The trend for today’s manufacturers is to keep costs down and this is best done with an effective ERP system to manage processes. Craig Charlton, Senior VP, Asia Pacific, Epicor Software Asia Pte Ltd has more on this.
Many companies in metal fabrication prioritise two things for survival: keeping operational costs under control, and increasing profitability. In recent times, both things have been harder to achieve due to fluctuating raw material costs and continued downward pressure on product prices. Customers are also demanding more complex and often bespoke products and configurations in an effort to move these processes up the supply chain. As a result, many soon find that a strategy to compete purely on price is not sustainable, and that a different approach is needed.
Controlling Costs, Protecting Profits
To get out of competing solely on price, leading companies are planning to launch initiatives aimed at achieving more profitable growth. Today, this is normally done through adopting disruptive technologies such as big data and the Internet of Things. With the ability to analyse detailed, real-time data on things such as inventory, shipments and downstream customer demand, businesses can increase productivity on the plant floor, optimise their supply chains and leverage global sourcing opportunities to keep costs in check.
At the same time, manufacturers are also trying to be more customer-oriented by adding more value and differentiation to their offering to defend against competition on both price and the ability to replicate standard products quickly. The shift toward providing more value-added services has been a steady trend for the past few years, and it is usually done by offering services such as Research & Development (R&D) capabilities and the ability to manufacture configurable or customised products. Today, more and more businesses are going even further with initiatives that help to improve the customer experience for greater client loyalty and longer lasting relationships between supplier and purchaser.
The Customer Experience
The customer experience represents an opportunity for manufacturers to really get ahead of their competition, especially in industries that are traditionally cost-oriented. An IDC Manufacturing Insights white paper stated that only the top nine percent of manufacturers worldwide understand the importance of how creating a customer-centric culture and process workflows can turn the customer experience into a competitive advantage.
In metal fabrication, the customer experience extends beyond meeting specified product features and specifications. It also includes any of the interaction that a business might have with their customer. This can encompass things like ease of doing business with the company, reliability in terms of quality and consistency, speed of interaction and the accuracy and timeliness of delivery. These could prove to be the essential difference that puts businesses above the competition.
The Role Of ERP
The right Enterprise Resource Planning (ERP) system can be key to supporting these initiatives. For example, it can enable companies to manage costs and control quality as more customisation and configurations can lead to increased complexity of the manufacturing and logistics processes.
While a traditional ERP system might be able to help with operational cost control, it is limited in its capability to support growth in an environment which requires more customisation and a closer customer relationship. This was the experience of leading industrial pump manufacturer Ensival Moret, who’s traditional ERP could not support their need to produce a large variety of products at very low volumes, all within very short lead times. When they opened their new plant in China, they took the opportunity to invest in a modern ERP system to meet the requirements of their complicated production processes. Today, Ensival Moret reports being able to provide better quality and delivery times to their customers, and they have attributed these successes to their modern, fully integrated and flexible ERP system.
A modern ERP system impacts a business in a few ways. Firstly, it can help by giving operations increased visibility and better access to data from the plant floor for more accurate decision making. Lead times, supply lines and quality can all be compromised without this visibility. It also supports greater internal collaboration that can reduce errors and inefficiencies in the manufacturing process. This helps streamline operational processes and improves efficiency.
Secondly, it has a direct impact on customer experience. Like the example above, providing better quality, accuracy and speed all contribute to a positive customer experience. However, this may prove hard to achieve, especially where higher levels of customisation are expected, and requirements might change from job to job. A company that can effectively offer a better customer experience might wield a highly differentiated offering that is not easy to replicate.
Closer collaboration can also be achieved as a fully integrated ERP acts as a link between the back and front offices, enabling integrated customer relationship management (CRM), warranty management and aftermarket management functionalities. In the Ensival Moret example, their sales teams can offer customers quick and complete responses to their queries on their order, as the data gets pulled through in real-time. They are also able to give more exact delivery times to these customers based on detailed information.
What The Future Holds
Using a modern ERP system need not be painful, neither in terms of resource requirements nor implementation. So when choosing a system for one’s business, look out for ERP systems that offer flexibility in terms of deployment and architecture, which allow for future expansion and manageable costs. Also, make sure to select an ERP which is easy-to-use to reduce training time and improve employee engagement. For example, Epicor’s ERP 10 contains intuitive navigation and configurable dashboards that users of today’s consumer apps and devices will find familiar.
ERP systems have been a fixture in the manufacturing sector for years now, and have helped support companies in being efficient and streamlined. Modern ERP systems can support what is potentially the most important initiative of all – making your business adaptable to customer demands and their increasing expectations. The ultimate goal is to win their respect and continued business with a customer experience that represents a strong, measurable competitive advantage.