Herbst Software explains how ERP systems are revolutionising engineering and manufacturing and how a modular approach to a system’s adoption can realise benefits that aren’t immediately apparent.
The primary objective in any company is to achieve lean business operations, and a growing number of ERP (Enterprise Resource Planning) systems promise to provide the silver bullet. At its core, an ERP has a single comprehensive database. When new information is entered in one place, related information is automatically updated. For manufacturing and engineering companies dealing with complex processes involving production planning and scheduling, inventory management, procurement, cost tracking, quality management etc., the allure of a system that can seamlessly integrate various departments and functions to ensure smooth operations and accurate data flow is undeniably appealing.
Many companies depend on a set of 12 to 15 spreadsheets that form the backbone of their operations (often carrying more importance than their accounting software as they aid in managing various aspects of the business). But if a company’s sales and order processing systems can’t communicate seamlessly with its production scheduling setup, it leads to a decline in manufacturing efficiency and customer service. Similarly, if the sales and marketing systems do not align with the financial reporting infrastructure, decision-makers are left relying on intuition rather than a comprehensive grasp of product and customer profitability. To put it simply: when a company’s systems are disjointed, its business also becomes disjointed. While an ERP system might not completely eradicate the use of all spreadsheets, it will significantly reduce their number while providing real-time information accessibility that surpasses previous capabilities.
But are ERPs living up to companies’ expectations?
When implementing an ERP, a lot of people expect to have the perfect system from day one. However, this isn’t very practical. While it would be great, even if you have the budget, the smarter way is to introduce the ERP solution in stages. This makes the integration process more manageable and efficient without stopping production.
The initial step starts with the finance department, streamlining operations and reducing paper-based tasks. The procurement team follows, optimising purchase orders and pricing control. Next up, the sales team which will incorporate the system for creating and managing quotations. The manufacturing or operations department can then utilise the system to set up jobs and manufacturing processes, creating cohesion between departments. Having an integrated business management solution offers another compelling advantage: automated tracking of stock movement across all business processes. This seamless integration ensures a high level of accuracy in various critical aspects, such as job costing, cost of materials, cost of manufacturing, and sales margins. Precise stock tracking offers better resource management and responsiveness to market shifts. Consolidating functionalities enables informed decisions with real-time data.
What’s particularly exciting for small and medium-sized organisations is the advent of modular systems. These systems cater precisely to companies that are mindful of budget constraints, avoiding hefty investments in comprehensive ERP setups or the overhead of maintaining dedicated IT departments. The brilliance of these systems lies in their inherent flexibility.
Orson Herbst, CEO of Herbst Software, explained: “It’s common for people to acquire a system to tackle a specific challenge and then discover opportunities for enhancing various facets of their business in stages. Take, for instance, an engineering client of ours who initially adopted the system to address stock control issues. Subsequently, they seamlessly integrated an additional module – the Herbst Jobber app – empowering their engineers with a handheld tool that automatically incorporated time and parts into job records. A seemingly minor enhancement that not only simplified life for the engineers but also saved time for the accounts department. Most importantly, it provided management with real-time insights into the variances between actuals and estimates.”
This exemplifies how the incremental approach of adding modules can provide an opportunity to take a fresh look at a company’s strategy and foster continuous improvement.
In the dynamic landscape of engineering and manufacturing, choosing the right ERP system is a pivotal decision. The journey might seem daunting, but armed with a clear understanding of your unique needs, careful evaluation of options, and a strategic implementation plan, you’re poised to harness newfound efficiencies, enhance collaboration, and drive your company toward a future of innovation and growth.