This is How You Implement Process Optimization Using an ERP System

1. What is process optimization?
2. The advantages of process optimization
3. How process optimization using ERP system supports you in production
4. Conclusion: Process optimization is easy with the right ERP system

Process optimization is an important component in businesses. It not only leads to increasing efficiency and effectiveness of business processes, but also offers a decisive competitive advantage. One thing is clear, without process optimization there is no progress and no advancement.

How process optimization is properly approached, what it really means, and why you can think of process optimization as a kind of cycle, you will learn in this article. We will show you why an ERP system can be a real game changer for you in process optimization.

What is process optimization?

In process optimization, companies analyze their processes. Based on these data, they derive appropriate measures to make existing processes more effective, to increase productivity and profitability, and to enable flexible adjustment in the face of changing requirements. Process optimization is not a one-time thing. It is an ongoing process in which digitization and automation play a major role.

Process optimization consists of five phases:

1. Preparation: Companies define which individuals should be involved in the optimization, who is leading it, and above all, which area should be improved.
2. Analysis: Companies analyze the current state of their processes, products, and services.
3. Re-Design: Companies develop measures to expand their potential and correct their weaknesses.
4. Implementation: The agreed-upon measures form the basis of process optimization.
5. Evaluation and follow-up: Companies monitor the effects of their measures, measure their success, and locate implementation difficulties.

The advantages of process optimization

Process optimization brings many advantages for all your business areas. Crucial are the specific measures you take. They always aim at increasing productivity, quality and work safety as well as reducing costs:

• Productivity: high productivity, short processing times, high and constant utilization, efficient processes, short routes, process automation
• Costs: low production costs, minimal resources, and inventory
• Quality: high quality and adherence to deadlines, efficient communication, and reporting processes
• Work Safety: prevention of occupational accidents

How process optimization using ERP system supports you in production

Areas in the ERP System

An ERP system has functions that improve your processes in production, finance and accounting, marketing and sales, materials management, human resources, and inventory and requirements determination. How you best proceed with process optimization with an ERP system, we will now take a detailed look at. In our example, we focus our sights on process optimization in production.

Your production is probably pursuing these three (interdependent and sometimes competing) goals:

1. Ensuring your quality standards: Product quality, delivery capability, and adherence to schedules
2. As short as possible processing times:low inventory and short procurement times
3. As high as possible economic efficiency: high productivity, maximum utilization, and low costs

You can achieve these goals as part of process optimization with an ERP system in five steps.

Phases of process optimization with ERP

Phase 1: the preparation

First, you define everything you need for the further phases. You decide which departments and employees should actively participate in the process optimization and assign them responsibilities and roles.

Phase 2: the analysis

Now you should deal with the current and the target state. The analysis will show you how efficient your current procedures are and which parameters you can adjust to get better. To subsequently move into implementation, you develop a concrete action plan that is tailored to your individual (smart) goals. At this stage you define KPIs, by which you measure your progress.

Phase 3: the redesign

A concrete (technical) measure could, for example, be to convert to Production 4.0. This would mean that your production line is automated (Industry 4.0), as is often the case in the automotive industry in particular. Your redesign can be technical, organizational, personnel, or structural in nature. For example, you could use

• A new method like Six Sigma to improve your production quality.
• Switch to regional suppliers to reduce procurement times.
• Rely on lean production to minimize your resource use.
• Outsource subprocesses to relieve your employees.
• Clearly define responsibilities and goals to bring your projects to a conclusion quicker.
• Compare your process design with the biggest competitors (Benchmarking).

Phase 4: the implementation

You have set the goals and developed measures to get you there. This preparatory work forms the basis for your process optimization or its implementation. An ERP system that supports you in process optimization is microtech. It includes solutions for inventory management (WaWi), financial accounting (Fibu), payroll accounting, e-commerce, logistics, shipping, production, and manufacturing. Here's what your implementation with microtech could look like:

1. Planning and organization of your individual, series, and variant production: Plan and create production orders in the inventory management system.
2. Production planning and control (PPS): Plan, control and monitor your processes. The ERP system automatically calculates the respective delivery dates.
3. Operational data acquisition (BDE): Capture your times (e.g., start, end, set up, and disruptions) via the BDE.
4. Resource utilization: Determine and plan your optimal machine and resource utilization. You can intervene early if necessary. 
5. Serial and batch number tracking: Track all articles verifiably based on the serial and batch numbers from production to sale. 
6. Build-to-Order and Build-to-Stock: Produce your products according to incoming customer orders or for your warehouse.
7. Paperless production: Digitalize your manufacturing process. All information and documents are created and managed digitally and automatically. 
8. Bill of materials and recipe import: Imports are done via the ERP system. Departments such as purchasing and production can access and work in a single (common) system.
9. Pre- and post-calculation: Create follow-up calculations with the data from production and order processing.
10. Integrations: By integrating relevant systems, you save yourself double maintenance effort and create transparency across systems.

Phase 5: the evaluation and follow-up

The last step is to monitor your processes. Important KPIs could e.g. be the flow number (throughput number of an order) and the flow factor (ratio between the value-adding piece time and the order throughput time). You should document the procedure in detail, comprehensibly and measurably. All business areas for which the information is relevant must be able to access these figures. With microtech, you handle this step digitally and automatically.

Conclusion: Process optimization is easy with the right ERP system

ERP systems are ideal for process optimization. They relieve you and your team of all routine tasks. This not only makes you faster and better, but also ensures traceability and verifiability - for example in your production. OMR Reviews lists many ERP systems. Just click through the most popular tools like microtech büro+. The verified user reviews will help you find the perfect tool for your requirements.