Overview of Cloud ERP Systems and Traditional Manufacturing ERP Systems
Enterprise resource planning (ERP) software is designed to allow manufacturing businesses to manage their entire manufacturing and business operations from a central software system. ERP software systems are designed to streamline operations and administrative work, allowing manufacturing managers to focus their time on valuable work.
Overall, there are two types of ERP systems a manufacturer can use: on-premises and cloud ERP systems.
Understanding Traditional ERP Systems
Traditional ERP systems are built and hosted on the manufacturing facility’s premises. Most manufacturers that choose to build their ERP system on-premises are primarily concerned with data security and system stability.
Another reason manufacturing companies might opt for on-premise systems is the customizability that comes with having complete control over the ERP system. Manufacturers can build the system around their specific needs, ensuring the ERP system will effectively manage core business processes. Since on-premise ERP systems are not dependent on a cloud vendor or internet connection, there is a much lower risk of downtime due to the system being down.
Emergence of Cloud ERP Systems
Cloud-based ERP solutions are hosted by cloud vendors over the internet, which allows manufacturing businesses to access the ERP system from any location with an internet connection.
One benefit of implementing a cloud-based ERP system is the speed at which it can be developed, since the work can be completed off-premises and implemented across multiple facilities. Cloud-based systems are also easier to update and maintain, since the work can be completed off-premises and implemented outside of operational hours.
Comparison between Traditional ERP and Cloud ERP
Determining whether a traditional or cloud-based system is the right fit for a manufacturing business will depend on what factors the business prioritizes. For example, if a manufacturer prioritizes data security and stability above everything else, then an on-premise solution would best fit their needs.
However, if a manufacturing business is primarily concerned with cost-effectiveness and easy access, then a cloud-based system would better fit their needs. These factors typically result in most manufacturing companies opting for a cloud-based ERP system.
Key Benefits of Cloud ERP Systems in Manufacturing
When manufacturing companies implement a cloud-based ERP system, they will reap countless benefits across the manufacturing process. Let’s take a look at a few of the key benefits that manufacturers experience with cloud ERP software.
Real-Time Data Access and Improved Decision Making
ERP software systems are used across manufacturing operations, supporting supply chain management, inventory management, production planning, and customer relationship management.
Since the ERP system is involved in all of these processes, it will also collect real-time data that can be transformed into valuable insights. Manufacturing businesses can use historical and real-time data analytics to make informed decisions when making changes to operations.
Enhanced Scalability and Flexibility
One benefit of using a cloud ERP software system is the ability to make quick changes to the workflows or production processes when necessary.
For example, if there is a change to the supply chain that impacts inventory levels, the production operations for the day need to be adjusted in response. With an EPR system’s production planning features, managers can make changes in the system and see the immediate change in operations. This level of flexibility is a game-changer for manufacturers trying to avoid costly downtime.
Host Efficiency and Return on Investment
Hosting an ERP system through a cloud vendor is almost always more cost-effective than an on-premise system. The affordability of a cloud-based ERP system can go a long way when evaluating the ROI, as it will take less time than an on-premises solution.
The ability to scale cloud ERP systems when there are changes in the manufacturing process ensures the long-term use of the system, which will also encourage a high ROI.
Overcoming Challenges & Fostering Successful Cloud ERP Implementation
Companies will always face challenges when implementing a new software system into daily operations. Let’s take a look at a few common challenges and how a manufacturing business can overcome them.
Addressing Security Concerns Related to Cloud ERP
There are multiple security measures a manufacturing company can put in place during the development and implementation process to address security concerns. For example, users can be required to complete multi-factor authentication during the login process, requiring an additional one-time code sent to a separate device. This is a common security practice that reduces the risk of employee accounts being hacked by an external threat.
Ensuring Proper Training and Change Management
When introducing a new system into the manufacturing process, user adoption can be difficult, but necessary. To ensure a successful implementation, manufacturing businesses should have a small group of managers and employees test the ERP system to confirm it’s configured correctly.
Manufacturing companies should also plan an effective and extensive training for employees before they have access to the ERP system. Employee training can include multiple in-person demos, recorded walkthroughs, and a user manual with FAQs for later reference.
Selection of the Right Cloud ERP Provider
When searching for a cloud ERP provider, a manufacturing business must first determine if a custom or off-the-shelf system is the best fit. Custom software will typically have a higher upfront cost, but a higher ROI since the system is designed around the manufacturer’s unique needs, removing the need for timely workarounds or additional software systems.
Off-the-shelf software will have a smaller upfront cost, but come with a monthly subscription fee that is subject to change. A downfall to off-the-shelf software is the lack of customization, which can make the system difficult to work with, often requiring timely workarounds or systems integration to fit your production needs.
How Geneca Can Help
Geneca has over 25 years of experience creating and maintaining high-quality, reliable custom software solutions. Our partners choose us because we:
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Understand software and business, including industry processes and regulations
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Use cutting-edge technology paired with trusted, evergreen tools
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Communicate changes, progress, and expectations through every step of the development process
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Honor your budget and timeline from the start
If you’re ready to learn more about how an ERP system can put you a step ahead of your competition, contact us today!