Discover how a Dynamics 365 Business Central ERP can revolutionize your manufacturing processes, streamline operations, and drive productivity.
In the realm of manufacturing, the journey towards efficiency begins with digital transformation, and a Dynamics 365 Business Central ERP offers a comprehensive suite of tools to help you achieve your goals. By defining the parameters of your digital transformation, integrating automated tracking, serialization, and machine integration, your ERP can help streamline manufacturing processes, ensure quality control, and enable seamless production planning, empowering manufacturers, like you, to make informed decisions, enhance visibility, and stay ahead in cash flow management while keeping a vigilant eye on orders through robust production tracking capabilities.
Streamlining Manufacturing Processes Through Digital Transformation
The big question that all small and medium-sized businesses need to ask is, are you prepared to transform? Has your business or company changed in the past few years in such a way that you're starting to think about moving on from your current ERP system, which is either incomplete or outdated?
Even small and medium sized businesses have so many data input points that it's virtually impossible to keep track of them all. Tracking down or tracing transaction errors can be almost impossible, limiting the integrity of your database. When you're trying to make decisions, do you really want to be making decisions on limited or partial information?
What do you hope to gain from digital transformation? What are you willing to change in your current process? What are you willing to look at in your SOPs (standard operating procedures) that just doesn't work? What are you not willing to change or what are you not able to change?
These are questions that really start the thought process for digital transformation. But, where do you find the answers?
For more on the importance of digital transformation for manufacturers, check out Supply Chain Digital Transformation: Why It Matters for Your Organization.
Defining Parameters for Your Digital Transformation
Recording your transactions in production, purchasing, finances, sales, transfers, and other relevant transactions provides the information base you need to analyze your business. When you do a SWOT analysis (strengths, weaknesses, opportunities, and threats) and you look at the results, many small and medium-sized businesses will find that their greatest strength is unfortunately in people's ability of recall.
Many transactions rely on manual input and remembering how that was done last time. This also provides for potentially the greatest weakness. What happens when that person leaves or retires? In some cases, companies are not aware of all the steps that are required to record transactions or how much it costs to perform a simple transaction.
For instance, it may cost about $35 just to produce a sales order header plus $5 a line. If you apply Pareto's law, most of the transactions, about 80% of them, are processed the same way every time with the same cost. But, about 15% of those transactions are processed with some form of manual manipulation that requires extra effort, extra clicks, extra information, and by extension, extra cost.
Beyond that, there's also the outliers, the few transactions that are processed almost entirely by hand. They're manually entered into an ERP, things like item journals, and miscellaneous sales or miscellaneous customers and miscellaneous products. There's no way that you can effectively track a miscellaneous category.
In some cases, especially in certain industries like manufacturing, there are very particular requirements or transaction steps that must be taken, and which must be taken into account when you're defining your must-haves and your wants for a new ERP.
When you look at your SOPs, can you or have you been able to standardize any of your SOPs to create flow? Is there a better way to conduct that transaction? Is the cost of performing the transaction that way, is it justified? Are you recouping that cost?
With digital transformation, you need to consider whether it’s cost effective, but if you standardize your SOPs, you may actually require less customization from a new ERP. Many companies look to spend money to customize an ERP, to fix what really isn't broken. But, the best time to change your SOPs is when you're implementing a new ERP. Everyone can be involved as part of the discovery process to find ways to simplify your SOPs in order to minimize customizations and reduce ERP implementation costs.
For more on how you can address the challenges your manufacturing business is facing, check out Common Manufacturing Challenges For SMEs & How To Overcome Them.
Streamlining Your Manufacturing Processes with an ERP
Streamlining manufacturing processes with an ERP system is pivotal for modern businesses seeking operational efficiency and agility. By leveraging the comprehensive features of a Dynamics 365 Business Central ERP, you can optimize workflows, enhance collaboration, and achieve seamless integration across departments, ultimately driving productivity and competitiveness in your specific manufacturing industry.
For more on the manufacturing industries we serve, check out our industry specific pages.
Save Time with Automated Tracking and Serialization
With item serialization, you can create unique serial number records for each output item, which will be searchable within the ERP. This will enable you to trace the historic records posted to that item. Serialization can be automated or manual through standard functionality in Business Central. Additional customization can provide means for how and when serial numbers are assigned during the process and even the serial number format, if there's a specific requirement in your company or your industry.
You may need to track raw materials that are transformed in production without the addition of other materials. For example, big rolls of paper that are being cut into sheets. The paper itself doesn't change, but the item that is being produced changes. With these changes, there's a requirement to maintain the traceability and integrity of that product, the paper itself. Serial numbers can be automatically attached to documents and printed labels to provide traceability to the original sale, to the original purchase, throughout production, and any subsequent transactions after the sale, such as for service orders or warranty issues.
There are a number of different industries that are similar to this example: timber, steel, and other metals. But, what about groups of items?
Recording heat or lot numbers from vendors, or production items that are recorded in batches, can be grouped with lot numbers or a similar form specific to an industry. Like serial numbers, lot numbers can enable similar traceability to the original transactions and forward also to quality control and compliance documentation.
Meet Quality Control and Compliance Standards with Ease
Extending on the topic of item tracking and traceability, maintaining records for quality control and compliance is a very common necessity in manufacturing. You are likely required to maintain traceable records of not only your finished goods, but also the raw materials used during your manufacturing process.
There's a number of different ways this information gets input into an ERP. If you're running a production line where there's some automated machines that have digital connections, you can link the automated serial number assignment to your output. It will also help with recording your elapsed time for each unit. Also, any production errors that come in, those records can be sent automatically to the ERP. And with quality control input at your at your workstation, you can link your workstation with Business Central, so that your test method details can come up on the screen and they can be recorded right there on the shop floor.
That traceability can be carried through each point of the production transformation process, wherever there's a workstation. Data will be available in almost real time. However quickly the input can be done at the workstation, it can be uploaded to Business Central and will be available to compliance documents or test documents or any kinds of certificates that you need to produce for customers or for government regulations. And, because the data is being kept as part of the database, it will be searchable and accessible in the future if you ever need to go back and find and prove you have a certificate of analysis to prove that tests were done and what the results were.
Don't forget to check out our webinar: Streamlining Manufacturing Processes: Addressing Pain Points for Efficiency & Compliance.
Boosting Production Efficiency with an ERP
When talking about improving production efficiency for small and medium-sized businesses in manufacturing, it all comes down to the information in your production and assembly environments. In manufacturing, production is the focus of most of the time and effort of available resources. So, this is where the details need to be available for analysis of everything from quantity of material, time to produce, labor hours, inventory of finished goods, etc.
For more on the key tools available in ERP software for manufacturers, check out ERP for Manufacturers: 12 Essential Features.
Eliminating Errors with Machine Integration
As mentioned above, with some customization, information can be passed between the shop floor and Business Central with ease. These transmissions from the shop floor can reduce input errors on production details and when completing the production order process. When the shop floor is reporting information, if the machines are looking after the information, there's not going to be any errors. But when the production is running or when it's complete, at any point during that process, somebody can look into the system and see when a certain production order is going to take place and when it is in the process of being produced as well as how far it is in the production process.
By utilizing machine integration with Business Central, production order details can be sent directly to the work center, and machine counts for inputs, times, and outputs can be sent directly back to the ERP.
Streamlined Production Planning for Manufacturers
Beyond the efficiency gained by integrating your ERP with your machinery to record data, you can also use this data to make important planning decisions. Business Central can help you manage the what, the when, the where, and how much of what needs to be produced. There are a few different forms of finished goods production, such as stock goods and made to order products.
With stock items, your company decides to carry a certain amount of finished goods inventory to support projected sales or a specific campaign. You want to be able to manage those items not only to produce them, but to produce them at the right time, because you don't want to have inventory sitting there longer than you need to.
With an ERP like Business Central, you can store information, such as production lead time, lead time for raw materials, and even lead time for how long it takes for a finished good to be shipped to its end destination. Business Central can provide some structure to help you manage and maintain your production BOMs (bill of material) with updates as well as maintaining different versions, depending on how static or dynamic you need them to be. It can also help you analyze whether there are raw material items or certain components, sub-components or sub-assemblies, that you can standardize. The planning function in Business Central can help you plan right down to purchasing the raw material.
But what about output capacity planning? So many ERPs will assume infinite capacity, unless other details are provided. But do you know your own capacity? Are you running a full 8 hours a day, five days a week? And, if so, how long will the current and planned capacity last at that rate?
Visibility to upcoming production requirements will help you provide details to decide which batches can go together. If production order number two and production order number five are virtually the same thing, you could save time by running them together or back-to-back to reduce the changeover time. Reducing your changeover time means that your machine's running, and machines that are running make money.
This visibility will also provide duration of production to determine the best time for things like planned shutdowns for maintenance, allowing you to avoid unplanned downtime. It's always better to keep your machines running, but they can't run forever, and you need to be able to judge the best time to shut down this machine or to shift your crews around from one machine to another so that you can maintain the machine with as little disruption to your production process as possible. This helps avoid overtime charges trying to make up for unplanned shutdowns, as well as keeping your customers happy by avoiding delays.
For more on maintaining supply chain visibility, check out How to Improve Supply Chain Visibility.
Making Informed Decisions for Warehousing and Inventory Planning
In the planning cycle, you're going to have a finite amount of storage capacity storage for raw materials and components as well as for your finished goods. So, you need to know that when your product is done, packaged, palletized, and when it's going to get shipped out to avoid carrying more inventory than you actually have space for.
Business Central functionality can be configured to include physical inventory storage spaces through the ERP’s standard warehouse functionality. It can also help you calculate the cost of inventory storage as well as other physical resources such as work centers, machine centers, or any of the items you might use a subcontract vendor for.
For more on inventory management, check out Key Inventory Management Strategies to Optimize Your Operations.
Improving Visibility with Reporting and Financials
Companies are accustomed to seeing reports in a specific format. That's how you've been looking at this information for years. But some of the detail is not available and some must be summarized manually. So, in some cases, you're just getting a big block of data that you're having to go in and wrangle into the format that makes sense.
Business Central provides one database for all your production information, eliminating the need to export data to excel or manually account for data that doesn’t fit. In addition to the standard reports and dashboards, Business Central also connects very easily to Power Apps if you need something more than the standard functionality.
There's a plethora of standard accounting and financial reports available in Business Central, and there are a lot of pages and lists. Once you get everything into the system and you run your plan and you run your purchase suggestions, you can validate the system against your previous equations and methods to be sure that it is working the way you need it to.
Staying Ahead of Cash Flow Management
One of the most important parts of business is your revenue. Another important part, in fact, one that people talk about all the time, is cost. Cash flow management is generally accepted to be about 30 to 45 days from cash-to-cash cycle. But how much of your cash is tied up in inventory that's ready to sell right now? And how much of your cash is tied up in your WIP or your throughput inventory right at this very moment? And how does that compare to your expected accounts receivable and your accounts payable?
This may be information that you're currently not able to easily access, but, in Business Central, a lot of that information can be accessed in dashboards. Quick reports can be pulled up so that you can see your financial position in real-time.
Talking about cost fluctuations of production output, for instance, you can't necessarily control your costs every step of the way, every day of the week. But if you're able to see that, during production, there's a certain production run that has a high level of scrap, for example, you can see that very quickly. Then, you can go and investigate the cause on the shop floor.
H3 Managing External Costs from Vendors and Subcontractors
Need to know your process cost? An ERP like Business Central can help you maintain your vendor cost lists and subcontractor charges for future comparisons and analysis. You can see how the amount you are being charged by your vendors and subcontractors translates to the value add function they're performing. Plus, you can compare pricing over time to see how what they are charging you this week compares to what they charged two months ago or a year ago. This will allow you to see the cost pattern and make predictive estimates of what those materials and services are likely to cost you down the road.
Keeping an Eye on Orders with Production Tracking
Tracking key aspects of your production time, like your expected time to completion versus your actual time is simple with an ERP like Business Central. You can then use this data to either adjust your expectations or address any issue that are slowing down production on the shop floor.
You can track your production order statistics by production order. You can see the breakdown of expected cost of material used, expected cost of production, anticipated setup time, run time, and your overhead costs. This allows you to easily spot fluctuations and identify issues in the production process.
Additionally, you can also see calculations of production variances, allowing you to quickly determine whether an item you’ve manufactured is within your tolerances. With this tool, you can analyze, identify, and take action quickly. This is especially useful when dealing with things like the bullwhip effect.
All of a sudden you have all this demand coming in. How are you going to deal with that? Do you have enough raw material? Do you have enough production capacity? Are you looking at having to put in overtime? If you don't have the visibility on that in real-time, you could end up in a position where you have customers and sales staff on your case to get the production out and meet very tight deadlines.
For more tips on how to improve production in your manufacturing business, check out 5 Ways to Increase Productivity at Your Manufacturing Facility.
Conclusion
With all the factors and moving parts that go into manufacturing production and assembly, your company needs to have a complete supply chain solution. In order for a supply chain solution to work efficiently in a manufacturing business, it needs to handle everything from end to end. That’s what you get with Business Central as your ERP when you partner with an ERP partner like Kwixand.
Not only are we experts in Business Central, but we are seasoned partners in a wide range of manufacturing industries. We can help you integrate your new ERP with your existing systems and build customizations that deliver the exact functionality you need to see and manage the full picture from planning and material sourcing to production and assembly all the way through distribution and beyond.
We don’t just stop at implementation either. Kwixand offers comprehensive support through our Customer Care Program. You can choose from a range of coverage options that start from the basic technical support and end-user training to plans that include prepaid blocks of consulting or development hours and so much more. Check out our Customer Care Program page for more details and pricing to learn more about post-implementation support.
Not sure if an ERP implementation or upgrade is what you need for you manufacturing business? Sign up for our FREE one-day ERP assessment to see exactly how an upgrade to Business Central with the help of Kwixand Solutions can improve your supply chain, production, assembly, and distribution for a more efficient and productive manufacturing business. Reach out today and experience the difference of working a dedicated ERP partner like Kwixand.
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