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Manufacturers Harness Data and Cloud to Navigate Supply Chain Disruption

A robust cloud-based ERP system is a vital tool in enabling manufacturing businesses to overcome supply chain volatility and embed true resilience in their operational processes.

The Covid-19 pandemic has transformed the manufacturing landscape, exposing fragilities in supply chains and bringing significant planning shocks on both the supply, and demand side of businesses. Even in rare instances where manufacturers haven’t been constrained by their own capacity issues, they would have at least seen output impacted by key suppliers. On the demand side, changes in consumer demand are difficult to navigate, with increased uncertainty.

Previously manufacturers could rely on one or two suppliers in a particular country, but the pandemic has forced them to diversify their supply chain, increasing work order and supply lead times exponentially.

Liquidity challenges imposed by the challenging conditions, meanwhile, have seen many companies move to a Just-In-Time (JIT) model, whereby efforts to make more items to order reduces the need for warehouse inventory.

The pandemic has triggered a need for more bespoke, as opposed to mass production, as customer expectations have become more nuanced and demanding. This would be a challenge at the best of times, let alone when manufacturers are unable to rely on workers being available. Without visibility into resources, they are sure to lose out to competitors whose superior forecasting enables them to plan work order lead times more accurately.

Failing to deliver by the date committed can make or break businesses.

Exploiting the Agility of Cloud

Having solutions to support the compounding requirement for greater agility and flexibility is extremely important, which has pushed manufacturers to better exploit the benefits of the cloud, particularly in the area of enterprise resource planning (ERP). Cloud-based ERP software streamlines business processes and helps eliminate silos that accumulate through the single-purpose systems manufacturers implement over an extended period.

Disparate systems are an enemy to the flexibility needed to achieve supply chain resilience, fueling complexity and slowing down decision-making. Cloud ERP software brings together business process management and data across all core functions into a single application, enabling users to access accurate information and manage operations across the company, including sales, marketing, purchasing, inventory and customer relationship management.

To embed real agility into their operations, manufacturers must ensure they have the systems and visibility to quickly and efficiently produce goods. A scalable cloud-based ERP system will enable manufacturing businesses to manage data more effectively and respond and adapt to changes within the supply chain, while gaining vital data-driven insights to inform better decision-making and identify what is required to meet demand.

With the right ERP system in place, manufacturers can also take advantage of the latest innovations, such as utilizing technology like the internet of things to create a more connected factory floor and enhance the flow of information along the value chain.

Greater visibility and transparency is the key to satisfying supply and demand as it evolves.

Pivoting with Dynamic Production

Put simply; manufacturers require systems that enable them to react and pivot quickly. In NetSuite, users can maintain two core elements against each finished product: a bill of materials, including the various provisions and items within that, and manufacturing routing, which is a collection of all the steps required to complete the production process.

For instance, in the bill of materials for a bicycle, users can see all the items required to manufacture one product, such as a frame, a hardware pack and a handlebar, and which bills are required. For each item, they can see where it is sourced from, whether it’s in stock and if it’s a sub-assembly production. With NetSuite, users can manage several levels of sub-assemblies, creating nested bills of materials. The result is a simple ability to conduct accurate demand planning through a system that dynamically considers all the individual components needed to make a finished good right down the sub-assembly level.

Meanwhile, manufacturing routing for a bicycle might include welding, chain assembly and wheel assembly, final assembly, and a quality inspection – the operational steps to producing a finished good. The operation sequence is also managed and maintained in an ERP software, along with the setup time and runtime against each step. Understanding the efficiency of every human and machine resource is crucial to achieving operational excellence and resilience in a manufacturing environment. A good ERP system will also calculate per-hour runtime costs as well as the overall cost to produce each finished good, meaning manufacturers can constantly monitor an accurate gross profit for all their products.

Visibility Brings Control

The ability to specify where certain components of an assembly are used, and maintain work calendars against each resource group, provides a more granular level of control over overproduction and, vitally, the visibility and flexibility to respond quickly to changing supply chain requirements. The additional visibility allows manufacturers to schedule and plan production processes more efficiently, ensuring demand can be met and lost sales avoided.

With the power to dynamically generate a bill of materials and routing steps, manufacturers can create a system of truth at all levels of the organisation, from informing board decisions to ensuring those on the shop floor are working from the most accurate and up-to-date information. Accurate production costing eliminates rework and drastically reduces error rates in field service departments, driving significant cost savings across the business.

Cloud-based ERP will be an essential ingredient as manufacturers continue to adapt to waves of supply and demand in a post-pandemic environment in which disruption shows little sign of slowing. At least for the foreseeable future, a steady and predictable state of supply and demand is not something that any manufacturing business can count on. Therefore, they must embrace the power of data and cloud through a robust ERP solution to ensure the right product is always reaching customers in a timely and cost-efficient manner.

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