Implementing an ERP system does more than just streamline your business operations. An ERP system can also help improve manufacturing quality. Quality is improved because manufacturers are forced to implement standard procedures and maintain accurate data for the system to work effectively.
According to a survey of operations and quality assurance managers by consulting firm TR Cutler, ERP systems also help improve quality by providing a record of how products are built versus how they were designed. ERP systems also help manufacturers identify problems with incoming parts and materials. In fact, 72% of respondents indicated that ERP systems provided vital information on the performance of vendors regarding delivery, quantity and quality.
Here are eight ways an ERP system can help you track and improve the quality of your manufacturing:
1) Material Requirement Planning: Material requirements planning (MRP) is a production planning and inventory control system. An MRP integrates data from production schedules, inventory and the bill of materials to calculate purchase and shipping schedules for the parts or components required to build a product. There are three primary functions of an MRP module. First, the system helps ensure that the appropriate materials are available for production and the necessary products are available for customers to avoid shortages. Second, MRP reduces waste by maintaining only the lowest possible materials and product levels in stock. Lastly, an MRP system helps plan manufacturing functions, delivery schedules and purchasing.
2. Production Order and Planning: Production planning is the planning of production and manufacturing modules in a company based on customer orders be it Made to Order (MTO) or Made to Stock (MTS). It helps in resource allocation, material and production capacity planning, in order to cater to different customers and their orders.
3. Scrap Management: Managing scrap left over from the production process helps your company meet its profitability goals and utilize specified yield. A good ERP system will give you visibility of whether your scrap ratio is within tolerable limits. You can also keep track of a product’s scrap factor and yield percentages in the bill of materials (BOM) and track the variances between projected scrap and realized scrap through your ERP system.
4. Quality Management: The quality management module within your ERP solution provides you with many different options to monitor quality during the production process. A good ERP normally has the facility for in-process inspection and quality clearance, ability to define control points based on control factors like warehouse, supplier and customer among others. The ERP has the ability to define inspection plan for each control point and to have attributes based on those plans. You can also define standard operating procedures per production schedule, and capture analysis methods for defined attributes among others.
5. Creation of Multi-level BOM: A multi-level BOM is essentially a nested list whose parts or items are listed in two or more levels of detail to illustrate multiple assemblies within a product’s BOM. In contrast, a single-level BOM depicts one level of parts in an assembly and only the components needed to make that assembly are listed. A multi-level BOM is also helpful when you have complex and highly configurable products. Updating a sub-assembly within a larger product assembly can be done quickly if you have structured your BOM as multi-leveled, since a change order only needs to address a subset of the product.
6. Make to Order/Make to Stock Management: A good ERP system gives you the ability to manage both Make to Order (MTO) and Make to Stock (MTS) production lines. In a make to order situation, the manufacturing module is linked to the company’s sales order module and the production-planning module. Customer Sales orders are translated into production orders. In the case of MTS, an ERP system geared to make-to-stock production can make purchasing department more efficient. Purchase orders are issued well in time on the basis of parameters such as minimum stock, minimum order quantity and reorder levels.
7. Production Cost Management: Managing costs involved for producing different items helps in adjusting production quantities accordingly. An efficient ERP solution is capable of tracking almost everything from the production process. It provides you expected vs. actual scenario of various cost heads.
8. Work in Progress Stock Management: Work in progress (WIP), also called work in process, is inventory where the manufacturing process has begun and is no longer included in raw materials inventory & is not yet a completed product. An efficient ERP solution, allows you to easily track the status of WIP stock with processes involved.
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