Many smaller manufacturers are content running their business on a simple accounting system while managing the operations side of their business with some combination of spreadsheets and manual tracking processes. The feeling is "We are too small for an ERP system."
"This could not be further from the truth. There are systems designed specifically for the smaller company that can help you do so much more with your business," said Ian B. Creswell, Manufacturing Product Manager, Passport Software
Why should a smaller company invest in manufacturing software for small businesses? An ERP system can help manage accounting processes as well as manufacturing operations.
Here are a few simple reasons:
- Run more efficiently
- Allow yourself to grow
- Improve profitability.
Run More Efficiently
Though many companies feel like they have things under control, the reality is quite the opposite. When managing the plant manually, you lack the visibility to ensure that you are getting things done in a timely fashion. There are many reasons for this. One of the big ones is not having the material you need when you need it.
So often, a $1.00 component being overlooked can hold up an order with thousands of dollars. When talking with a new customer in Illinois, they brought us to a work bench, held up an empty inventory bin, turned it upside down and said, "This simply cannot happen anymore!"
The bin was supposed to have 500 washers in it. These are not washers one can get at the local hardware store-they were specialty washers required for a particular product.
The company's manual system indicated that they should have 500 in stock and as such, they never ordered more. They assumed that they had what they needed. This one item was holding up a $50,000.00 order and it had been sitting for nearly a month past its due date awaiting them to come in.
Better Visibility
So many operations run into this same scenario. Sometimes it just holds up an order for a few days. Other times, it could result in the order sitting for months waiting for the material to come in that should have been ordered much sooner.
This is where manufacturing software for small businesses can help. The system will provide the visibility you need to highlight material deficiencies when you still have time to do something about it. If something was overlooked, reporting will continue to flag the item until the need is satisfied. This can virtually eliminate the scenario above.
Reduce Product Lead Times
The wonderful side effect of this is many companies are able to reduce product lead times through improved visibility and better planning. By keeping materials flowing as they are needed, orders can be completed faster and more efficiently, allowing to better meet customer's demand.
We have seen customers implement manufacturing software for small businesses and reduce lead times by as much as 50%. In the process, they have made themselves more competitive in their respective markets.
Some leverage this as a competitive advantage while others use it to leverage higher fees for rush orders resulting in higher profits. The reality is they can easily perform faster than many of their competitors already. They are just charging a premium for the pleasure.
Allow Yourself to Grow
Many smaller companies in growth mode eventually hit a wall where they simply cannot grow anymore. The problem is their inefficient processes in the shop prevent them from being able to meet customer demand. Adding additional employees can help, but often provide minimal relief. This comes back to poor material management and often, poor production resource management. Again, improving your visibility across the entire business, planning capabilities and resource management, you will find that you can often do far more with the resources you already have. A good ERP system, designed for the smaller company, can help you do exactly that.
Improve Order Flow
Manufacturing software for small businesses can provide scheduling tools that enable you and your staff to know what needs to be worked on and when. You can manage capacity on the shop floor and can see where any job is at any given moment. These tools can help you keep production flowing smoothly and keep orders going out the door on-time. The level of detail of your data reporting in and out of the system is completely up to you, allowing you to attain the level of control you desire.
Increase Profitability
You have probably already started to make the connection here. By increasing your efficiency, potentially reducing your lead times and making better use of your production resources, you should be able to improve your profitability as a small manufacturer.
Add to that the ability to better estimate and track costs on products, and you have just set yourself up to complete with much larger competitors in your marketplace and you have set yourself up to handle short and long-term growth.
Authored by Ian B. Creswell, Manufacturing Product Manager, Passport Software
For more information contact:
Passport Software, Inc.
181 Waukegan Road, Suite 200
Northfield, IL 60693
800-969-7900 / 847-729-7900
www.pass-port.com