Your Reaction Speed Can Be Your Biggest Competitive Advantage

As anyone working in the manufacturing sector will understand, a significant amount of time is allocated for planning, reviewing strategies, forecasting sales and profit, as well as setting budgets. While this was never a straightforward task, it has been made all the more difficult over the past few years, with the COVID-19 pandemic, rising prices and ongoing global instability having a detrimental impact on productivity and profitability.

While these global issues have revealed a number of weak points in many manufacturing businesses’ processes, they have also acted as a powerful wake-up call and forced leadership teams to really examine their operation, focusing on what works and what doesn’t.

One report recently published by The Institute for Supply Management (ISM) revealed the true scale of the disruption and how it had impacted business plans. The most frequent reason given for plans failing to come to fruition was supply chain disruption, with state/local or government restrictions and remote working challenges the second and third most common answer. While these three issues are all external factors – largely out of anyone’s control, a significant number also highlighted internal issues, such as increased costs, lack of staff bandwidth and unavailability of personnel.

Unlike previous years, where ISM productivity-related surveys had uncovered technology related issues, this most recent survey found that the main blockers to getting things done wasn’t necessarily the systems, the data, or the networks of suppliers, but the means to effectively use them and put them to work.

The benefits of software for manufacturers

Agile and innovative organizations are using enterprise resource planning (ERP) solutions to overcome outdated processes that actually limit the businesses’ resilience. Here’s how an ERP solution can help to manage unforeseen disruptions in each function of the supply chain and ensure the business adapts as quickly as possible.

Planning and scheduling

Difficulties arise in supply planning due to a lack of information or visibility on the impacted suppliers. On the demand side, this can stem from a lack of data on fluctuations. An ERP solution streamlines the planning and forecasting process, through effective job scheduling that accounts for the use of all resources and materials in real-time.

When suppliers are impacted by disruptions, these flexible systems are set up to automate ordering through suppliers that can meet demand. Similarly, as customer demand changes, this will be flagged and the required action automatically actioned.

Sourcing materials

As we’ve seen over recent years, difficulties in sourcing critical raw materials and parts, as well as delayed shipments and longer lead times can create significant disruption. A manufacturing specific ERP solution can manage, automate, and streamline the procurement of materials and parts across the supply chain. It also automates communications with all involved vendors and suppliers and keeps documentation on communications.

According to McKinsey research, as supply chain disruptions become more frequent, manufacturers can expect a significant disruption lasting 1-2 months every 3.7 years. This finding emphasizes the critical role ERP systems are set to play in helping manufacturers optimize their supply chains for resilience.

Production

Difficulties arise from rapidly scaling production up or down, and from having to reconfigure production lines. ERP systems enable the creation of a bill of material (BOM) for each item and create records for labor and machine resources in real-time. An ERP system can also enable streamlined work order modifications and last-minute alterations so that production is completed on deadline, without errors and with strict quality control.

Warehousing and inventory management

Difficulties arise in warehouse and inventory management when manufacturers are having to balance cost-efficiency with agility and flexibility. Manufacturers must be able to maximize cash flow and minimize inventory carrying costs, while still being nimble enough to respond to supply and demand changes, and more severe supply chain disruptions.

Just-in-case planning is the solution to balancing the needs for efficiency in inventory, labor, warehouse space, and supply chain resilience.

Establishing and managing pricing rules

With margins increasingly tight and manufacturers having to do everything they can to maximize profitability, the ability to establish and manage pricing rules is of growing importance. Deacom ERP software can help manufacturers and distributors set up different pricing rules, promotional and discount rules, as well as rebate rules for when they are selling to their customers.

Distribution

To maintain a competitive advantage, manufacturers need to be able to meet distribution deadlines. Difficulties may arise from products being held-up by affected parcel companies, or in ports and at borders, and this is an issue that’s becoming increasingly common.

A manufacturing specific ERP system can maintain a central repository for customer shipments and delivery details to ensure on-time delivery. System flexibility and integration with transportation management software and parcel software also enables manufacturers to choose the most cost-effective or quickest providers.

It’s clear that across the U.S., digital transformation is taking hold and delivering benefits, not just in terms of efficiency, speed, accuracy, and customer experience, but also allowing manufacturers to quickly adapt in the face of unforeseen challenges.