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5 Must-Have Accounting Features in Manufacturing ERP
Why manufacturing businesses adopt ERP (Enterprise Resource Planning) systems? To keep a track of their supply chain or inventory or quality of products or finances? Well, the answer is all of the above. But the number one use of manufacturing ERP system is to maintain operational efficiency as it is still the name of the game.
However, many businesses make use of ERP systems, but manufacturing ERP software has its own intricacies. Before I start about software, first, you need to understand that manufacturing ERP consists of processes by which the organization manages and integrates the important operation of its business. Not like other businesses that include distribution and services, there is a broad set of procedures for manufacturing businesses as well. Even though maintaining operations is core function of an ERP software, but it also keep in line the finances of a manufacturing business.
But then, how to find that one reliable software, which suits your manufacturing needs?
For example, finding a needle in hay is tough. But you know what’s the toughest? Finding that specific needle, in a plethora of needles. Same is the case with manufacturing ERP. You can find a number of manufacturing ERP systems in the market. But, finding ERP software with reliable accounting modules is really a daunting challenge, yet, essential to succeed in the manufacturing business.
Prepare a checklist that includes the following four steps:
- Have a clear plan before selection
- Value functionality and ease of use over cost
- Get contribution from all levels of the organization
- Parallel ERP with your goals and industry.
Keeping in mind the importance of accounting, below I have outlined some effective accounting features you must look in before purchasing an ERP software for your manufacturing business:
1. HR Accounting
In the manufacturing business, there are maximum laborers to perform the tasks related to machinery, packaging, etc., and are paid on a daily basis. So, the burden of HR team of manufacturing business increases as they need to calculate the wages of each worker, moreover, salaries of employees along with benefits. This eventually hampers the efficiency of HR team.
But integrating with ERP software, HR team can be easily shifted from paper forms and employee tracking to a centralized database that streamlines the entire process. The amount of time and stress it saves of the HR team that hiring only one HR will be more than enough. It can easily track the attendance of employees, benefits administration, and payroll.
2. Supply Chain Management
Supply chain management plays a crucial role in any manufacturing business. And ERP system with inbuilt supply chain management abilities can greatly assist the staff of different departments in understanding the various supply chain processes. It helps in various aspects some of them are:
- Vertically integrated partnership
- Demand management
- Preferential pricing and lead-times
- Product lifecycle management
- Accounts payable invoice processing
- Vendor contract management
- Electronic Data Interchange (EDI)
A great ERP system has the ability to provide you simultaneous data on your entire value chain, from production to shipping. Moreover, the ERP solution is also capable to save this information in documents for future references and audits. An efficient ERP system reduces the headaches of the production team, irrespective of increase or decrease in demand.
3. Asset Management
Having asset management in your ERP solution is the best deal in order to track your physical assets like manufacturing equipment or utility grids as it usually focuses on the hardware side of the manufacturing businesses. Moreover, with proper asset management, you can maximize your investments as well. Asset management module in your finance lifecycle can help you with the following aspects:
- Reduces costs and risks
- Maximize return on assets(ROA)
- Increases uptime and improve predictability
- Helps to make an informed decision about assets
- Reduces total cost of ownership(TCO)
You can get accurate insights into the financials of your manufacturing business and help you avoid costly breakdowns. With this module, you easily depreciate the value of your assets.
4. Inventory Management
Keeping more of the same products is good for businesses, but in manufacturing business having excessive inventory incurs redundant holding costs, especially for an automotive manufacturing firm. They have spare parts of many cars, but having an excess of parts in the warehouse, which is of no use or not in demand, ultimately increase the cost for the automotive firm. Today’s modern manufacturers are embracing inclined manufacturing tactics for optimizing inventory and keeping goods with a specific purpose. The inventory control module in ERP solution benefits manufacturing businesses in different ways that include:
- It facilitates processes of maintaining the appropriate level of stock in a warehouse.
- It identifies inventory requirements, set targets, provide replenishment practices and options, monitor item usages, reconciles the inventory balances, and report inventory status.
- It also manages sales and purchases to generate vigilant executive level reports.
In addition, the best ERP solution, also help you check features that enables materials requirements planning (MRP), which allows manufacturers to plan the advent of raw materials within the timeframe for the beginning of manufacturing or production.
5. Analytics and Reports
In this modern era, many ERP solutions have come up with Business Intelligence (BI) abilities. These ERP systems offer analytical and shrewd reports relating to manufacturing accounting across the enterprise, in actual time. Analytics and reports also help manufacturing businesses to implement some effective strategies for improving the business efficiency that ultimately makes them an innovator. More importantly, these reports enable manufacturers to make informed business decisions and gain a competitive edge in the market.
An adaptable and great web-based ERP solution offers several benefits to manufacturers that are in need of quality, promptness, and proficiency in all facets of the organization. In the end, the core value of using an ERP system is- “To maximize profitability and reduce operational costs”.
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