By Mike Wagner
For decades, manufacturers have leveraged the power of Enterprise Resource Planning (ERP) systems to manage various operational functions such as accounting, sales and inventory management. Over time, various modules were added to integrate other stages of manufacturing, resulting in home-grown versions of ERP. But, as some organizations grew the disconnect between departments grew with them due to technology limitations.
One critical area that needed to bridge the gap was the foundational development and design phase. More mature ERP systems are now designed to handle multifaceted engineering processes and project management, creating transparency from concept all the way through to production and fulfillment.
Let’s take a look at how leveraging ERP project management functionalities as it relates to engineering can have a major impact on profitability and overall efficiencies in three major areas.
1. Manage Manufacturing Costs
Maintaining project details within an ERP platform can help manage projects and determine if there are opportunities for improved cost controls during the initial design phase. As a project progresses, each iteration of development and related costs are transparent throughout the organization. Procurement can understand where a project is and plan for what they need to buy and when; Operations can see due dates; Production can have a better grasp on capacity planning; and inventory managers can anticipate materials handling.
Customers can also be billed according to a project’s progress and be invoiced for work completed to date, allowing finance to compare performance metrics against the budget and related KPIs.
ERP project management allows for modeling and creating “what if” scenarios as it relates to the Bill of Materials (BOMs) and using different components or parts. For instance, engineers can analyze how such a change might impact resource capacity, production costs, and labor so there are no surprises or disruptions as a result. Modeling allows for quick reactions and informed decisions.
When a component revision does occur, the remaining inventory of old parts is visible, ensuring that one part doesn’t run out before the new one is ramped up, facilitating a smooth change over process.
Additionally, automation of Engineering Change Orders (ECO) can be triggered inside an integrated ERP system, creating visibility into costs and any implications so that procurement is contracting for the right BOM.
2. Enhance Sales Processes
An ERP’s integrated data from a CRM can ensure every detail related to a project and its buyer is collected in one place. Having this broad-view visibility into project details and costs from the start, as well as all related customer sales orders and deliverables, gives Sales the ability to pursue opportunities and win at each stage of the sales process.
KPI metrics can be generated based on various project stages and incurred costs during the sales process. Additionally, KPIs for the sale of different versions and associated service costs from one version to another can be easily extracted, analyzed, and delivered to stakeholders.
As things inevitably change in a dynamic production flow and those changes are noted in the ERP, Sales can ensure that customers have the most recent versions and understand any cost or delivery implications.
3. Design for Manufacturability
Engineers proactively design products to optimize each phase of production, ensure quality, and contain costs. Seeing the role of other departments in the process allows engineering to address changes or optimize requirements during the design phase and before production begins.
Computer-aided design (CAD) systems can integrate into the ERP, creating a seamless transfer of data from engineering without having to manually enter information, ensuring more accurate and efficient BOM creation and updates.
Machine and resource planning data within an ERP give engineers insights into route versioning and optimal operational steps to manufacture a product. They can see which machines are available, their capabilities, and available resource capacities to help ensure production runs on the right lines at the right time.
Engineers also can have insights into variable and constant scrap factors so they can determine material requirements and ensure accurate BOMs.
Engineering can avert potential negative ramifications of a product change, too, and see what other products could be affected. For example, if an engineer wants to use a less expensive screw or change suppliers, it could affect other projects in the organization or require a change in the catalog. Visibility across departments eliminates silos and helps the entire organization work as a cohesive and collaborative team so that any implications can be identified and addressed.
Optimize Project Planning from Concept to Completion
Older generation technology and ERP systems aren’t appropriate in today’s highly complex manufacturing facilities which require close attention to detail, communication, and accuracy—from a project’s infancy until the final products end up in your customer’s hands. Engineers can help maintain your competitive advantage and fulfill orders on time and on budget with the help of a modern ERP solution. Contact us to explore the possibilities.