The manufacturing industry has always been associated with grit and manual labor, but it still benefits from a technological overhaul. Modern technologies like ERP for the manufacturing industry solve many persistent problems and provide a central nervous system.
From the shop floor to the top floor, from procurement to customer delivery, an ERP is your one place to access and manage everything.
Letโs understand the critical role of enterprise resource planning for the manufacturing industry and why itโs an indispensable tool.
What is an ERP System for Manufacturing?
At its core, an Enterprise Resource Planning (ERP) System is a software architecture that allows an organization to use a system of integrated applications to manage the business. When we talk about ERP systems for manufacturing, we mean systems that are customized to the specific challenges of the industry.
Most ERPs offer modules for finance, human resources, and sales. However, the ones built for manufacturing provide features specifically designed to manage the entire production lifecycle, from initial design and engineering to final product delivery and after-sales service.
The key differentiator of an ERP for the manufacturing industry is its deep integration with the core processes of production. It serves as the single source of truth where everyone from the CEO to a sales rep can access updated information. This eliminates the inconsistencies in data that occur due to disconnected systems.
Key Modules of an ERP System for Manufacturing
What separates a manufacturing ERP from others is the specialized modules it contains that are designed for a specific aspect of the manufacturing process. Your decision to invest in an ERP depends on these modules and figuring out which ones you really need. Here are some of the important ones:
Material Requirements Planning (MRP)
This is the core of a manufacturing ERP. The MRP module uses production schedules, bills of materials (BOMs), and inventory data to calculate the exact amount of raw materials and components needed to meet production demands. This means youโll always have the right materials at the right time, minimizing inventory holding costs.
Inventory Management
This module gives you a real-time view of whatโs in your inventory, from raw materials to finished goods. You can set auto alerts, which are triggered when the quantity falls below a certain threshold. It helps you prevent stockouts and reduce carrying costs. Advanced features may include lot tracking, serial number tracking, and support for various costing methods.
Supply Chain Management (SCM)
Effective supply chain management is non-negotiable. The SCM module of a manufacturing resource planning system provides tools for managing the entire supply chain, from procurement and vendor management to logistics and distribution. You can track shipments, monitor supplier performance, and collaborate more effectively with their partners.
Production Management
Production is at the heart of manufacturing, and you should opt for an ERP that comes equipped with features designed to enhance it. Most production modules allow for the creation of detailed production schedules, the tracking of work orders, and the monitoring of production progress in real-time. You can quickly adjust production schedules when thereโs a change in demand or inventory levels.
Quality Management
Maintaining high product quality is a top priority for any manufacturer. The quality management module of a manufacturing resource planning system helps to ensure that products meet the required standards at every stage of the production process. You should be able to define your custom standards by customizing the ERP. Also, you should get real-time tracking of inspection results and manage non-compliance issues.
Financial Management
An ERP for the manufacturing industry goes beyond simple accounting. It provides a comprehensive suite of tools for managing accounts payable and receivable, general ledger, budgeting, and financial reporting. You can generate detailed financial statements for specific products to speed up the financial close. This allows you to have better control over your expenses and make informed decisions.
Benefits of ERP for the Manufacturing Industry
Among all the ERPs in the market, going for the ones specifically designed for manufacturing offers a plethora of advantages. Here are a few benefits youโre bound to get by implementing an ERP system for manufacturing.
360ยฐ Visibility
Traditionally, manufacturing companies operated on a fragmented model. Every department had its own system, which led to disconnected information. For instance, the sales department had its own customer database, the production team had its own scheduling system, and the finance team had its own accounting software. This made it impossible to get a comprehensive overview of whatโs happening in the business.
When ERP systems for manufacturing came into the market, they centralized all data into a single, integrated system. Every employee has access to the same, up-to-date information.
This has a big impact on decision-making. Managers have access to real-time, accurate data across all areas of the business. They can become more agile and make decisions at the right time.
Automate Core Processes
Another significant benefit of enterprise resource planning for the manufacturing industry is automation. Traditionally, all the manufacturing tasks are performed manually, which is time-consuming and prone to errors. An ERP automates these tasks and reduces the overall manual workload.
Letโs take the procurement process. In a manual system, a production manager might have to manually create a purchase requisition, get it approved by a manager, and then send it to the purchasing department. The purchasing department would then have to manually create a purchase order and send it to the supplier.
With an ERP in the manufacturing industry, this entire process can be automated. The MRP module can automatically generate a purchase requisition when inventory levels fall below a certain threshold. The requisition can then be automatically routed for approval, and once approved, a purchase order can be automatically generated and sent to the supplier.
This level of automation can be achieved across your organization, from production scheduling and quality control to financial management and customer service.
Optimized Inventory
Inventory management is all about maintaining a balance between overstocking and stockouts. A manufacturing ERP provides the tools to strike the perfect balance, enabling you to optimize your inventory levels and minimize costs. It shows you a real-time view of your inventory so you can precisely track the stock and movements. Some features include:
- Reorder Points: The ERP automatically reorders raw materials when they drop below a set point.
- Demand Forecasting: Know clear demand patterns to prevent overstocking.
- Movement Tracking: The ERP uses barcodes or RFID tags to track inventory movement and reduce the need for manual cycle counts.
Improved Quality Control
Today, even a single quality issue can damage your reputation. An ERP in the manufacturing industry provides you with multiple tools for managing quality throughout the entire production process, from incoming inspection to final product testing:
Define Quality Standards: An ERP allows you to define quality control parameters for each product and process.
Quality Monitoring: Track quality data at every stage of the production process, from incoming raw materials to finished goods.
Manage Non-Conformance: An ERP system manages the non-conformance issues from creating reports to implementing corrective actions.
Complete Audit Trail: An ERP system provides a complete audit trail of all transactions, making it easy to demonstrate compliance.
Better Cost Control
An ERP for the manufacturing industry provides a clear picture of your organizationโs financial health by integrating financial management with all other aspects of the business. This integration of financial and operational data provides a number of significant benefits.
First of all, you get an accurate picture of product costs by tracking all costs associated with production, including materials, labor, and overhead. This, combined with real-time financial and operational data, allows you to set more accurate budgets.
You also get a comprehensive set of tools for managing cash flow, controlling expenses, and ensuring compliance with financial regulations.
Increased Customer Satisfaction
Customer experience is king today, and a manufacturing ERP allows you to achieve just that by:
- Accurate Order Promising: Your sales reps can provide accurate delivery dates to customers, as they have access to real-time visibility into inventory levels and production schedules in the ERP.
- Improved Order Fulfillment: An ERP ensures that all orders are fulfilled quickly by streamlining the entire order fulfillment process, from order entry to shipping.
- Enhanced Customer Communication: Support agents can provide a more personalized and efficient service with access to a central repository for all customer information, including contact details, order history, and service requests.
Most manufacturing ERPs have a Customer Relationship Management (CRM) module, which provides a comprehensive set of tools for managing the entire customer lifecycle, from lead generation to after-sales service.
How to Choose the Right Manufacturing ERP
Implementing an ERP requires a significant investment in both time and resources. Thatโs why selecting the right vendor is an extremely important decision that will shape your business for years to come. A methodical and well-thought-out selection process is not just recommended but imperative.
Hereโs how we recommend you go about selecting an ERP in the manufacturing industry:
Conduct a Needs Assessment
You must have a clear understanding of your own business needs before you even look at a single vendor brochure. Get all stakeholders involved and list down what you need the ERP to accomplish or solve. Are you aiming to reduce inventory costs, improve on-time delivery, increase production throughput, gain better financial visibility, or enhance quality control?
Map out your current workflows, from order-to-cash to procure-to-pay. Identify what works well, but more importantly, identify the bottlenecks. Consolidate your findings into a detailed requirements document. This should list all the essential features and functionalities you need, categorized into “must-haves” and “nice-to-haves.”
Establish a Realistic Total Cost of Ownership (TCO)
Weโve seen many businesses have a very vague or unrealistic idea of how much an ERP costs. Most usually associate it with just the initial software fee. However, the TCO includes:
Software Costs: Subscription fees for cloud or license costs for on-premise.
Implementation Services: This is often the largest cost component, covering system configuration, data migration, and project management.
Hardware & Infrastructure: If choosing an on-premise solution.
Customization & Integration: Costs to tailor the system to your unique processes or connect it to other critical software like CAD or PLM systems.
Training: The cost of getting your entire team proficient in the new system.
Ongoing Support & Maintenance: Annual fees for vendor support and system updates.
Research Vendors
Once youโve got your requirements and budget in hand, you can start looking for vendors. Look for ERP vendors and implementation partners with proven experience in your specific manufacturing sector. They will understand your unique challenges and offer solutions with built-in industry best practices.
Use industry reports, peer reviews, and online research to create a longlist of 10-15 potential vendors. Then, use your requirements document to narrow this down to a shortlist of 3-5 vendors who appear to be the best fit.
Consider Deployment Models
Decide which deployment model best fits your business:
Cloud (SaaS): Lower upfront costs, managed by the vendor, accessible from anywhere. This is the dominant model for new implementations.
On-Premise: Housed on your own servers, giving you more control but requiring significant IT overhead.
Hybrid: A mix of both, perhaps with financials in the cloud and shop-floor systems on-premise.
Due Diligence
Donโt fall for sales pitches. Provide your top 3-5 vendors with your key business scenarios and ask them to demonstrate how their software would handle your specific processes. This allows for a true apples-to-apples comparison.
Ask for access to a sandbox or trial environment. Let your core team members run through a few key tasks to get a feel for the user interface.
Finally, ask for references and reach out to them to know about their experience with the software.ย
Best ERP System for Manufacturing
Weโve made the research work easier for you by listing the best ERP systems in manufacturing. However, there could be many smaller, less popular ERP systems that may fulfil your specific needs beyond this list.
Tier 1: For Large, Global Enterprises
SAP S/4HANA
As a market leader, SAP S/4HANA offers incredibly deep and broad functionality for all types of manufacturing and is particularly strong in production planning, supply chain management, and financial control.
- Deployment: Cloud
- Cost Per User: $200/mo
- Price Range: N/A
NetSuite
Oracle NetSuite offers comprehensive modules for manufacturing, financials, inventory management, and CRM. Its key strengths are its unified cloud platform, real-time visibility, and scalability.
- Deployment: Cloud
- Cost Per User: $125/mo
- Price Range: $10K – $100K
Tier 2: For the Mid-Market
Epicor Kinetic
Kinetic is a cloud-based solution built with deep industry-specific functionality for make-to-order (MTO), configure-to-order (CTO), and mixed-mode manufacturers. It is highly regarded for its shop floor control and planning/scheduling capabilities.
- Deployment: Cloud & On-Premise
- Cost Per User: $125/mo
- Price Range: $4K – $500K
Infor CloudSuite Industrial
CloudSuite Industrial is an end-to-end ERP for both discrete and process manufacturers. It is known for its user-friendly interface, strong planning tools, and the ability to manage complex value chains from suppliers to customers.
- Deployment: Cloud & On-Premise
- Cost Per User: $150/mo
- Price Range: $25K – $500K
Microsoft Dynamics 365
Dynamics 365 offers two primary ERP solutions: Business Central for small to mid-sized businesses and Finance & Supply Chain Management for larger, more complex enterprises.
- Deployment: Cloud
- Cost Per User: $175/mo
- Price Range: N/A
Acumatica
Acumatica has gained significant traction for its modern technology, flexible licensing model, and user-friendly interface. Its Manufacturing Edition supports various production environments like MTO, MTS, batch, and project-centric.
- Deployment: Cloud & On-Premise
- Cost Per User: N/A
- Price Range: $7.50K – $150K
Summary
Today, having an ERP for the manufacturing industry is not a luxury but a necessity. Itโs the foundation upon which a successful and sustainable business is built.
If youโre planning to implement an ERP system for manufacturing, Navsoft can help you out. With over 25 years of experience, weโve helped multiple businesses select and implement their ideal ERP system.
Along with basic implementation, we also integrate your ERP with advanced AI tools like NavAI and make it finger-snapping easy to get insights from your data or automate complex tasks with agentic AI.
Book a consultation with our ERP experts to get started!
