Lean manufacturing comprises a collection if ideas and practices aimed at minimizing waste while simultaneously improving product quality. It’s often implemented as a complete, systematic approach to running a manufacturing operation. ERP software for manufacturing can help you realize the benefits of lean manufacturing.
The software alone does not guarantee this outcome, however. Rather, when companies deploy ERP software in accordance with well thought-through and company-specific lean practices, results start to emerge. To illustrate how ERP software can support the success of a lean manufacturing effort, we thought it would be worthwhile to highlight the applicability of software to seven critical principles in the lean manufacturing discipline.
What is Lean Manufacturing?
To understand lean manufacturing, it’s useful to know where it came from. Though the words “lean manufacturing” have only been with us since the late 1980s, the lean philosophy actually originated in the early days of Toyota, in the mid-1930s. At that time, car-manufacturing was relatively wasteful and inefficient. It’s not that people weren’t trying to make car assembly lines efficient. The problems stemmed from poor assumptions about how things should be made.
Kiichiro Toyoda, the legendary founder of Toyota, was one to challenge prevailing ideas about how to make cars. He applied a new set of principles to manufacturing. His ideas evolved and matured into what we now call lean manufacturing. Among other things, Toyoda identified seven areas of waste that contributed to high costs, low quality and inefficient operations:
- Transport, e.g. moving items that are not needed for the actual processing
- Inventory, e.g. keeping inventory at a minimum, including components, work in progress and finished goods
- Movement, e.g. wasteful motions of people or equipment
- Waiting, e.g. delays between production steps
- Overproduction, e.g. making goods ahead of demand
- Over-processing, e.g. excessive work due to poor product or tool design
- Defects, e.g. the work required to inspect for defects or worse, recalling them after shipment
Each of these forms of waste has a negative impact on product quality as well profitability. For example, overproduction can tie up cash in goods that may never be sold. Similarly, stockpiling components in advance of manufacturing not only ties down cash, it can conceal defects that will appear later in the manufacturing cycle. In contrast, the “just in time” approach, which involves receiving components close to assembly time, enables the manufacturer to catch defects in real time.
How Manufacturing ERP Software Helps Manufacturers Avoid the Seven Wastes
Used the right way, manufacturing ERP software, can help you avoid, or at least reduce, the seven wastes of traditional manufacturing:
- Transport—Software enables you to track the movement of components across the entire manufacturing process.
- Inventory—Stay on top of inventory and procurement in real time, aligning component delivery with manufacturing operational plans.
- Movement—Optimize your manufacturing operation using process analysis and planning.
- Waiting—Organize your production schedule to minimize waiting.
- Over-production—Estimate demand using data analytical tools in the software, making it possible to avoid over-production.
- Over-processing—Manage the production process at a granular level to detect and then reduce over-processing.
- Defects—Use reporting and data visualization to determine root causes of defects, so they can be remediated.
All of these actions contribute to the ultimate ethos of lean manufacturing, which is continuous improvement. The idea that propelled Toyota into one of the world’s largest and most respected brands for quality was that everything can be done better—always. The lean manufacturing practice means constant observation and improvement. With data analytics and other specialized tooling, manufacturing ERP gives your organization this potential.
To arrange a demonstration of Acumatica cloud ERP software for manufacturing and discuss how it can drive lean manufacturing at your business, let’s talk.
Excel has been a mainstay of work environments for some time. While Excel is good for listing data, and to some extent calculating prices, it’s not ideal for a manufacturing business. Excel lacks many features of Acumatica Manufacturing Edition. Today’s manufacturers need maximum visibility into projects, pricing and business processes. Here are six reasons to give up Excel for Acumatica’s all-inclusive solution.
1) Lack of Integration
Acumatica Manufacturing Edition offers seamless integration with Acumatica’s software suites for distribution, financial and customer management as well as project accounting. All your business activities can be coordinated in real time and all data are available in a centralized location. Excel does not offer this functionality on its own. Also, it’s only available for Windows and Mac OS X operating systems, often making compatibility an issue.
2) Pricing Rules Are Hard to Manage
Excel does not enable an effective value-based pricing system. It only supports simple pricing strategies. On the other hand, Acumatica supports multiple costing methods, provides sales integration and enables users to estimate non-inventory items. Production orders can be created from estimates, while the software includes complete accounts receivable and accounts payable systems. And, to mitigate issues with formulas, Acumatica integrates formula validation.
3) Lack of Security
Data security, fraud and corruption are issues with Excel. It lacks user friendliness. Breaking down large data files can lead to losing or misplacing information. Excel does not integrate with other business systems or provide a means to spot mistakes quickly. Acumatica minimizes the risk of human error. It automates the entire fulfillment process, provides a complete audit trail and includes CRM integration and revision control.
4) Tracking Information on Excel Is Difficult
Spreadsheet data are often scattered across multiple sources and locations. Tracing the logic of formulas from one cell to the next can take time that impedes high volume production. Acumatica lets you track production steps, expiration dates and lot and serial data. Users can also manage production order changes and financials from a single location. The software even streamlines integration of sub-accounts and allows for intercompany accounting.
5) Excel Isn’t for Collaboration
Manufacturers often collect information from different departments and corporate locations. Spreadsheets can only be exchanged via email, so tracking all the files going back and forth can be tedious. There’s also a risk of sending out-of-date file versions. The lack of collaborative support can make quick decision-making a challenge. But with Acumatica, all the information stakeholders need is in one place.
6) Excel Doesn’t Grow with Your Company
Acumatica adapts to every step of the manufacturing process and supports project-centric tasks, batches and repetitive manufacturing. Engineering changes are handled seamlessly, from change requests to change notices and approvals. There’s no guarantee an Excel spreadsheet will provide the required accuracy and dependability. Plus, data recovery can be difficult, so Excel does not support business continuity very well.
If your manufacturing company is still relying on Excel, these are just some of the reasons you should consider switching over to Acumatica Manufacturing Edition. Contact us today.
Additional Manufacturing Resources
How Configurators Help Manufacturers Expand Their Product Lines
7 Signs You’ve Outgrown Your Old Manufacturing ERP System
The Best Software for SMB Manuacturers
Project-based businesses are theoretically interesting places to work. There’s very little of the “same old, same old” routine you can get in a company that does the same thing very day. Each project is a little different. That’s fun, right? Whether project management is exciting or stressful depends on an employee’s personality. Technology is also a factor, however.
One constant source of stress in project-based businesses arises from the need to keep track of the money. Project accounting tends to be a headache. In even the best-run companies, you might find all sorts of manual handoffs between accounting systems, spreadsheet-based expense tracking and the like.
While such adaptive processes may work, they are invariably inefficient. People spend billable time chasing down project accounting details. Billing slips out of alignment with project status, and on and on. Ultimately, although it may seem as if everything is fine, manual patchworks for project management and accounting lead to project delivery problems.
Today, modern ERP software offers a solution, with built-in project accounting functionality. Here are some examples of how ERP project accounting software helps you save time and improve project results:
- Set up new projects using templates—modern ERP lets you templatize project quotes, contracts and budgets. You can then segue directly to tasks, dashboards and analytics without having to re-key project information into a new system.
- Visualize project statuses in real time on management dashboards—improve on-time delivery and spot potential problems before they cause trouble.
- Establish a “single version of the truth”—capture project time sheets, expenses, milestone statuses and any other relevant issues in a single locus of control. Modern ERP makes this information available to tablets and mobile devices, so everyone can stay in tune with the project even if they’re out of the office.
- Track project costs—ERP project management tools give you the ability to assign cost codes to project items, so you can know how much is being spent on different categories of project work. This is quite useful for companies managing multiple projects at more than one client site. You can see the activities going on in the field in real time and be aware of any irregularities or budget overruns.
- Stay on top of change orders—clients often change project parameters. This can cause disruption and accidental financial losses as budgets may not accurately reflect the new scope of work. Alternatively, a change order may produce an updated but inaccurate budget for client approval. For example, if a change order requires 100 more billable hours, but a revised budget only captures 50 hours of expected new billing, that will result in a loss. As experienced project managers know, it is easy to miss an error like this in a fast-paced, multi-project business. ERP, with its unified point of management and data, makes it much simpler to track changes and keep up with their financial implications.
- Recognize revenue in accordance with accounting rules—the tax authorities expect your business to recognize project revenue based on ASC Rule 606. This means that you cannot recognize revenue either before or after the correct time period. ERP with project management will make this revenue recognition practice a natural part of the project accounting process.
These are a few of the many benefits of modern ERP solutions for project management and accounting. Learn how Acumatica can help you achieve these benefits below.
Acumatica Project Accounting
Acumatica has designed and developed a project accounting solution for the unique needs of the professional services firm or project-based business. This platform helps leaders to make smarter decisions, simplifying everything about the business—budgeting, inventory, time sheets, billing, profitability, and reporting for individual business initiatives.Learn more in our webinar Project Accounting Made Simple, or contact us for a demo.
Migrating from QuickBooks to Acumatica
How to Get Better Financial Reporting
How to Streamline Your Multi-Entity Financials
A product configurator is software that enables you to configure a complex manufactured product. Manufacturing ERP solutions like Acumatica have product configurator modules that port configuration data directly into sales quotes, order management, supply chain management and operational scheduling. Configurators help manufacturers run more efficiently. They have another benefit as well, which is to smooth the process of expanding a manufacturing product line.
How Configurators Work
A configurator lets you establish options and rules for a manufactured product. To take a deliberately simple example, let’s say you make two types of electric pumps: Wall-Mounted and Free-Standing. As shown in the grid below, the Wall-Mounted model can take a 1” diameter hose, but not a 1/2” hose. The Free-Standing pump is the opposite. It can only take a ½” hose.
|Takes 1” hose
|Takes ½” hose
If a salesperson wants to create a quote for a Wall-Mounted pump, the configurator will not allow her to configure it with a ½” hose. That’s a configuration rule. In real life, the rules and options can be extremely extensive and complex, so the configurator is essential for ensuring accuracy and preventing accidental combinations of parts that won’t fit together.
Where Configurators Help Save, and Make Money
Configurators save money partly through avoiding configuration errors. There are many other opportunities to save and make money with configurators. For example:
- Reduce or eliminate manual processes in the configure-to-order workflow—If you take a close look at your quote-to-order process, you may find manual hand-offs between people and systems. For instance, once the configured product is set for production, a procurement person may have to take the specifications and input them into a supply chain management system. This not optimal. People become more productive throughout the manufacturing process once configurator are in use.
- Close more deals—Configurators make salespeople more responsive to customer inquiries. In so many cases, the winning manufacturer is the one that is “fastest on the draw” with accurate specifications and pricing.
- Avoid vendor problems and supply shortages—Having accurate manufacturing specifications and parts requirements in advance enables your team to stay in top of ordering and steer clear of situations where vendors can’t come through with needed manufacturing inputs.
How Configurators Facilitate the Expansion of Product Lines
Configurators facilitate product line expansion in several ways. For one thing, configurators allow product managers to mock up multiple hypothetical versions of a complex product. With sophisticated version management features, configurators like the one found in Acumatica make it possible to show prospective customers or market researchers different editions of a product—determining which will sell the best and make the most profit, before any actual manufacturing is done.
With a configurator, the complete manufacturing team can participate in the development of an expanded product line. For example, with configurations readily available for discussion, every stakeholder can look at proposed new products and offer their input. Issues might include problems with manufacturability, supply chain, shipping and more. If a proposed product is too big to ship or has parts that experts know won’t work in real life, the configuration process will save a great deal of trouble later on. Alternatively, if everyone signs off on a proposed new product configuration, that can lead to productive, profitable additions to the product line.
Adding a configurator could be a good way to add on to an existing ERP system. It could also be the pretext you need to think about updating your legacy ERP. We have worked with many manufacturers on the implementation of configurators. If you want to learn more about how a configurator can help your business, let’s talk.
Additional Manufacturing Resources
7 Signs You’ve Outgrown Your Old Manufacturing ERP System
What Is the Best Software for SMB Manufacturers?
5 Things Manufacturers Need in ERP
The Acumatica Summit 2020 is going to be a fun, informative experience. Held at The Cosmopolitan resort on the Las Vegas Strip from January 26-31, the event will be jam-packed with engaging sessions and networking opportunities. You’re coming, right? We’ll be there. This is not to be missed, especially if you want to learn about the software or how to make the most of your Acumatica Cloud ERP investment.
Acumatica Summit 2020: The Setting and Major Attractions
Normally, we wouldn’t talk about the setting, but The Cosmopolitan is special. It’s one of the newer resorts on The Strip. It’s not the kind of cheesy, labyrinthine mega-complex that you sometimes get in Vegas. Rather, it’s more of an elegant skyscraper. It also happens to feature amazing conference facilities that promise an incredible experience from start to finish.
The guest speaker this year will be Robert Ballard, the renowned ocean explorer and scientist. He’s the one who discovered the wreck of the Titanic. He will talk about what it was like to find the Titanic, among other significant finds. In this Ballard, will no doubt earn the empathy of legacy ERP users who have struggled to find submerged data that everyone else had thought was lost to history.
The conference is expected to draw more than 2,000 attendees. This will provide opportunities to build new relationships. You can meet peers in the industry, who may be using Acumatica for the same workloads as you. You might learn, or teach, a few best practices in the process. There will be industry analysts at the conference, too, along with Acumatica executives, product teams and sales teams. If you have an issue you need to air, you can buttonhole whomever you think can solve your problem.
There will be over 60 sessions and workshops presented by the leading worldwide product, sales and marketing experts. They will discuss product roadmaps and strategy. Sessions will feature storytelling, advice on achieving strong ROI from your ERP. Many live demonstrations are planned. Notable sessions topics include:
- Acumatica 2019 R2 Feature Update—Learn about the new accounting features and other advances embodied in this latest edition of the software. Learn more about Acumatica 2019 R2 Features.
- Distribution Edition—For companies in the distribution business, Acumatica offers an industry-specific solution, along with add-on modules for specialized workloads like inventory management.
- Manufacturing Edition—ERP started in manufacturing. Acumatica’s Manufacturing Edition enables manufacturing businesses to operate with optimal efficiency and profitability.
- Payroll Overview—For people who manage payrolls, Acumatica gives you an integrated payroll module that aligns with accounting and finance, operations, HR and more.
- Construction Product Tour—Construction is another industry vertical solution from Acumatica that has been embraced by professionals in the field. It provides a deep feature set to help construction companies manage projects, budgets, cash flow and so forth.
- Construction Project Management—This will be an in-depth discussion about using Acumatica for managing complex construction projects.
Other sessions will cover “Cross Connected Workflows: Project and Field Service,” custom solution building, and reporting and dashboarding. As always, a “Tips and Tricks for New Users” session will help beginners get acquainted with Acumatica.
As a leading Acumatica partner, we would like to invite and encourage you to attend this great event. This is your opportunity to experience the Acumatica platform, network with industry leaders, and speak with Acumatica partners and customers on their incredible solutions to business problems. Plus, there is plenty of fun planned! To learn more, visit: https://summit.acumatica.com/.
Additional Acumatica Resources
Moving from QuickBooks to Acumatica
Better Financial Reporting with Acumatica
Manufacturing Challenges—How Acumatica Can Help
How can you tell you’ve outgrown your old manufacturing ERP system? Chances are, if you’ve implemented ERP for your manufacturing business, you have a system that works relatively well. It gets the job done, more or less. The “or less” part can become increasingly problematic as older systems age, however. Here are seven signs that you’ve outgrown old the ERP.
1) Quality suffers
ERP in manufacturing should give you very fine-grained control over manufacturing processes and material inputs. If a customer returns an order, you should be able to go to your ERP and quickly gain a firm understanding of what went wrong. That way, you can recall any other orders that were shipped with the same same defect or intervene with a supplier that contributed to the problem. For example, if you manufacture a food item, and you discover that a particular lot contains a harmful chemical, your ERP needs to give you complete information on where the chemical came from and who got shipments of the tainted product. Older ERPs can struggle with this level of control and insight.
2) You’re spending a lot to keep it going
Legacy ERPs are like old cars. You love them, but they take a lot of care and feeding. If you notice your ERP management and admin budget climbing every year, even if you’re not adding new functionality, that’s a sign you need to replace it.
3) You need specialized people on staff just for ERP
If you have to keep people on staff because they are the only ones who can administer the ERP and get data out of it for reporting, you need a more modern solution.
4) Inventory is holding things up, tying up cash or both
Modern ERPs like Acumatica give you many nuanced controls over inventory management, including tracking of lot and serial numbers, expiration dates, transaction reason codes, inventory bin locations and item class hierarchy.
5) Integration is clunky or nonexistent
Is your old ERP linked to your accounting system, HR or CRM solutions? If it isn’t, that’s already a tip off that you can do better. Acumatica comes with simple, fast integration with related systems. These enable more efficient business management overall. Alternatively, if managing such integrations is a cumbersome, expensive proposition, it’s time to make a change.
6) Reporting is a chore
How hard is it to generate timely, in-depth reports with your legacy ERP? If reporting is time-consuming or incomplete, you should know that you’re missing out on insights that can make your manufacturing business more competitive and profitable.
7) Security is weak, costly or both
Is your data secure? Do you feel confident you can protect your digital assets from Denial of Service (DoS) attacks? If you’re not sure, or you are being told you will have to spend a lot of money to get secure, you might do better with a modern ERP. A cloud-based ERP like Acumatica is hosted in a secure cloud data center. This doesn’t make it 100% bulletproof—nothing is—but this architecture takes a huge security burden off of your plate.
We have worked with many manufacturing companies on ERP upgrades. If you are curious about how a new ERP could help your business run better, we should talk. Or, to arrange a demo of Acumatica, please visit our website.
Additional Manufacturing ERP Resources
Manufacturing Challenges—How Acumatica Can Help
The Advantage of True Cloud Manufacturing
What Is the Best Software for SMB Manufacturers?