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The Better Idea – ERP
The acronym ERP may sound more like a noise you make after a big celebratory meal, but it stands for Enterprise Resource Planning, which still might leave people confused as to its purpose.
Simply put, it allows all your collected data to be shared. It does away with hoarding information for some imagined personal benefit, and figuratively, lets the left hand know what the right hand is doing.
To understand what ERP is all about you have to understand just how complex a business is; how many small processes and functions combine to actually make a business work. It is a prime example of synergy.
The Old Process – Before ERP
Manufacturing companies don’t just make things which somehow magically manage to sell themselves. Job Shops perform custom work that has been obtained by a sales force, which pursues leads generated by advertising, all of which is paid for by accounting departments, driven by decisions made by management.
Old-fashioned systems were entirely manual. Salespeople would write out an order (usually in triplicate, or more), leave a copy with the customer, submit a copy to the Order Desk, and keep a copy for themselves. The Order Desk would send it to Scheduling where it would be approved and then forwarded to Accounting, where would be approved again, and then sent to Inventory, resulting in orders for any materials required if there was insufficient stock, and so on, and so on.
At each stage, a human being was involved, and there was a chance of variations and errors creeping into the system. Every time someone set pen to paper was an opportunity to get it wrong.
Once we left the age of filing cabinets safely behind and entered the digital age, with centralized information in an electronic form, ERP was possible. We were all supposed to be using the same information anyway, and ERP integrated that for us.
The New Process – ERP!
Now when a sales order comes in it is entered once by a salesperson and all the modules of ERP look at it simultaneously.
Accounting looks at it, checks the customer’s credit, approves or denies it instantly based on available credit.
Scheduling looks at it, analyzes where it would fit into the schedule, and if the delivery date can be met based on the available machines or equipment required, and approves or denies it instantly.
Inventory looks at the order determines if current unallocated supplies are sufficient to produce it, and approves it, or if supplies are insufficient creates an order for the necessary materials.
Every single aspect of the order flies through the entire system in a matter of moments getting all the appropriate approvals, or if necessary, alerting a human that an action or approval is needed. This automation streamlines the whole process and has an added benefit: now any authorized person can instantly see performance characteristics for any or all parts of the system in real time.
Redundancies are starkly visible; we can eliminate duplicate or wasteful processes and understand the performance of key metrics at a glance. Time and money are now under complete control!
Instead of hours, days, or even weeks, orders can be approved and added to the system in minutes. Now there is less downtime and productivity is enhanced.
The ERP system understands:
- which people are on staff
- their machine preferences and capabilities
- when they are on vacation
- scheduling machine time in the most efficient way possible
- tracking operational hours so as to schedule maintenance at the appropriate time, coincident with the slow periods, for a given machine.
The more thorough the integration the greater the increase in productivity; the more sophisticated the reporting capabilities; the better the performance analysis; the less inventory needed to be kept on-hand, and consequently the less capital tied up in stock.
Shoptech ERP Modules
There are modules for:
- Accounting & Finance functions, with all the usual bells & whistles you would expect including integrated reporting and cash flow, budgeting, bank reconciliation, accounts payable and receivable, and of course, the general ledger.
- Customer Service Management (CSR) modules allow you to monitor your product once sold, for recalls if necessary, for post-sale servicing contracts, to manage warranties and to check on customer satisfaction as well as historical data.
- Contact maintenance with customers allows you to enhance future sales, solicit testimonials, and seek referrals for new business.
- Distribution and Shipping allow you to track logistical data, manage your warehouse, and know where your equipment and products are being used, and how well they perform.
- Manufacturing has its modules, sometimes referred to as Materials Requirement Planning (MRP) or
- Manufacturing Resource Planning (MRP II). They track raw materials and finished goods, labor, overhead and provide the total cost of production for an item.
In truth, they are the ancestors of the whole ERP system itself. ERP is an outgrowth of the original manufacturing software that relied on several discrete components that managed just the manufacturing aspect.
Once we had large databases at our disposal, all it took was a little bit of clever programming to integrate all that information so it could be shared by the entire company. There was no longer need to rely on employees entering the same data over and over again by hand. With the advent of RF-ID tags and barcodes, handwritten entries are eliminated.
Now if a customer calls a salesperson to ask how many units are complete, the salesperson can inquire of the database and know right to the minute how many units are ready to go.
The customer can be informed that the order will be complete in four hours and thirty-three minutes, and be ready to ship at 2:30 PM that very afternoon. The level of customer satisfaction will skyrocket and repeat business can be assured compared to the old-fashioned system.
Shoptech is Your Solution
If you’re not using a modern ERP system, you have a significant disadvantage compared to your competitors. Call us today, and we will put you back in the race!
In just 20 minutes our Job Shop Experts can show you the best options for your business. Sign up here for a Free Demo of the E2 Shop System.
For your convenience, please have a look at our Job Shops Buying Guide which is available for download now.