ERP in Production Planning: The Future of Manufacturing Industry

Nikita Agarwal

Nikita Agarwal

Senior editor

Parul Saxena

Chief editor

Last updated: July 8, 2021

The manufacturing industry has undergone a massive change in the way it operates. 

To increase its efficiency, there needs to be a smooth flow of information. More and more manufacturers are investing in best-of-breed software with the aim to streamline their activity and improve collaboration between employees. 

This is where enterprise resource planning software comes in. 

An ERP software is a set of applications that help manage the entire manufacturing operations — starting from production planning to procurement of raw material and supply chain management

Looking for Enterprise Resource Planning Software? Check out SoftwareSuggest’s list of the best ERP software solutions.

In this article, we will focus on how ERP plays a vital role in production planning.

What Is Production Planning?

Production planning is the process of developing strategies for the allocation of resources, including raw materials, workers, and workstations, to ensure order fulfillment on time. 

It involves planning and estimation of — 

Sales and inventory level 

Target management for production

In other words, it helps with the optimization of the manufacturing process — making the production process as efficient as possible. 

Steps Involved in the Production Planning

#1: Determine the production capacity

#2: Specify your audience and forecast the market demands

#3: Proper inventory control

#4: Reduce the generation of waste

#5: Risk assessment and management control

Without further ado, let’s look at the role of ERP in the production planning process.

How Does the ERP System Lead to Productivity?

An ERP system comprises an array of integrated business management systems that assist with production planning. By streamlining the processes, all information is available in a centralized location — giving a 360-degree view of the entire manufacturing process. 

Besides, it enables you to monitor the production status in real-time without any dependence on the team members.

For instance, the procurement team can monitor the availability of the raw material stock and keep restocking it. 

Automation brings inefficiency to the system and improves productivity, helping companies to maintain their order commitments.

Benefits of ERP in Production Planning

1. Customer Service Enhancement

The production planning module in ERP streamlines the process right from the procurement of raw materials until its conversion to the final product. It takes care of scheduling and optimizing the production period. 

Thus, it ensures the timely delivery of the final product with no compromise in quality. Delivering products on time is crucial to maintaining customer relationships. 

Such activities result in the gained trust from your customers and persuading them to place more orders with you. In short, it helps build long-term relationships with your customers. 

2. Smooth Workflow

If you want to enjoy running your business, you want to make sure that your workload is not overburdened with poor workflow. 

A poor workflow can have bad consequences, resulting in delays in delivery orders and lost customers. 

Workload automation processes ensure smooth and reliable workflow, eliminating repetitive tasks such as data entry. It allows workers to focus more on important tasks, thereby increasing their work productivity. 

Furthermore, the manufacturing ERP system facilitates manufacturers to not just plan, execute, and control production but integrate these operations into other business processes. 

3. Inventory Control (Material Requirements Planning)

ERP in inventory management is the lifeblood of the manufacturing process. Managing stock in a structured manner is critical as planners need to balance holding enough stock to satisfy customer demand while also minimizing the risk and cost involved in holding extra inventory. 

An ERP in production planning keeps updating the status of materials in real-time and reorders them automatically when the stock needs replenishment. These systems also use a Just-In-Time scheduling strategy to further reduce the need for holding large quantities of work-in-process items.

ERP software in production planning ensures that inventory processing occurs in a streamlined manner.

4. Equipment Improvement 

Equipment needs regular maintenance and cleaning to ensure its smooth functioning. But most often, things like these are delayed, which results in lost productivity as machines fail to meet their production targets.

However, with ERP in production planning, you can schedule regular maintenance management and ensure timely cleaning for the underperforming equipment.

It will make sure that equipment is able to meet the targeted outputs and the optimal use of resources. 

5. Plant Morale Improvement

When you have a systematic workflow, it reduces stress on the shop floor and helps increase workers’ productivity. 

Stress acts as a great hindrance in manufacturing as it results in distraction and defects on the shop floor. This can be avoided by implementing ERP in the production planning process. 

An ERP will ensure that everyone is well-coordinated, and there is no rush in meeting deadlines. The floor workers are aware of their tasks and can meet their goals in an organized manner.

6. Idle Time Reduction

Idle time in manufacturing refers to when workers are getting paid, but a worker or machine is unproductive.

This is generally due to a shortage of raw materials or various machine repairs. 

This period of low productivity can easily be avoided with the help of a manufacturing system. The ERP in production planning minimizes downtime by scheduling timely replenishment of stock and regular preventive maintenance.

It effectively coordinates with the purchase departments for the release of materials, ensuring that every production step is right on schedule.

7. Improved Delivery Performance

Another significant advantage of ERP in production planning is that it keeps quality checks in control.

Delivering high-quality products is critical to running a business successfully. Your customers are more likely to endorse your brand if they are satisfied with your product quality.

It’s important that your products meet industry standards at various checkpoints in the manufacturing process. The product planning process looks after the aspect of procuring quality raw material and resource optimization. This will ensure that the delivery of your final products is not compromised.

Final Thoughts

An ERP system is the quickest way to increase performance parameters by streamlining the production planning process. There is no denying that ERP is the future of the manufacturing industry. 

As per Allied Market Research, the global ERP software market is expected to rise up to $78.40 billion by 2026, at a CAGR of 10.2% from 2019 to 2026.

Get the best ERP in production planning and witness a radical growth in the overall productivity of your manufacturing unit.

Nikita Agarwal
Nikita is a SaaS copywriter and content marketing expert with almost five years of experience. She creates engaging and high-quality content for businesses that want to see their Google search rankings surge. When she is not writing, she is busy following the search industry news to stay updated on all SEO tactics.

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