7 Common Issues Driving Manufacturers to Look for New ERP Solutions

The current economic climate is causing pains across the entire manufacturing sector. But with many of the same issues plaguing manufacturers across the country, there are strengths in numbers. By identifying with similar issues, you can strategize on how to predict and respond to existing pain points for your business.

The worst situation to be in as a business is not knowing what lies ahead. The more you familiarize yourself with these commonalities, the best you can prepare your business to overcome them. Our team has compiled a list of the most frequently communicated issues within the manufacturing industry so business leaders can share and strategize solutions moving forward.

Manufacturing issues hitting the industry hard

  1. Widespread and wasteful use of disconnected software applications and siloed information decreases productivity and leaves your company vulnerable to human errors.

    Utilizing multiple software systems creates an inefficient and unscalable environment by having different departments on different systems. Businesses are unable to react quickly to changes and collaborate efficiently. Multiple systems require repetitive and time-consuming data entry devoid of real-time oversight. Potential solutions include consolidating into a single software platform that can combine all departments while providing visibility and process control across operations.

  2. When quality control is paper based, it makes it difficult to know the status of materials in real-time.

    With the number of industry-specific regulations businesses are facing, it makes it extremely difficult to manage and prepare the proper reporting for these types of regulatory requirements. Modern manufacturers require checks and balances throughout the process of receiving, issuing and shipping. Currently, many businesses are completing this manually, which generates redundant email communication, slowing down workflows. Not to mention forcing employees to manually walk-through warehouses to find and hand count items. Potential solutions include implementing quality control protocols directly into the ERP.

  3. Manufacturers are struggling to maintain visibility into their inventory.

    Many manufacturers are struggling with a lack of real-time visibility in the handling, transferring, producing, and managing of inventory.  When you are utilizing pen and paper methodology, you can end up creating an abundance of duplicate data entries. This ends up turning into extra overhead for the business. Those who do not use scanning and barcoding are self-sabotaging themselves in terms of lot-control, leading to negatively impacted scheduling, planning, and purchasing.

    Archaic inventory methods result in disorganized batches, incorrect shipping, and significant write-offs of materials. Human error is not only real but also incredibly costly. The inventory management process is extremely manual and very labor-intensive.  Additional headcount is being allocated just to manage this process. 

    Potential solutions include an integrated WMS to automate the inventory management process in real-time and reduces the need for physical counts.

  4. Weekly out of stock issues are cause production line stoppage.

    Production yield issues cause considerable pain. Especially when calculations are performed manually after production, leading to unaccounted-for inaccuracies. Holding excessive inventory ties up operating capital with higher carrying costs and creates ongoing space challenges. Some manufacturers we’ve spoken with describe having to log more than 20 weekly hours sifting through Excel documents. Outdated processes like these require significant manual work by employees to manually shift through documents, without accurate visibility into available inventory. Potential solutions include having a native MRP system that incorporates forecast, sales, and production requirements into one central view, which allows you to better predict material purchase demands.

  5. Manufactures with multiple locations have trouble managing their network of inventories and locations.

    Far too often companies with multiple locations or facilities find they have over-or under-ordered products, leaving them with too much or not enough stock to fill orders. This happens often during acquisition stages, as businesses are expanding their locations. In this setting, the sheer number of disparate databases and systems necessary to compile a consolidated report can result in an enormous amount of lost time ensuring data accuracy and consistency. Expanding businesses need increased inventory visibility to centralize planning and purchasing. You need standardized processes and centralized access to common master files for customers, vendors, finished goods, and raw materials. This will ensure you never short ship again. You’ll also benefit from consolidated financials across all facilities and entities. Potential solutions include partnering with a software vendor that combines materials and usage into a single actionable report to act on. Most of today’s systems cannot provide this level of functionality.

  6. Regulatory compliance is labor intensive and needs to happen in real time.

    Mandatory compliance with regulatory agencies is a part of life for manufacturers within certain regulated industries. To stay ahead of compliance, companies need to collect, organize, and retrieve information from across all aspects of the manufacturing process. Potential solutions include implementing an ERP system that enables companies to easily recall this data in real-time and provide regulatory reporting at the time of shipment.

  7. True costs are hard to maintain and calculate with the current software environment. 

    Without accurate product costing, pricing new products correctly becomes difficult. Lacking accurate inventory controls and labor tracking increases overhead. Not knowing true product costs can result in items being over or underpriced. This could cause loss of business and lower profits.  Not being able to react quickly to changes in supply costs may also lower profitability. It is essential to have a deep understanding of COGS and their effect on profit. As this problem grows, it will only get harder to solve in your current environment. Potential solutions include having a system that more accurately calculates and reports on product costs where pricing rules are set and maintained with accurate margin calculations.  As costs change the system should provide real-time visibility of their effects on profitability, allowing management to make better decisions.

It might be time to think about your options if any of these pain points sound familiar to you. Finding the ideal ERP system for your business is the next step, and we can assist you with that.

About the author

Content Writer

Lee Escobedo is a Dallas-based content writer with ECI Solutions. He is a marketing specialist with over a decade of experience and leadership in helping companies grow their brand.