your expectation out of implementation. Prepare a requirement document and give it to different vendors and ask him to mark in details with explanation against each point, whether the point you are mentioned is available in the advanced manufacturing software or is it a workaround or is its customization. Likewise, identify the best fit for your needs. If it is opensource or paid, check how many years the product is in the market, what is the customer feedback and identify the application which is chosen by the majority. If your budget is less go for open source or else if you have a good IT team and expects a big change is a software again go for opensource. Go for paid ones only if your specific requirement is directly meeting in paid and if it is not available in Opensource and if the payment is within your budget.
How much should I spend on ERP?
This purely depends on your expected output from the application, the number of users and so on…. for an average production unit this value can be somewhere between 30k to 100k USD.
Whether out of the box ERP or the customized one?
If out of the box ERP exactly fits your requirement, go for it. Unfortunately, no ERP can be used 100% without customizing.
Points to consider while choosing an appropriate consulting company
Choosing the right ERP Vendor is more important than choosing a product even though its the best ERP software for manufacturing in India. Because all the ERP’s should be properly configured based on the need. If the configuration is wrong, whether the industries software is opensource or paid or cheaper or costlier doesn’t matter. You will not get the desired output.
So what should be the criteria of the right implementor? The simplest way, first tell your prospect implementor to describe your manufacturing process completely. If he is experienced and knows the process and your expectations, then he is the right fit. Else trawl for another.
Implementing an ERP system is an extremely complex and time-consuming process. Many difficulties and pitfalls arising from the project implementation can increase its value to unprecedented values, which most likely will have a negative impact on the project’s ROI and financial performance of the business as a whole. In order to avoid these problems, the customer needs to be wiser and act as a risk manager of the project, knowingly consider the possible risks and prepare his company for innovative changes.