ERP System Production: Functions, Advantages & Tool Tips

1. Why do production & manufacturing companies need special ERP systems?
2. What advantages does a Manufacturing ERP software have over “regular” ERP systems?
3. 5 central functions of an ERP system for production
4. Recommended ERP systems for production & manufacturing
5. Conclusion

Regardless of which product your company manufactures - an ERP system (Enterprise Resource Planning) is not only important, but should be a central part of your tech stack. Simply put, an ERP is the control center of your company, where all data and processes are centrally managed. Often we also talk here about a "single source of truth", i.e. the place from which all other systems and tools serve.

This means specifically: In an ERP system, all customer data, inventory and contacts are stored - but also production plans, employee times or financial data.

But what exactly does such an ERP system look like? Why do production companies in particular need ERP software? And what advantages do these solutions offer and what should you pay attention to?

In this article, our guest author Daniel Pammé sheds light on the topic specifically for manufacturing companies and shows you how to find the right ERP software for your requirements. When Daniel Pammé is not writing for us, he is an entrepreneur and consultant in sourcing and ERP.

Why do production & manufacturing companies need special ERP systems?

The needs of manufacturing companies are complex and often very specific. The continuous development of ERP systems makes them increasingly geared towards meeting the requirements of production.

Central data storage, process control and cross-departmental collaboration play a decisive role in production and should therefore be covered by an ERP system.

But what exactly are the concrete requirements for such a solution?

The following main features should definitely be included in an ERP system for manufacturing companies:

• Coverage of all relevant production processes (calculation, scheduling, order processing, production control/planning, quality management etc.)
• Integration of finance and controlling (budgeting, cost accounting, cost comparisons etc.)
• Support in complying with prescribed standards (e.g. ISO or GMP)
• Mobile access to data and functions
• User-friendly interface with intuitive operation
• Individual adaptability & expandability
• Scalability of the solution (adaptable to the specific needs of the company)

This list is of course not complete, but should give you a first overview of the requirements for an ERP system in production & manufacturing.

What advantages does a Manufacturing ERP software have over “regular” ERP systems?

The most important advantages at a glance:

• Reduction of production costs through efficient work
• Shorter processing times of individual processes
• Quality improvement through better control and quality assurance
• Better planning of production (amongst others through scheduling & production control)
• Increase in customer satisfaction through shorter delivery times

There is now a near overwhelming landscape of different solutions and ERP categories. Some of them cover many use cases very broadly, others have been developed for very specific industries.

To make your evaluation easier: discuss in your team or with the main responsible in each of your departments and get a picture of the requirements, processes and data.

Create a catalog of requirements and user stories to better understand what your ERP needs to bring and perform. For example:

• For production planning, employee A needs an overview of all manufacturing orders for the next 4 weeks, including parts lists, to be able to plan machines and resources.
• For calculation and purchasing, employee B needs the quantities of all goods in the warehouse and an overview of all orders to suppliers, in order to place orders on time.
• For training on the machines, employee C needs production orders with tasks and information about processes and work steps.

5 central functions of an ERP system for production

The following functions should not be missing in a Manufacturing-ERP system:

1. Calculation & Costing:

A realistic picture of the production costs is the basis for the successful design of prices. A Manufacturing ERP should include a calculation function with which cost scenarios can be designed and compared.

• Calculation & Costing
• Quality Management (QM) & Quality Assurance (QS)
• Work preparation/ Resource planning & Production control
• Scheduling & Order processing
• Integration of CRM, inventory and finance

For example, different material sources can be taken into account or different production processes can be compared with each other.

A feature that has proven itself in everyday working life: the automatic calculation and stock calculation based on the creditor invoices from our suppliers. Thus, we always have the current stock value of our warehouses at a glance.

2. Quality Management (QM) & Quality Assurance (QS):

In production, a high quality of goods is very important. A QM system in ERP helps to record, monitor and improve quality.

Both in audits and in later daily business, functions such as a batch number system, the creation of test plans and complaint processing are very helpful. Thus, every batch is traceable from goods receipt to delivery to the end customer.

A practical example from production is the audit for organic certification. Here, we can make a so-called material flow calculation during the audit with a few clicks. In other words, we can show exactly how much goods from each batch were booked into the warehouse, produced (filled) and sold. Then the digital stock is reconciled with the physical warehouse on site. This way we can quickly and easily show that no conventional goods were mixed with organic goods.

If you are interested in an ERP system for production, make sure that QM functionalities are already integrated.

3. Work Preparation / Resource Planning & Production Control:

Work preparation is an essential part of production. In this process, it is planned when tasks should be processed.

The Manufacturing ERP should therefore include a resource planning function with which the employees and machines can be planned.

It is also important that the system can monitor and control the individual steps of the production.

Digital production plans thus not only help you plan resources better, but also train new employees. Here, every step in production is precisely recorded and comprehensible.

4. Scheduling & Order Processing:

A scheduling function in the ERP allows companies to keep track of the current status of production.

Through scheduling, the production processes can also be optimized and errors avoided. Order processing is another important part of production.

In this process, the individual steps of the order are processed and monitored. The Manufacturing ERP should therefore include a function for order processing.

Based on data from purchasing and sales, most ERP systems are able to notify in time when goods need to be reordered. A practical function that has already saved us a lot of time and work: converting purchasing suggestions from scheduling automatically into orders. Because ERPs are cross-departmental, all employees from production can see which orders are currently underway and when these are expected to be delivered.

5. Integration of CRM, inventory and finance:

Production is often not isolated, but closely connected with other areas such as CRM, inventory management and finance.

The Manufacturing ERP should therefore be able to integrate all relevant data from these areas. In this way, customer data can be used for production or the results of production can flow into financial planning.

As a rule, debtor and creditor invoices, bank data and personal accounts can be exported in DATEV format for your tax advisor with a few clicks.

Recommended ERP systems for production & manufacturing

• weclapp

• Microsoft Dynamics 365 Business Central

• Infor M3

• Myfactory

• e.bootis-ERPII

weclapp

weclapp is one of the all-rounders among the ERP systems and is particularly attractive for smaller companies due to its pricing model. weclapp brings with it all important functions for production, manufacturing and beyond.

The cloud ERP (no local installation necessary) has rightly received an extraordinary number of positive reviews at OMR Reviews.

Microsoft Dynamics 365 Business Central

The ERP from Microsoft offers nearly unlimited scalability. Microsoft Dynamics 365 Business Central is comparatively expensive, but offers an unimaginably large range of functions and applications. The user interface is based on Microsoft Outlook and is very intuitively designed.

Among other things, Microsoft Dynamics 365 offers the following modules for production:

• Work Preparation
• Production Control
• Quality Management
• Calculation & Costing
  

Microsoft Dynamics 365 is also capable of integrating external data such as customer data from a CRM system. Especially if you are already using Microsoft Office 365, you should take a closer look at this ERP.

infor M3

infor M3 is one of the leading systems with a focus on industry. Many large corporations already rely on the software. This is mainly due to its scalability, numerous functions and integration into other systems.

For production & manufacturing, infor M3 has developed some modules:

• Work Preparation
• Scheduling & Order Processing
• Quality Management
• Resource Planning & Production Control
• Calculation & Costing

The ERP system is available on-premise (local installation) and in the cloud.

myFactory

myFactory as the name suggests, has specialized, among other things, on SMEs in the field of production. The cloud ERP is a web-based software that does not require local installation.

myFactory includes the following functions:

• Work Preparation
• Scheduling & Order Processing
• Quality Management
• Resource Planning & Production Control
• Calculation & Costing
• Logistic (inventory management)

The setup usually takes place within a few days. With the myFactory Cloud ERP software production processes can be optimized and costs reduced.

e.bootis ERPII

e.bootis ERPII has also focused on medium-sized companies and was on the OMR Reviews Watchlist in 2021. The web-based ERP system is available in the cloud and can therefore be operated from any location without needing to be installed in advance.

e.bootis-ERPII is modular and can therefore be optimally adapted to the needs of your company.

Conclusion

The selection of an ERP system is not an easy task. There are countless systems and providers on the market, each with its own advantages and disadvantages. To find the best ERP system for you, you should first carefully consider which functions and modules you really need.

Then you can look at the recommended systems and compare them with each other. With most providers, you can view the ERP in advance in a free demo, which I highly recommend. Don't forget to involve as many employees as possible in the evaluation early on.

Pay special attention to the costs, the operability and the integration into other systems.

What has also helped us: bring flexibility in the processes. Think about your processes and whether they really need to be portrayed by your ERP exactly this way. We reversed the whole thing and adapted our processes to our ERP and not only were we able to integrate the system faster, but at the same time we were able to make our processes more efficient.