As American manufacturers face increasing global competition, effective production and supply chain optimization techniques provide multiple advantages in cost saving, inventory management, sales and distribution.
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Let’s take a look at traditional E.R.P. systems in manufacturing environments and discuss seven possible reasons your business may be looking at upgrading and migrating from an E.R.P. to a customized industrial workflow and management system in Salesforce.
What Is E.R.P. in Traditional Manufacturing Management?
Every day, manufactures must correlate data sets regarding production, inventory, distribution and forecast supply and demand for their products. This balancing act of making sure that the production volume does not exceed the B2C or B2B demand for the goods is a complex one.
If demand and trends are calculated incorrectly, the manufacturer can find themselves with excess stock. Some types of products have a limited shelf life (for example, food products with safety expiration dates). Other types of products may not lose value as a result of spoilage, but instead, can become an additional expense for warehousing and management of that inventory. And products that are also held within inventory due to overproduction, can become damaged and lose value and saleability.
The ideal flow for any manufacturer is to produce products on a steady and rather predictable scale that aligns with the sales and distribution of the good. Some businesses adopt the J.I.T. principles (common in Japanese manufacturing) for ‘just in time’ order fulfillment. This helps reduce the cost of storage for excess inventory, loss and damage, while fulfilling customer or retailer orders in a timely way. These calculations are typically managed by an E.R.P. or Enterprise Resource Planning system and database within the production facility.
Chances are you are already using some form of E.R.P. in your manufacturing or distribution business. However, many manufacturers work with an outdated system that performs the basic functions until they find that the list of null capabilities exceeds what the E.R.P. can actually do for the organization.
How can you tell if it is time for your business to explore a new Enterprise Resource Planning System? Here are 7 criteria to help with your analysis of your current E.R.P. system.
1. Lack of Vendor Support With Current E.R.P.
How long have you had your current E.R.P. system in place? Software is constantly improved with updates and patches, but at some point, in the lifecycle of SaaS, E.R.P. software age and vendor support may become a big obstacle to your business, if it cannot be updated.
In some cases, manufacturers have also found themselves using an E.R.P. system that has no available support, because the licenses for the software are no longer being renewed, and the publisher or software company has decided to discontinue assistance and development on the E.R.P. That leaves a company stuck with a very old system that can be something of a ‘ticking timebomb’. When it does finally break, there will be no assistance from the E.R.P. developer to fix it, and that means your business will have a critical breakdown of data management that can be a significant operational risk.
2. Software is Outdated and Not Scalable
Another common problem for wholesale distributors or domestic manufacturers, is the scalability of the current E.R.P. system being used. For instance, the database, production, purchasing and supply, as well as inventory management and accounting software may have worked well, when your business was a start-up or mid-level organization. If you have grown significantly, the amount of data that will need to be incorporated and used within the E.R.P. system may actually exceed the SaaS capabilities.
3. Lack of Support for New Business Models or Product Development
Some business may start with a very limited but successful product line. Over time, new products and services may be developed to augment the profit center products in widest distribution. Think about the small and limited product list that Ikea started with, decades ago. Today, there are thousands of SKUs in the product line; managed by an E.R.P. system that can handle multiple products and the introduction of new products, as they are developed.
4. Loss of Staff With E.R.P. Native Expertise
The CEO and Founder of the organization is unlikely to know how to use the E.R.P. system. In a traditional business model, the organization may have relied on one or two long-term employees who were present when the original E.R.P. system was integrated, and part of that integration project. There may be two or three people in your company, who know your existing E.R.P. system inside out; how to make it work, find and create reports, access data, added products and other essential features.
Now, let us imagine for a second that those anchor staff members were no longer with the organization? They may retire or move to a different job with another employer. Suddenly, you are an organization left with a dated and highly complex E.R.P. system that… no one really knows how to use. And that’s a big problem.
5. Inability to Update Hardware Infrastructure for E.R.P.
How is your E.R.P. connected with every executive, manager and individual worker who needs to engage with the data on a daily basis? As older software platforms, E.R.P. systems are notorious for being siloed or limited by user access and hardware requirements.
Typically, these customized systems are not agile and able to be accessed through a portal external to the office. Compare that to E.R.P. replacement solutions in Salesforce, which are cloud-based and able to be securely access and used anywhere and anytime your team needs the information and functionality.
6. Will Not Comply With Privacy Requirements for Global Expansion (G.D.P.R.)
If your business is planning a business expansion into a new foreign or overseas location and growth market, your E.R.P. system will have to ‘jump through some new hoops’ in order to meet the strict criterial for data privacy and protection in APAC and European countries.
From management of B2B customer profiles and contact information, to order history, employee records and other sensitive data and information, a G.D.P.R. compliant E.R.P. system can be used globally, and has built in features to notify management about data retention limitations and other privacy law considerations.
7. Evolving to Multi-Tenancy Requirements for E.R.P. Data and Utility
When you first implemented your original Enterprise Resource Planning System (E.R.P.), you may have been a smaller company, with a requirement for up to 5 people who could access the information and tools in the E.R.P.
Fast forward ten years later and your business is still using the same trusty E.R.P. system, but you need to have twenty or more individuals accessing tools within the system. And it is limited to 10 users by design (and may come with the option of increasing users at a monthly or annual licensing fee that is not very cost effective). You need an E.R.P. replacement that will grow with your business, while keeping software licensing costs affordable.
At 6 Street Technologies, we are certified Salesforce Partners (S
is) and we specialize in helping mid-level to enterprise level manufacturers build customized SaaS to optimize department efficiencies, and essential functions like purchasing, inventory management, shipping and logistics and other facets of the production and distribution lifecycle.
Our I.T. consultants will help your team assess not just your current data management and communication needs, but the capabilities your business will need in the future. Contact us today to schedule an introductory or discovery call with our team of Salesforce developers and let us start working on an integrated replacement for your E.R.P. system.