The top 5 benefits of ERP in the manufacturing industry

The extension of lockdown restrictions weighed heavily on production in Africa’s manufacturing industries at the start of 2021, causing many to lose momentum.

At the same time, in today’s connected, informed, and always-on marketplace, customers are demanding high-quality, individualised products delivered within shorter timeframes. To build up local production capacity and meet these requirements, companies must synchronise their demand chain with their supply chain.

“Automation in the factory is nothing new, but the convergence of the digital and physical worlds has made the transformation of the supply chain increasingly possible.” says Navin D’Cruz, Head of Sales East Africa, SEIDOR.

In manufacturing, artificial intelligence (AI) improves overall equipment efficiency production yield. This means manufacturers can use AI to increase uptime and ensure consistent quality, which makes for better forecasting.

Machine learning (ML) which requires data input, data training, defining and choosing algorithms, data visualisation and more, is applied to develop a mapping function with a level of accuracy that allows manufacturers to predict outputs when new input data is entered into the system.

Powered with AI, ML, and natural language processing, chatbots in manufacturing can streamline manufacturing processes by equipping stakeholders with the required data on the go. Deploying chatbots for manufacturing can help companies gain increased profits, enabling them to maintain a competitive edge in a global marketplace.

In “The smart factory: Responsive, adaptive, connected manufacturing”, part of a Deloitte series on Industry 4.0, the research team reports that the smart factory represents a leap forward from more traditional automation to a fully connected and flexible system, one that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands. D’Cruz says there are five key benefits to integrated ERP systems:

1. Accurate demand forecasts

How many times have business owners wondered what the next quarter is going to look like? ERP brings sanity to production, sales, procurement and inventory plans. It helps to generate forecast and sales reports based on historical transactions, increasing the accuracy and dependability of production and buying levels. This minimises both out-of-stock and excess inventory situations, keeping stock levels in line with the increase and decrease in demand.

With major advances being made in artificial intelligence and machine learning, businesses are investing heavily in advanced analytics to get ahead of the competition and increase their bottom line. One of those areas is called predictive analytics, where companies extract information from existing data to determine buying patterns and forecast future trends. By using a combination of data, statistical algorithms, and machine learning techniques, predictive analytics identifies the likelihood of future outcomes based on the past. This technology is being used to determine customer responses or purchases, forecast inventory, manage resources, and even detect fraud.

Predictive analytics is becoming more and more mainstream when it comes to demand forecasting, an area of predictive analytics focused on customer demand. Based on the analysis of historical data and current market conditions, it determines the estimated demand for the future and sets the level of preparedness that is required on the supply side to match demand.

2. Decreased costs and improved profitability

Industry leaders everywhere are focusing on increasing revenue in the next 18 months. Getting more work done for lower costs means business growth and improved profits. ERP helps manufacturers to react quickly to changes in the industry, such as raw material costs and delivery timeframes. Data is stored in a single, integrated database that allows fast information processing, and enables quick, high-quality decision-making. Increasing organisational efficiency highlights less profitable areas and cuts down on waste. It also reduces control and inventory management costs.

3. Mobility and increased employee efficiency

Working remotely can be challenging for companies that are experiencing it for the first time. In the strange new world we are living in, ERP enables employees to work remotely with ease, and to access all the information they need from a single portal. They can access business data from their phones, tablets, laptops and computers, no matter where they are based.

4. Increased flexibility

In a pandemic world, manufacturing flexibility provides the capability to respond quickly to shifts in market requirements. Flexible manufacturing enables a business to be collaborative in meeting market and customer demands, respond more quickly to changing demand, and build to order. Flexible approaches enable increased revenue and market share, improved efficiency, and lower cost.

5. Enhanced security and compliance

Whilst the number of data protection laws of Africa are increasing, on 1 July 2021 the Protection of Personal Information Act (POPIA) becomes effective in South Africa. Compliance with data protection laws is non-negotiable. ERP systems have many features that can assist companies with the protection of personal information. Data entered into an ERP system can be secured and coded. Access to the data can be restricted through identity and access management, ensuring data security.

“Companies depend on technology systems to grow, but outdated, overly complicated architectures can hinder business agility,” says D-Cruz.

“Integrating legacy systems with new, intelligent ERP technologies to unlock scalability and unleash the potential for innovation is the start of a journey that leads to sustainable growth.”