Watching profit is a number one priority for every single organization; and we are all constantly looking for ways to grow in that area. Too often though, manufacturing businesses look to expanding a customer base or creating new products to grow the bottom line before they turn internally to examine their own, existing processes. Usually, you’ll find operating areas of excess that can be fixed with the implementation (or restructuring) of an enterprise software suite.
Here are five of the most common producers of unnecessary cost within your business, and how you can then reduce waste with ERP software and the right supporting processes. You might just be surprised about how much extra cash you have left over for investment in new innovations and client growth!
Product defects; they’re bound to happen to any manufacturing business, likely many times. However, storing all your production data and processes in a single enterprise system will act as a buffer to production mistakes that can happen when systems don’t communicate properly.
ERP software can also monitor the health of your production lines. If something has gone wrong or a certain machine has broken down on a line, then the ERP software will be able to notify you immediately of the error. From that point, you can shut down production from your interface (if you’re operating ERP in the cloud, you can do so from anywhere with internet access) and redirect product onto operating lines. Defective product can be hard to eliminate completely from your shop floor, but with ERP you can do everything possible to limit the damage, both in monetary costs and time lost.
Wait times on a shop floor are often overlooked as major source of manufacturing waste, but some facilities may be spending seconds of unnecessary time transferring items from production to quality assessment, or waiting for a certain manager to approve a part in one system before it can move ahead inside another. Now, it may seem trivial to add up the seconds. But at the end of the day, or year, that could mean countless minutes, or years, of lost opportunity and profit. Reduce waste with ERP by consolidating all your operations and making sure every team member, machine and manager is on the same page. ERP software can automatically notify a product manager for a change order or a need for approval, and know the priority of the tasks. Quality assessment will also work faster than ever, as your business can implement specific rules inside your system that stop production if a certain factor (pH, temperature, resistance etc) is not up to standard.
Another serious source of time-wasting that most manufacturing businesses are often not aware of? Transportation and delivery. Are you using more middlemen than necessary to distribute product? Are there faster ways to get your end product to market, or a flat-out better mode of delivery? Properly mapped ERP software will be able to automate all of your delivery and shipment logic, from the points of transfer to the need for signatures at each delivery stop. You’ll build out the most efficient chain of supply possible and reduce waste with ERP that can be built around your specific businesses’ supply chain and delivery processes.
Excess production can happen at any point to any manufacturing business. Perhaps you’re overloading your inventory or simply overusing production lines, or there’s been a drop in demand that you haven’t properly measured. It will always result in too much product sitting in your warehouses—in turn meaning you need to get rid of it or spend money on more storage space. Excess inventory will be especially problematic for businesses that manufacture perishable products (food and beverage) or those that decrease in value quickly (electronics). Your priority should always be getting the right amount of product to clients on shelves that you know will sell.
With the accurate demand planning functionality provided by an ERP suite, you’ll be able to leverage past sales information and trends to plot out an accurate predictive timeline for future sales. From there, you’ll be able to plan an efficient manufacturing strategy that will cut back on waste, whether that means that you need to cut back on production numbers or you need to expand your capacity.
Manufacturing businesses are consistently focused on waste reduction. Your business can actively combat multiple sources of excess costs by using enterprise software and trimming down on excess or old processes that may have been holding you back without you even realizing it. Whether it’s in an overwrought supply chain that has gathered too much weight over time, or too much product falling victim to company miscommunication, waste can accumulate very quickly inside a business and bring it down before you even know what’s happening—don’t let it.
Looking to reduce waste with ERP inside your own business? Get in touch with Datix today! We are experts at ERP implementation and business process modeling and can leverage both to get your business working at the most efficient it’s been in years.