What is Manufacturing ERP System?

Manufacturing Enterprise Resource Planning (ERP) is a management software that integrates business processes. Its origins date back to the 50s when Material Requirements Planning or MRP systems began to be applied to the management of the productive systems of large companies. MRPs have evolved to the present Manufacturing Resource Planning (MRP II) and ERP, its usage has been extended not only to manufacturing companies but also to services, government and NGO’s. It integrates all aspects of business management, beyond the productive one, such as:

  • Operations Management
  • Supply Chain Management
  • Project Management
  • Sales
  • HR
  • Accounting
  • Customer Service (CRM)
  • Finances
  • and others

The Manufacturing ERP is a multifunctional system that integrates the internal business processes. ERP offers companies real-time solutions for their commercial, productive, economic and financial processes. It is also possible to track business orders and resources, such as:

  • Materials
  • Personnel
  • Cash
  • Machinery

Characteristics of an ERP system

The main characteristics of a Manufacturing ERP system are:

  • It is modular, in which the functional areas are grouped in ERP modules (for example, sales, manufacturing, accounting, etc).
  • Existence of a centralized and integrated database.
  • The processes are interdependent.
  • There is an input data feeding the system, and through algorithms, outputs are obtained.
  • It allows quantifying, understanding, forecasting and improving business performance.

Let’s look at an example, in which an organization markets a certain product. To find the final result, it is necessary for the organization to execute interrelated processes, such as:

  • Billing of the finished product
  • Tracking of the material from the warehouse until the arrival at the hands of the customer
  • Integration of the organization’s systems with those of the customer
  • Product manufacturing
  • Procurement of materials and integration with the supplier
  • Resources and costs used within the organization for its manufacture

Classification of ERP systems

There are several types of ERP systems, depending on the classification criteria used:

According to the installation

Cloud-based ERP when it is hosted on the vendor’s servers and accessed through a web browser.

– On-premise software is installed locally, on a company’s own computers and servers.

According to the type of software used

– Open source ERP, which allows access to your source code freely and changes them as needed.

– Closed source ERP, in which there is no access to the source code.

According to the type of software used

– Vertical ERP, used for a particular industry.

– Horizontal ERP, usable for any type of organization.

System Implementation

With the advent of the internet, ERP software systems have been significantly simplified.

In the beginning, ERP Systems were only applicable to large companies. They demanded a huge investment and required considerable time for its implementation. This fact has been reduced through the use of the internet. Today it is possible to provide solutions to organizations of small and medium-size in relatively shorter times. Huge disbursements are no longer required and the delays of years for their implementation can be reduced to months.

Advantages and benefits of its use

Manufacturing ERP systems allow data collection, ordering, describing process performance and improving it. The results of its implementation are:

  • Improves internal communication, creating support between different departments
  • Get real-time information
  • Integration of global operations
  • Business scalability simplify
  • Allows you to control operations more easily
  • Reduce the costs of different activities
  • Automate processes and minimize administrative times
  • Optimization of manufacturing times and productivity improvement
  • Improvement in delivery service
  • Reduction of business costs
  • Improvement of the efficiency of the company
  • Increase the ROI of the organization

In summary, Manufacturing ERP systems are resources that save time and money, covering all the needs of a business. It is a solution for all types of organizations in the search of higher profits and competitiveness in the market.