As companies look ahead and prepare for improving backlogs yet are concerned about getting too far ahead of their ability to maintain profit and cash flow objectives, smart leaders are better utilizing and optimizing ERP and data analytics to bridge the gap. Our best clients are better utilizing ERP to automate processes, enhance customer value and better prioritize resources to support growth and scalability. Simultaneously, assuming they have a modern ERP system, they can create win-win results by better leveraging artificial intelligence and advanced technologies to power smart supply chains and smarter decisions.

Better Utilize ERP Systems to Drive Business Results

During our 20 years of consulting, we found that 100% of our clients could better utilize their ERP system to drive bottom line results. Here are a few of the top ways clients better utilize ERP and related technologies:

  • CRM: Our best clients utilize CRM (customer relationship management) to provide value to potential customers and track opportunities for growth. As we better utilize CRM such as Salesforce and standardize stages in the sales process and how to track percentage likelihood of winning the sale, this information can be powerful in creating a predictive demand plan as part of a SIOP (Sales Inventory Operations Planning) process.
  • Configurator: Custom manufacturers (ETO, CTO) can achieve step change improvements in service, lead times and visibility by better utilizing a configurator. For example, several clients not only shortened the time to quote an order by weeks to hours or minutes (depending on several factors), but they also provided enhanced visibility to what was coming down the pike to production, purchasing, and logistics support systems.
  • Sales forecasting: ERP systems have a placeholder for your demand plan/ sales forecasts; however, they do not support developing the sales forecast to gain a predictive view of customer demand without additional modules/ advanced technologies. If your business is custom, forecasts can be created from your quotes, orders, historical patterns, aftermarket, and configuration capabilities and uploaded into this field. That can transform your supply chain as it will drive MRP, production planning and related needs. If your business is high-volume and/or promotion driven, it is likely you’ll need an advanced demand planning module / capabilities. The results will also populate this ERP field.
  • Sales orders: Companies are automating the order entry for sales orders and providing exceptions for the Customer Service team to review, enabling real-time visibility. In addition, better utilizing and standardizing pricing capabilities will not only enable automation but it will enhance service and support increased profitability with quick updates for changing conditions.
  • Purchasing: Clients build purchasing variables into ERP such as lead times, primary and backup sources of supply, blanket order capabilities, and other standard ERP functionality that automates and improves the outcome. Supplier portals extends visibility into the supply chain and supports collaboration.
  • Master data: Boms, routings, work centers, item masters and the like seem like no-brainers yet 80-90% of clients have opportunities to better utilize functionality to better track waste, labor, and progress for fulfilling orders.
  • Production: Work order management is often overlooked as leaders assume this standard functionality should be a no-brainer; however, there are often opportunities for improvement especially in combination with other factors. In addition, better utilizing MES (manufacturing execution systems) and related systems (vision systems, predictive maintenance systems, etc.) will reduce waste, build quality into the process upfront, improve labor efficiencies and increase output.
  • Cycle counting/ inventory accuracy: Although this topic should be “easy” from executives’ minds, it is often underappreciated how integral and complex it can be depending on ERP setups, transaction timing, and other factors. Since it drives manufacturing, replenishment, service, and financial performance, it is important to better utilize ERP to support business results. This topic is highly ingrained with operational processes and transactions. Thus, combine both to ensure success.
  • Raw material planning/ MRP: Material requirements planning (MRP) will drive the appropriate purchases (raws, commodities, components, finished goods) to supply your production and replenishment plans as well as your customer requirements, optimized to minimize costs and maximize results.
  • Production planning/ MRP: An optimal production plan and schedule will power growth, customer service, operational performance, and cash flow. It brings together the optimal master data setups with the better utilization of MRP, inventory, sales orders, forecasts, and work orders to develop a production schedule. In addition, better utilizing your ERP system for production planning and scheduling is key to creating a win-win of service, margin/ efficiencies and inventory levels/ cash flow. Thus, this becomes a huge focus in our consulting services as it becomes an interrelated, heavy ERP utilization and upgrade topic in combination with business process improvement with a link to strategy and SIOP.
  • Replenishment planning/ DRP: Distribution requirements planning (DRP), also referred to as replenishment planning or vendor managed inventory (VMI) planning, ensures that the “right” products get to the “right” location (distribution center, customer facility, service center, warehouse) at the “right” time to support customer needs and growth plans with the least amount of cost and inventory. Better utilizing DRP will drive improved results.
  • Advanced planning: For multiple production facilities, more complex plans (container ships routed around the world, ETO environments requiring AI-driven capabilities etc.) and scenario planning capabilities, clients turn to advanced planning systems. Similar to sales forecasting systems, base capabilities are typically in ERP with advanced functionality requiring additional modules and/or advanced technologies. Upgrading and/or utilizing these systems will drive greater capacity/ ability to scale, enhanced profitability and superior customer service.
  • Capacity & labor planning: Depending on your master data, production and planning setups, and work order and labor tracking, you can gain insight into your capacity (machinery, storage) and labor needs as you better utilize your capacity requirements planning (CRP) module and related technologies. AI will give you predictive functionality with run rates and other insights to better manage capacity and labor.
  • Shipping & receiving/ logistics: ERP functionality will support inventory allocation, prioritizing of customer orders, and efficient shipping of customer orders. Customer service will not occur if you cannot ship on-time, accurately and efficiently. There are several other related technologies that can get involved to tie this to package shipping, tracing, truckload planning and with import/ export compliance.
  • Warehousing/ WMS: Simple warehousing efficiencies can be gained by using ERP and a dose of common sense. For more complex warehousing and distribution scenarios, WMS (warehouse management systems) and related automation and AI-enabled technologies are key to success. Better utilize WMS capabilities including receiving, putaway, order fulfillment, task optimization, automated guided vehicles, AR/VR etc. to drive productivity and profitability.
  • Transportation/ TMS: Transportation management systems (TMS) will select optimal routes, carriers, modes, and fulfillment strategies to optimize your transportation plans. With advanced technologies for supply chain visibility, greater levels of speed and profitability are achieved.
  • Budgeting & cash flow planning: As part of financial management and tied with SIOP, ERP systems and related business intelligence (BI) and predictive analytics will result in predictive revenue, profitability and working capital.
  • Reporting, BI, predictive analytics, exceptions & alerts: In addition to providing sales insights, there are many uses for business intelligence and predictive analytics to enhance customer value, productivity and profitability. In addition, modern ERP systems such as Oracle and SAP are embedding AI agents and functionality to increase productivity and profitability. There are countless flags to highlight potential shortages, delayed receipts or shipments, errors, potential spikes and/or bottlenecks, etc.
  • Artificial intelligence: Modern ERP systems are incorporating AI into their systems. For example, cash flow planning, predictive analytics, integration to MES and predictive maintenance systems, etc. To learn more about how to leverage AI and advanced technologies, download our complimentary eBook: AI & Advanced Technologies for Manufacturers: How AI Powers Smart Supply Chains and Smarter Decisions.

Case Study: Equipment Manufacturer Spurs Growth, Service & Engagement with ERP Utilization

An equipment manufacturer serving the safety industry maintained robust sales as they provided superior service and stayed at the forefront of R&D/ new product development to lead in the marketplace. Thus, it was important to scale production rapidly while being resilient to changing conditions and product mix changes to best support customer growth while maintaining financial performance. They could do this by adding resources to support business process needs or they could upgrade their use of their ERP system (Oracle’s JDE) and related technologies (CRM, configuration, Teams, BI) to enable profitable growth. Thus, they brought in consultants and experts in customer service and planning to assess and recommend a path forward.

After improving the customer service processes to support service improvements, the leadership team decided to pursue the production scheduling process to upgrade and optimize manufacturing schedules to better serve customers with a more automated, efficient and sustainable process. The team found that the best way to improve results was to better utilize ERP and related technologies while educating and upskilling the team and connecting the improvements with the daily process. The team selected a manufacturing focus area that performed well with a high-skilled resource due to manual methods and proactive follow-up. It was dependent on the machine shop and fabrication areas and supplied final assembly, positioning it as an optimal pilot.

After digging into the details of the production scheduling process and key inputs, the team addressed several key areas:

  • Product attributes: The team captured critical product attributes (referring back to key configurator characteristics), customer pickup schedules, and production line characteristics that supported the optimal sequencing of items and performance of the manufacturing area. With the upgraded use of ERP, these attributes could be used by production scheduling and incorporated into key reports.
  • Customer demand: The company was rolling out SIOP (Sales Inventory Operations Planning) to improve visibility, better forecast and highlight potential opportunities. Thus, the team tied into this process and upgraded the demand planning process to enable statistical forecasting, easier incorporation of sales feedback by customer and/or product line, and integrate with the supply planning processes. In addition, the team automated the sales forecasting base so that the team could focus attention on exceptions and highlights.
  • Customer dates: The customer requirements changed frequently and dates were unreliable. Thus, intense manual revisions were required. The team partnered with the assembly planners to update key master data that drove MRP, better utilize MRP functionality, and better understand down-the-line impacts of data integrity and schedule changes. This supported their initiative to improve available to promise (ATP) capabilities and allow for better utilization of this ERP functionality to provide reliable dates to customers.
  • Backlog reporting: We automated the backlog reporting to incorporate what was relevant from a scheduling standpoint into a report that could be used for production planning, thereby turning a manual process into automated one focused on exceptions.
  • Dispatch report: JDE had a standard dispatch report that could communicate to the floor what should be run in what order on which production line. However, it couldn’t be utilized until the items were attached to the appropriate work centers and assigned run rates. Thus, the team condensed the items into run rate groupings, updated work centers and completed the process. In addition, they wanted additional information such as customer noted on the dispatch report and so they coordinated for the report to be revised.
  • Capacity planning: Understanding if the work center and work areas were full, had excess capacity or required additional resources was important. The planner performed this function manually; however, the process wasn’t sustainable. Therefore, the team updated the work centers, assigned run rate groupings and reviewed standard capacity reporting. This information was incorporated into the monthly SIOP process.
  • Schedule adherence: In addition, we wanted to roll out key metrics to support effective monitoring of the process and ensure production stayed on track with customer needs with the optimal schedules for the floor. Thus, we developed a schedule adherence tracking process and aligned with the team. After performing the process manually, we identified reports that contained the key information (work orders by work center, work order completions etc.) and automated the schedule adherence tracking process so that it could be incorporated in the weekly review meetings.
  • Order status: To gain better visibility into order status to enhance customer service and operational effectiveness, we rolled out order status tracking with key points in the end-to-end process. Although there were almost ten process steps the planner tracked manually, we reviewed the steps for those that were differentiated and/or meaningful to the process. If we tracked too many, we’d add additional production entry steps into the process without a benefit. On the other hand, if we continued without tracking any steps, we’d have to walk the lines to find out order status and the visibility wouldn’t be available for anyone else in the organization. We agreed on three key steps and rolled out JDE functionality to trace the order through the processes. It also provided better visibility by consuming the appropriate raw materials at the “right” step in the process, thereby improving inventory accuracy.

Not only did the team automate several process steps by better utilizing and rolling out ERP functionality, but they also developed a process that provided better visibility which benefited the customer and internal resources. The planners could spend time on looking to the future, managing exceptions and increasing operational performance while ensuring high levels of service instead of performing manual tasks, thereby improving their engagement and morale. The process was sustainable and scalable! In addition, because the planners didn’t have to spend so much time ensuring details were handled manually, they could deliver improved results (customer service, operational efficiency, inventory).

Tips for Better Utilizing ERP

No two clients are alike yet every client can better utilize ERP. No two systems are alike (JDE, SAP, Epicor, Dynamics, Salesforce, CPQ, Oracle, etc.) yet modern systems will have base functionality to improve business performance. Of course, tier 1 ERP systems will have more capabilities. On the other hand, tier 2 or 3 systems typically are simpler which can be a benefit as well. Whether process manufacturing, job shop, or custom (ETO/ CTO), there are best practices in common. No matter the situation, consider a few keys to success.

  • Business need: Start by evaluating your business requirements. What would add value for your customers, operations, suppliers or employees? Quickly prioritize where to start and research the appropriate functionality that would support your needs.
  • Cross-functional team: Form a cross-functional team including key resources from the focus area, upstream and/or downstream resources, IT/ ERP resources, and sponsoring resources. Empower the team and provide them with the appropriate tools, consultants and/or experts etc.
  • Test plans: Put together the appropriate test plans to simulate what you’d like to achieve. Try different pieces of functionality in a controlled setting, adjust as needed, re-test and document results.
  • Pilot: Complete a pilot process to try a real-world scenario. Tweak setups, adjust settings, update the process, and look for improvements. Set your team up for a quick win and be nimble with changing conditions and to incorporate feedback / ideas.
  • Rollout: Develop a cutover plan, incorporate training and education, develop metrics to ensure the process stays on track, and ensure there are resources to support go-live.

The Bottom Line

The best companies will utilize all resources at their disposal to support customer growth and business performance. ERP systems are one of the largest, if not the largest, investment your company will make. Many companies only use 20% of their ERP system with less than 50% usage being common. Our best clients dedicate the time and resources to better utilize their ERP system and related technologies (not to a particular percentage, but focused on key functionality that will add value) to automate, digitize, and thrive.

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Case Study in Fueling Productivity, Profitability, & Performance with ERP Optimization