In its December 2015 predictions for the manufacturing industry for 2016, the global marketing intelligence firm IDC made the prediction that by 2017, at least half of all manufacturers will take advantage of the cloud and cloud-based applications to improve operations. Specifically, IDC pointed to enterprise resource planning (ERP) as one cloud technology that manufacturers will leverage.
IDC also predicted that organizations that focus their energies and budgets on improving customer-centric cloud-based technologies will likely see a market share increase of 2 to 3 percent in 2016. ERP, though often considered an enterprise-focused application, can also fall into the category of customer-centric technologies because, ultimately, ERP helps organizations improve their customer relationships.
Why all this focus on cloud-based ERP? Because the benefits and capabilities can help manufacturing organizations increase efficiencies and decrease costs. The current manufacturing market is perhaps one of the most competitive markets, with nearly all manufacturers moving toward lean or just-in-time manufacturing. And there’s good reason for that. Cloud-based ERP can help manufacturing organizations grow and gain market share in the following ways.
Gain Control of Your Inventory
One of the largest costs manufacturers struggle with is the cost of inventory. That is reflected in not only the cost of materials but also equipment, labor, shipping, and a myriad of other elements affecting manufacturing. ERP helps to reduce these costs by providing deep visibility into inventory, inventory components, and all of the facets of manufacturing. Furthermore, traceability reduces costs by helping organizations track an order from the smallest part (and track each of those parts) to the finalized, delivered product. These efficiencies in visibility and traceability are requirements to stay competitive in today’s markets.
Access Real-Time Information
Manufacturing changes at almost the same speed as technology. Inventory changes, demand changes, equipment changes, all manner of environmental changes, and even market changes can determine whether a manufacturer is able to produce exactly the product that is needed, in just the right quantity, at the right time. Cloud-based ERP provides transparency for all of those manufacturing elements, and it provides that clarity in real time. Need to know if your supplier is going to provide a part on time? ERP enables a connection with the vendor that can alert you to any delay in order fulfillment. Organizations can even use real-time and historical data to accurately predict swing in demand to prevent over- or under-production issues.
Organizations with multiple manufacturing plants in various regions or even countries know the challenge of managing more than one plant or warehouse. Which location is handling a manufacturing job? Would another location be more suited to produce the product faster? Is there a backlog of completed product sitting in a warehouse somewhere that could be shipped rather than produced? All of these questions need to be asked and answered. Cloud-based ERP gives organizations the ability to connect multiple locations to a single ERP application that can provide real-time visibility between the locations.
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