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Successful Manufacturers Have a Secret
The most successful manufacturers all have a secret and the story typically starts with, “we weren’t always this great.” At some point there was a meeting with the best employees and the spirit of the conversation talked about being great, good enough isn’t good enough anymore, being average won’t win new business. Our customers should trust us to deliver 100% of the time.
Each day more and more manufacturers are looking for a competitive advantage, and many of them call on ERP software businesses to determine if it is a difference maker. You might be thinking to yourself, why could ERP software be the difference maker? The answer is simple and thousands of years old – knowledge is power.
The playing field in today’s manufacturing world is flatter than ever before (see what I did there – the above reference to thousands of years old and the world being flat?) because of the general availability of machines, labor, and training. Gone are the days where only ABC manufacturer can make a part and charge through the nose because they are the only ones with a specific machine (less those lucky enough to have patents). So where do you win, where can you get a competitive edge? The answer to that question comes down to the #1 thing you can control that will impact your profit and margin the most while costing you and your customers the least. So let’s think about a few opportunities and slap a grade on them (and of course, this reasoning may not fit your specific business and there are exceptions to every rule, yada yada yada, so to the naysayers I say “winter is coming”).
- Material – as a manufacturer you control the quality of the raw goods that you purchase, which in turn will impact your sales (people love great quality stuff), but buying the higher grade raw goods typically means slimmer margins and more expensive finished goods. GRADE: C
- Labor – as a manufacturer you control the pay, bonus structure, and benefits of your employees or at least know the structure for union workers. But we all know you get what you pay for and everybody loves overtime. Skimp on employee pay and benefits and your quality, on-time delivery, and credibility will suffer (likely with high turnover). Pay too much and you limit the number of employees can you truly hire, which will impact your growth or institute a wage gap culture. GRADE: C+
- Business Processes – as a manufacturer you control the culture and business processes used to make your finished goods. Gone are the days where you run your business with paper, pencil, and hanging file folders. All manufacturers use some form of accounting or ERP software to manage their business; and the extent to which you make this a breathing and living part of your culture is entirely up to you. A fully-integrated ERP software system managing all the critical aspects of your manufacturing with (this is the important part) a fully-committed ownership, management, and employee base optimizes every aspect of your business from quote to cash. Make fact-based better decisions, manage proactively, and stop running your business from the hip, buy yourself some ERP software (and pssst, buy it from Global Shop Solutions). GRADE: A
So let’s talk more about ERP software.
You win in manufacturing by delivering a quality product on time, every time. This requires accurate inventory, accurate costing, an accurate financial statement with operations data, and the ability to access operational data in real-time. How do you get this? You can only get this with a fully-integrated ERP software system. The key word is integrated – a software system that is built as one and does not require third-party add-on’s for critical business functions like finance or scheduling.
The most common question asked by our prospective customers is how does it work? The how depends on your manufacturing mode and what you are making, but for the sake of this article we will focus on a general step-by-step process for the typical make-to-order manufacturer.
- Estimate Router – Determine cost elements quickly such as material, labor, and outside services including a quantities breakdown and live costing. Our software makes sure you do this accurately and quickly allowing you to leverage historical data from a single screen.
- Create Quote – Add markup and calculate the price or simply create a quick quote. Our ERP software tracks quoting history and enables you to access past quotes through our integrated CRM module.
- Enter Sales Order – Create sales order acknowledgement to create demand. Our ERP software tracks sales history and provides you with multiple pricing methods. Also you can access any of the sales history or pricing history for any customer right from our integrated CRM module.
- Work Order Release – This is the mechanism to satisfy Sales Order Demand and trigger purchasing requirements along with Shop Floor Control.
- Purchase Order – Create purchase orders on demand to satisfy material requirements. Our ERP software speeds up this process through automated purchasing.
- PO Receipts – Receive materials and increase on hand quantities leveraging our ERP software systems wireless capabilities, lot/bin traceability, and link material certifications.
- Issue Material – Assign material to work order and decrease inventory quantities leveraging wireless capabilities. Our ERP software tracks inventory and the data is available from many screens due to our integrated software system approach.
- Labor Data Collection – Record labor data collection in real time to manage employee productivity and have accurate planning and scheduling leveraging our easy graphical user interface with barcode capabilities. Due to our integrated ERP software system employees have access to document control on the shop floor inuring the latest designs and documents are available reducing human error and defects.
- Daily Labor Balancing – Validate information collected from the shop floor enabling accurate labor costing.
- Close Work Order – Close existing work order and increase on-hand inventory leveraging the wireless capabilities and label printing capabilities of our ERP software.
- Shipping – Relieve inventory and print shipping documentation leveraging the wireless, FedEx® /UPS® integration, and material certification capabilities of our ERP software.
- Invoice – Process sale and generate invoices leveraging e-invoicing, sales/profit analysis, and accounts receivable capabilities of our ERP software.
- Cash – Receive payment and update general ledger. Our general ledger provides the user with the capabilities to drill down to shop floor control and inventory.
With an integrated ERP software system that includes a software development kit, many modules and screens can be customized to fit your manufacturing processes whether you are make to order, make to stock, engineer to order, mixed mode, or any other manufacturing mode, enabling more automation in your business. Now, you are probably saying to yourself, this sounds great, but give me something real. What difference will I really see when I walk through the shop floor or back office? The answers are endless but for the sake of argument, the top 10 ways we simplify your manufacturing™ can be found below (with a big thank you to Global Shop Solutions senior consultant Langley Melendres for curating the list).
- Simplify your shop floor communication
- Simplify your material handling and documentation
- Simplify your data entry
- Simplify your business management
- Simplify your continuous improvement plans
- Simplify your costing
- Simplify your sales process
- Simplify your work day to a single screen
- Simplify your processes
- Simplify your employee tracking
Want specific examples? Read any of the nearly 150 case studies of successful manufacturers that made ERP part of their DNA.
Adam Grabowski is the Director of Marketing at Global Shop Solutions. He is responsible for translating the company’s business objectives into successful brand, marketing, and communication strategies to drive awareness, revenue, and loyalty.