Understanding enterprise resources planning software

Metal manufacturers know that success depends on effectively managing tight margins.

They must collaborate with customers to design the most effective products while meeting quality, tolerance, and material specifications.

They also need to provide a full range of services from design to delivery.

These manufacturers must maintain flexibility to change capacity requirements while operating effective, continuous replenishment systems. Canadian Metalworking (CM) asked Paul Ellis, president of Syspro Canada, how effective enterprise resource planning (ERP) software helps manufacturers meet these goals. Here’s what he had to say.

CM: What is the main purpose of an ERP system?
Ellis: Using an up-to-date ERP system means that manufacturers can manage production costs, product quality, and on-time delivery through the standard capabilities of the software and enable the option for automating and integrating business processes with the shop floor.

From the front office to the factory floor, specialized manufacturing software provides metal manufacturers a 360-degree picture of what’s happening within their business.

CM: Does this purpose change, based on the size of the business?
Ellis: This software contains specific configuration options that equally provide elegant and simple options for simpler, single-entity organizations, as well as larger enterprises that require planning and consolidations amongst several business entities.

Whether the business growth demands high transaction volumes or transactional elasticity, good ERP systems provide the agility and scalability to continually adapt to the needs simply and cost effectively.

CM: How should manufacturers prepare for ERP installation?
Ellis: Key areas to focus on when assessing potential ERP software include future innovations and ongoing improvements. Often during the ERP selection, assessment, and preparation phases, organizations lose sight of the overall strategy and operational requirements that support the company’s strategy.

An effective ERP system should grow at the same pace as the business. It should allow the incorporation of new capabilities with ease, integration of other enterprise applications for better operational control, and management reporting to strengthen key business areas. It also should extend beyond enterprise software to give customers and suppliers the ability to link with their own systems for better order and delivery performance.

In doing so, it will facilitate an agile response across the supply chain, adding value and improving competitiveness

CM: What are some common misconceptions about ERP integration?
Ellis: Smaller shops may be under the misconception that an ERP integration will be costly and time-consuming to implement, requiring extensive tailoring to fit their business. However, correct ERP installation provides extensive support of its customers’ complex industry requirements and supports numerous manufacturing types, including assemble-to-order, batch, discrete, engineer-to-order (ETO), job shop, make-to-order, make-to-stock, process, and a mix of these different modes.

For example, Syspro’s latest release continues to add to the existing industry-built capabilities with support for manufacturing operations management, quality management, and corporate performance management.

It also enhances materials management by adding further support for warehouse management solution capabilities. These enhanced capabilities provide baseline functionality eliminating the need for third-party products to support these areas.

CM: What are some of the first decisions that need to be made?
Ellis: Customers must choose how they wish to deploy the software (cloud or on-premise), how to pay (subscription or perpetual license), and how to access the system (mobile, desktop, or web interface).

CM: How can manufacturers get the most from their ERP system, including new technologies?
Ellis: Five main pillars help manufacturers plan, execute, control, streamline, and expand production:

1. Optimizing the quotation process, especially in ETO environments. To improve turnaround times and provide a better service to customers, the quotations system should provide the means to collaborate with customers on new items, to effectively cost and measure the effort, as well as provide completion performance. As more and more services are outsourced to gain manufacturing and cost efficiencies, costs for material, labour, and outside services continue to be an important part of the quoting process.

A highly flexible interface provides the information needed to give customers timely quotes and estimates, as well as the ability to incorporate vendor-related service costs that can be marked up as a part of the estimate.

2. Streamlining the planning process. ERP systems use projected demand and supply to assist with planning and creating realistic production, purchasing, and supply transfer schedules. They also identify capacity constraints and maintain optimal stock holdings in a multi-site and multi-warehouse environment.

3. Synchronizing supply with demand. Particularly important for component and material suppliers and original equipment manufacturers, synchronizing supply with customer demand is a key requirement to prevent costly line stoppages in assembly plants. This involves automating order processing and other processes in the supply chain and also executing production plans using lean principles.

4. Enabling design and engineering collaboration. To improve efficiencies, ERP software foster the centralized management and control of the product design process, while its comprehensive security, customization, and multi-lingual capabilities enable tailored access to external collaborative partners around the globe.

5. Managing inventory effectively. For improved customer service and profitable management, effective inventory management should be a priority for every manufacturing or distribution business.

These businesses need a unified view of inventory, which requires real-time data at each stocking location: in transit, at the finished goods warehouse, on the factory floor, expected components and raw material from suppliers, and outstanding orders from customers.

CM: What mistakes do shops commonly make during ERP implementation?
Ellis: Many businesses forget to treat their software systems as an asset. Without proper policies and processes in place to ensure that the ERP software is being used to its fullest potential, there is a real risk that it will lose its luster, won’t fulfill its purpose, and will appear obsolete.

CM: How important is scalability in an ERP system?
Ellis: Scalability is a key factor for any ERP’s ability to deliver optimal performance and future-proof a customer’s business. It simplifies implementation of new functionality as a company’s needs change and enables better management of the addition of new processes and departments to the business’s ERP ecosystem

CM: How is return on investment measured in ERP use?
Ellis: Manufacturers continue to face challenges including volatile commodity prices, shrinking markets, offshore price cutting, and higher expectations for quality and speed of delivery. To this end, ERP software must show how it leverages innovations, enabling manufacturers to stay ahead of the competition and ensuring long-term viability of their business infrastructure.

Systems should help improve turnaround times and reduce loss with faster delivery and lower production costs through smart manufacturing management processes.

CM: How is the trend of digitization affecting ERP installation?
Ellis: As more businesses make the move to adopt some form of digitization, the ERP system also needs to be able to adapt, incorporating industry changes and future innovations to industry-built capabilities seamlessly.

In addition, manufacturers should never have to consider scrapping existing assets to embrace a fully digitized infrastructure. The correct ERP system should allow for the integration of legacy technologies to minimize costly disruptions.

CM: What role does cloud computing play in ERP systems today?
Ellis: At Syspro we consider a cloud-first strategy vitally important in helping businesses make the transition from monolithic, on-premise systems to an agile, cloud-enabled ERP.

The cloud allows companies to better manage large capital expenditures, such as servers, server rooms, and information technology personnel, and can also give them access to Industry 4.0 technologies, such as the internet of things (IoT), Big Data, analytics, automation, robotics, and predictive maintenance. These technologies could well be the competitive edge that propel manufacturing companies to capture market share in the future.

CM: How do digitalization, artificial intelligence (AI), and the IoT converge in ERP usage?
Ellis: At Syspro we believe that digital business in industry is key to remaining competitive, and we have adopted several specific emerging technologies and made them available in the latest release to help our customers on the journey of digital transformation.

The first is the enablement of integrated digital devices that work collaboratively and contextually with the software.

Second is the provisioning of digital citizens (bots) across the organization, be they internal or supply chain focused, providing engaging connection points between stakeholders and the software. Our application of these enable businesses to evaluate which of their repetitive processes they can “train” to perform those skills, as proficient as anyone else would, and deploy them to enable scaling.

The third aspect is about applying the way modern and emerging generational cohorts are used to engaging with systems and the world around them, by allowing all to interact with the software in the same manner; and also about promoting collaboration amongst peers, which is known to improve productivity.

Lastly is the pragmatic application of Industry 4.0, ensuring organizations today, with current equipment and factories, can readily connect and harmoniously engage with the ERP system, embracing both IoT and traditional shop floor technologies.

Of course, with this introduction of digital and embracing new message streams from digital, a new approach to making sense of all this data is needed. Here we make extensive use of machine learning and AI to make sense of data and provide analysis and insights to users, addressing the large amounts of structured and unstructured business and industry data that companies increasingly need to consider as part of their decision-making process.

3 tips for smooth ERP installation

Think about both day-to-day operation and big picture

According to Ellis, three main tips can help the ERP implementation process run smoothly:

1. Be mindful during implementation.
If a new ERP package is required, the ERP vendor should assist in reviewing and streamlining the business processes to provide a full understanding of the environment and enable delivery of the ERP objectives. Importantly, these objectives also should support organizational objectives.

2. Put post-implementation policies in place.
Application erosion happens to software when the people using it don’t appreciate its extended capabilities beyond their own use.

Manufacturers that ensure continuous upskilling in their ERP system and stay abreast of improvements are in a better position to leverage the capabilities that drive improvements and add value. ERP users should have regular training, either from a champion in the organization who is passionate about staying up-to-date with the program and its capabilities or through official vendor training at least once a year.

3. Focus on continuous improvement.
Business agility is critical. An organization that quickly adapts to and embraces change will be better able to improve its competitive standing. A manufacturer’s systems need to be flexible and agile enough to help maintain a steady forward pace.

Syspro Canada, www.syspro.com