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Managing complex global supply chains, multiple locations, shifting labor requirements, and fluctuating customer demand are all ongoing burdens for discrete manufacturers. Add global trade wars, tariff increases, the global COVID-19 pandemic, and the persistent need to do more with less, and the case for advanced, cloud-based technology platforms becomes clear.
The problem is that many of these companies, which produce distinct, finished products, rely on aging, on-premises technology solutions, spreadsheets, and basic accounting software to run their operations. These solutions give them little or no visibility over their operations, let alone their global supply chains, which proved especially problematic at the onset of the pandemic. With supply chain interruptions impacting most industries, discrete manufacturers scrambled to fill those gaps and continue serving their customers well.
Companies with modern enterprise resource planning (ERP) solutions in place were able to react quickly to changes in the environment, meet their customers’ current needs, and more accurately pinpoint future demand. Where some rushed to “stock up” to shield themselves from future disruptions (thus increasing their inventory carrying costs), discrete manufacturers using cloud ERP efficiently managed their cost production and waste, all while operating leaner.
Here are six advantages that cloud ERP can give discrete manufacturers in any business environment:
1) Greater operational visibility. Many discrete manufacturers rely on legacy systems that don’t “talk” to one another. As a result, operational visibility is extremely poor, and departments operate in silos. No one can see what’s happening real-time in the business, and decisions are made based on gut instinct versus the real-time, consistent data that a cloud ERP provides.
2) Support for lean concept modeling. Discrete manufacturers need to be able to model their downtime from the shop floor right up to the decision-makers. A cloud-based ERP platform can project the impacts the downtime has on productivity and profitability. It can also identify bottlenecks and determine whether they are caused by the company’s distribution requirements planning (DRP) system, or if they’re a byproduct of technology limitations.
3) A 360-degree view of business performance. By pulling together the various aspects of a manufacturer’s operations onto a single platform, cloud ERP provides a single, integrated view of that company’s business performance. Modern ERP systems typically consolidate information from multiple sources, be it via integration or by using common data sources. This also enables accurate data sharing across departments because product inventory levels, manufacturing output metrics, general ledger data, and other key performance indicators (KPIs) are all available in one place, and everything is in the cloud.
4) Accurate inventory management. With cloud ERP in place, discrete manufacturers know what their inventory levels are at any point in time. They can understand manufacturing throughput, and measure the effectiveness of their bill of materials (BOM). With real-time inventory updates generated throughout the day (versus on an hourly basis), production managers can make better decisions based on accurate inventory values and costs.
5) Customer service tools. Cloud ERP generates real-time data that manufacturers can use to preempt problems (i.e., by determining where manufacturing resources need to be positioned in order to perform specific tasks). For instance, if a customer payment is delayed, companies can use a real-time information dashboard to respond accordingly from a customer service perspective.
6) Faster scaling. Cloud also helps manufacturers move away from locally managed hardware and software systems, thereby freeing up internal resources and increasing the reliability of the software. They can scale up faster, with additional capabilities/modules incorporated as needed, with relative ease, and without significant implementation time. As manufacturing businesses evolve, a cloud ERP system can quickly evolve with them.
In today’s competitive, disruptive environment, discrete manufacturers need robust technology platforms that they can run their entire business on – not just pieces or parts of it. As the pandemic and trade disputes give way to future challenges, the companies that took this time to adopt unified, cloud ERP systems will be best positioned to thrive.
Subject matter expertise
Paul Ricci
CPA, Partner, Technology+
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.