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Don’t Buy a New ERP, Do This Instead…

I’m Frustrated with the Lack of Flexibility of an ERP. What Now?

An ERP is designed to do two things – account for the past and to a certain extent, plan for the future.

Based on the sales orders that come into an ERP, you figure out how much inventory is needed, predict how much product to make, and once everything is made and sold, calculate the amount of money made. An ERP is really, really good at tracking inventory.

Manufacturers and people try all of the time to make an ERP do a lot of other things, too, but at its core, tracking inventory is what it’s good at. The problem arises when people become frustrated that an ERP is not good at all of those other things – it’s not flexible. If you want to track inventory, great. But, if you want to see how the machines are performing, well, you may not find what you’re looking for.

When you think about accounting for the product and planning for the future, it’s not necessarily a bad thing that an ERP system is not flexible. But, for everything else, it can be a problem.

You may think you want to get a brand-new ERP system to help you do all of those other things, but an updated ERP isn’t going to solve your problems. Don’t buy a new ERP, integrating your current ERP with manufacturing analytics can fix the problem.

When you talk about looking at the factory floor, understanding, managing, and working, the factory floor, flexibility is a key requirement. Especially considering that on that factory floor, nothing is ever the same. Integration between an ERP and manufacturing analytics will provide that flexibility needed.

Can Manufacturing Analytics and an ERP Work Together?

Priorities change. Problems happen on the floor that causes you to have to react immediately. In an ERP, it is very hard, if not impossible, to account for those changes because the system is so rigid. If you’re not able to change the schedule and account for what actually happened on the floor that day or week, there is a larger problem at hand. But, how can you obtain insight into what actually happened?

The answer to that question is manufacturing analytics. To put it plainly, an ERP tells you what is supposed to happen whereas manufacturing analytics software tells you what actually happened. You can benefit from integrating the two systems by comparing the plan to the real-time data to figure out where you came up short. Don’t buy a new ERP because there’s really no need to go through the process of getting a new ERP system when you can implement manufacturing analytics relatively simply and get access to the data you need for a complete picture of how your plant is running.

Can Any Manufacturing Sector Can Do This?

That integration of an ERP and manufacturing analytics platform can apply to virtually any industry within manufacturing. That’s right, even yours. See how manufacturing analytics can help virtually any sector.

How Beneficial is it to Integrate an ERP and Manufacturing Analytics?

There are two big benefits to using both an ERP (yes, the existing one you have is just fine!) and a manufacturing analytics platform:

1. Reduction of manual work and double-entry – No one has to enter production data into the ERP system since it can be directly transferred from the Mingo platform and vice versa.

2. Improved accuracy – Since you’re no longer relying on manual data entry, accuracy will undoubtedly improve.

By integrating the two, you can better determine if you’re meeting the takt time goal. “Am I delivering my product on time to my customer?” The ERP knows what you have to make, in a certain amount of time, to meet customer demand. Then, you can take that demand and use Mingo Manufacturing Analytics to track against it.

When you use the two together, you can determine the true takt time, not only at the final stage but at every step of the way.

Most companies are highly focused on labor and machine utilization. There are incentives for people to overproduce a product – use the people you have and run the machines as much as possible – you may not need to do that at all. Why? Instead of focusing on maximizing resource utilization, you should optimize for on-time delivery to your customers and takt time. By using an ERP system and manufacturing analytics together, you can.

So, now you’re optimizing to deliver on time to customers and matching customer demand versus optimizing for throughput or total products produced. In the end, that is the strategy that will most likely be most beneficial to your company.

Note: There are some businesses that can sell everything they make and there is a need to optimize for throughput, but you’re still matching customer demand to lead times and expectations so you can deliver as close to on time as possible.

An example of that would be a company that sells office furniture, made to order. They can clearly sell everything they can make as there has already been an order made but may have the issue of being unable to deliver on time due to inefficiencies in the production process.

Don’t Buy a New ERP. Integrating with Analytics is the Solution

So, what’s the moral of the story, here? An ERP is a massive, complicated system that may be making you incredibly frustrated. It’s great for tracking inventory, but that gap of information leaves the rest of your manufacturing process in the dark. Instead of starting a search for a new ERP, introducing a long implementation process, and spending a lot of money in the process, don’t buy a new ERP and integrate your current system with manufacturing analytics.

Trust us, you’ll thank us later for the insight.

If You Do Want to Buy a New ERP, At Least Do This….

The biggest opportunity that implementing an ERP and manufacturing analytics at the same time provides is more visibility into what’s happening in the plant.

ERP’s are typically more focused on back-office operations like order taking, estimating, purchasing, planning, material requirements, inventory, costing, accounting, all of those things. All of which don’t really touch the factory floor operations which leaves the opportunity to implement manufacturing analytics in parallel and see big gains.

Most of the time, that company’s focus is on ensuring the ERP is properly set up in the back office so that it runs smoothly once in use. But, implementing a new ERP takes a really long time to set up, requires a lot of input, and is relatively complex.

You have to have all of these back-office things set up before you can even start to think about using the ERP on the factory floor. You need your bills and materials, routings, everything set up before you can use it…. so where does that leave production?

You’re running on the same systems in production that you’ve had before. The ERP implementation process can take 8 months to a year depending on how big or complex your organization is. So, that entire time, you’re not making any improvements or leaps on the factory floor, beyond what you’re doing today.

A manufacturing analytics solution like Mingo requires so little data to get valuable information out of it, which means you could set this up to be up and running and be completely proficient within a month. You don’t need an ERP integration to do this. You’re simply just replacing Excel & paper, today. You can really start getting value out of it almost immediately.

Then, once the new ERP is set up, you can get even more value out of both systems by integrating the two. It doesn’t have to be this give and take of one system versus the other.

Achieve Big Wins Now

Most of the time, the production team isn’t even involved in the day-to-day setup of the new ERP system implementation anyway. So, why not use manufacturing analytics to start making improvements?

It’s something that can be handled by the production team, and the rest of the organization doesn’t need to be involved. Combine the idea of achieving quick wins by starting small and moving fast, and you’re achieving real goals. You’re starting small with a limited amount of data that you need to get value out of it and thinking big by eventually integrating it into the ERP system.

The other thing that’s worth thinking about here, too, is most companies don’t have accurate cycle times and scrap rates. Bills and materials and routing are often wrong, too. This is one of the core reasons we developed Mingo in the first place – to provide accurate data providing the ability to make data-driven decisions.

With manufacturing analytics, you can start collecting good, accurate data that can then feed into the ERP, when it’s fully implemented. You’re setting those things up, correctly, to be used in conjunction with the ERP system when it rolls out.

When you start collecting data off incorrect data, you’re going to wonder why stuff is wrong later. Essentially, if you put garbage in, you get garbage out. This is why it’s best to get those best practices established now rather than later.

The other thing is that ROI on an ERP takes a very long time to achieve if you can get it all. Compare that to manufacturing analytics where the ROI is extremely fast and extremely high, often in 6 months or less.

Why not implement a system that will help you achieve big things now, and that will, down the road, improve even more when integrated with the ERP system you’re company is currently working on implementing?

It’s a win-win situation.

Picture of Bryan Sapot
Bryan Sapot
Bryan Sapot is a lifelong entrepreneur, speaker, CEO, and founder of Mingo. With more than 24 years of experience in manufacturing technology, Bryan is known for his deep manufacturing industry insights. Throughout his career, he’s built products and started companies that leveraged technology to solve problems to make the lives of manufacturers easier. Follow Bryan on LinkedIn here.