Common challenges for Small to mid-sized manufacturers to adopt advanced manufacturing technologies

Abstract

The global manufacturing area has changed significantly over the past couple of decades, and Australian manufacturing is not an exception. Advanced technologies (High Tech) have the potential to benefit all manufacturers across Australia. This includes a number of digital technologies that are often part of the digital transformation projects for businesses (also known as Industry 4.0). 

Example of these advanced digital technologies is robotics, 3D printing, artificial intelligence, Machine Learning, nanotechnology, biotechnology as well as automation. 

Among these technologies, there is one that is not new. It has been there for more than a decade and has been adopted by many manufacturers around the world.

Automation! 

This article illustrates why and how the business needs a robust system to boost up overall manufacturing processes. This article talks about the everyday challenges of manufacturers and how an ERP system can address these challenges. This article's primary audience is the managers and heads of departments at small or mid-sized manufacturing businesses in Australia who are looking for efficient solutions for Production management, Inventory management, Sales and purchase management, and accounting and finance management.  

This blog article concludes with a brief note on some of the benefits of using the ERP system in the manufacturing business to maximize returns on investment.

Introduction

The manufacturing industry has one of the fastest-paced environments where every second is countable and may lead a business towards success or failure. However, it comes as a big surprise that many manufacturers, particularly the small and midsized manufacturers in Australia, are still unsure about the move. Despite facing many numbers of challenges in their daily operational activities, they still fear any changes to adopt digital technologies. It is not about the absolute absence of technology. Some manufacturers still using different software for different departments. However, the processes are still not centralized. Such a quick method of using technology (like using Excel spreadsheets here and there !) might let manufacturers operate with business functions associated with each and every team, but managing functions with a disjoint system is prone to inaccuracy inconsistency. It's time for getting an overview of an entire business. Put aside all new technologies like AI machine learning, and let's talk about a type of computer system that has been there for more than a decade and has proven to improve efficiencies of even the top manufacturing businesses around the world like Boeing! A robust solution that enables real-time tracking, audit, mobile access to the system, and forecasting intelligence for the company called Enterprise Resource Planning (ERP) and thanks to the advancement of software engineering, It doesn't cost the Australian manufacturing industry a fortune to get the latest ERP tech setup to get all the benefits that the top manufacturers.

Top 9 Crucial Business Functions which Affect Most to the Manufacturing Performances: 

1. Inventory controlling

2. Purchase Management

3. Material Management

4. Operation and Production Management

5. Quality Assurance

6. Sales

7. Customer Relationship Management

8. Accounting and Invoicing

9. Human Resource

Inventory Controlling Challenges for Small to mid-sized manufacturers:

Controlling inventory is still one of the significant challenges for manufacturers. However, with the assistance of automation technology, large companies are getting rid of this problem rapidly. In contrast, SME's who are still thinking to invest capital in system transformation and managing their inventory manually or by separate systems facing the challenge every day.

If a manufacturing company does not use an integrated system, it is very tough to get accuracy in datasets for stocking and production, and delivery flow. When the flow is disrupted, it might increase the cost for warehouse stocking, delivery, and return of the products. 

How ERP Systems like Odoo address the Inventory Controlling challenges:

One of the best modules of ERP systems that can be used for manufacturers is the stock module. The following are just some of the key benefits of utilizing stock modules in ERP systems.  

A robust ERP solution will help to avoid unnecessary purchases of raw materials and equipment comparing demand and supply. P software gives automation to routine audits to check items in stock. Even a good ERP system can be integrated with barcode scanners to track orders from anywhere.

ERP solutions can allow the managers to always maintain a safe level by flagging any overstock or understock in real-time.

A good ERP solution enables Drop-Shipping (deliver to customers straight from your supplier), Pick - Pack – Ship (planning own order process flow such as delivery to customers in one step or segmented steps: picking, packing, shipping.

With the ERP solution, a company can define its storage and removal strategies such as FIFO, nearest available zone, LIFO, and other methods.

ERP systems Provide analytics and report in different formats like tables, charts (bar, line, and pie charts).

Purchase Management challenges for Small to mid-sized manufacturers:

Purchase is one of the crucial sections for a manufacturer as it directly affects the inventory and supply chain, and it's hard to picture the overall efficiency of the supply chain without focusing on purchase management and its links to other modules like stock. Purchase management is directly connected to the sales, accounting, and inventory departments. So, if a company uses disjoint systems for its purchase management, it might be extremely tough and time-consuming to get a real-time update. In most cases, there is a high chance of making wrong decisions of a lack of accurate data. 

Another vital concern is the raw materials, energy, or packaging products are exposed to change constantly. If the changes cannot be tracked in real-time, the company may face challenges to its budgets. Without an ERP solution like Odoo or SAP, it is almost impossible to follow and track every day's market in real-time. It is easily understandable that the managers who manage the purchase manually or by spreadsheet give horrible time-consuming efforts to get a final analytical report. 

How ERP Systems like Odoo address the purchase management challenges:

When it comes to supply chain management in ERP systems, Purchase management is the critical module in ERP systems. The following are just some of the key benefits of utilizing stock modules in ERP systems. 

Manufacturing companies should use an ERP solution that automates combined purchasing data into a central database. It allows for tracking, monitoring, and getting notified on a daily market to reduce purchasing risk. 

 A robust ERP solution like Odoo ERP provides a modern dashboard to access manageable control vendor bills, purchase tenders, create Requests for Quotations (RFQ), inventory forecast, email, and massaging by one click from the website or mobile app. 

 A company can automate its ordering schedule by setting up procurement rules based on stock level, minimum quantities per site or supplier, or other factors.

An advanced ERP like Odoo ERP allows the company to customize its accounting category and define accounts and taxes.

Material Management Challenges for Small to mid-sized manufacturers:

The six R's pf Material Managements are 1. the suitable material 2. at the right time 3. in the correct quantity 4. of the excellent quality 5. at the right price 6. from the right source. So, it is easily understandable how complex the tracking and monitoring of all these components for the material managers are without an integrated system. 

Material managers are an umbrella term in a manufacturing company as it includes planning, sourcing, purchasing, transporting, stocking, and so on. If a company uses separate systems, it is an everyday challenge to maintain good communication and flow of information among the functions.

How ERP Systems Address Material Management Challenges::

            ERP systems like Odoo ERP allow the creation BoM (bill of management), including the list of part number, part name, part description, and part category. So, managers can easily track and monitor the parts or components for production.

Item's part name helps in planning management, providing the scannable feature. Managers can plan easily to track what things they have and what is needed more for the production.

    Ensure inspection, safety, security of material in the stock and prevent extensive wasting without repetitive physical attendance.

It enables easy monitoring and tracking of non-production stores such as office supplies without any significant effort. 

Operation and Production Management Challenges for Small to mid-sized manufacturers:

Production is the heart of a manufacturing company. Still, businesses are looking for better and effective ways to reduce production costs and get high-quality products simultaneously. The challenge is to keep balance in lowering production cost and effort and produce a quality product. Maintaining Real-time communication during production is a major challenge for managers.

How ERP Systems Address Operation and Production Management Challenges:

A Robust ERP solution like Odoo ERP provides an integrated system consists of MRP (Material Requirements Planning), Quality, and Maintenance in a single dashboard to give a better production experience.

Master Production Schedule is like a lifesaving feature for the production managers. Managers can see the allocation of manpower and equipment required for certain products. It might help to prevent any unwanted issues regarding staff and equipment production. Even they can forecast the status of the equipment.

Managers and supervisors use tablets on the floor to see worksheets, track time, and get barcode scanner help.

Any issue such as damages, pass-fail test, measurement can be easily reported by a single tap.

 ERP solution IoT box-like Odoo IoT box allows connecting tools and machines to check issues and control the working area and product quality.

ERP software like Odoo ERP connects the productions and operations to other modules such as Purchase, Maintenance, and Quality.

Quality Assurance Challenges for Small to mid-sized manufacturers:

This section involves with quality assurance of a manufactured product. It is time-consuming, and in most cases, it is not possible to maintain the standard of Quality control and assurance if

a company handles this section manually. Without an ERP solution company needs to inspect everything physically, and the process consumes enormous time. Also, inaccurate and delayed alerts on the issues can affect the whole production. 

 

How ERP Systems Address Quality Assurance Challenges:

With an advanced ERP like Odoo, the solution manufacturer can identify characteristics of the product that needs a QC test.

    A robust ERP allows its user to set different values as the parameters for testing the products during production. 

       The manufacturer can create a list of accepted, rejected products for further actions.

ERP software like Odoo can provide the Kanban view of the quality control process, which is super understandable and trackable for the managers.

The production supervisor can send alerts or requests to the respective departments regarding any issues, saving time and manpower costs.

Sales Challenges for Small to mid-sized manufacturers:

The sales department is the most crucial section for a manufacturing company. This department is responsible for finding a market, building a customer list, researching and selecting the products' price, etc. Without real-time notifications and automation, it's super slow and most probably an inaccurate process. Without an advanced Sales department, it is super tough to find new customers even it may lose current customers.  And the most concern is weakness in market research can result in a considerable loss. 

 

How ERP Systems Address Sales Challenges:

With an ERP solution like Odoo ERP, the sales department can send precise and entirely professional quotations to the prospects.

A business can customize, set and adjust the pricing strategy to maximize the revenue. Even an advanced ERP solution like Odoo ERP can use pricelist rules to calculate the best price based on the market.

This ERP module can store the order and contact list, which saves huge time and helps the marketing department make a relationship. 

Integrating the sales and accounting departments an ERP software like Odoo ERP accelerates producing the quick and accurate final report. 

Customer Relationship Management Challenges for Small to mid-sized manufacturers:

Lack of technology integration might result in miscommunication. Poor insights of business can not attract valuable customers even it has the best products to provide. 

For example, The following dashboard borrowed from Odoo (All in one ERP system) can be helpful for manufacturers to understand how many opportunities they have.

How ERP Systems Address Customer Relationship Management Challenges:

Every single interaction with the clients is documented So that the company can get a better understanding of their needs and keep them engaging with the business.

ERP solutions like Odoo ERP allow the creation of smarter insights with real-time reports, flow charts to get an accurate forecast of customer engagements.

    It enables the feature for scheduling any activities such as calls, meetings, mailing, and quotations based on sales scripts. CRM department can get all the information from the website viewed mail received list.

In an ERP system like Odoo ERP, CRM is integrated with sales, marketing which automate different tasks regarding better customer engagement. 

Accounting and Invoicing Challenges for Small to mid-sized manufacturers:

It is a challenge for an accounting department to keep updated with the advanced operations, sales, purchasing, and other departments. Nowadays, accounting has got more mobility as electronic documentation has already taken the place of traditional paper-based vouchers, invoices, or receipts. 




Cybersecurity is another concern in different platforms for accounting tasks since there is a lack of security integration.

How ERP Systems Address Accounting and Invoicecing Challenges:

:

A robust ERP system like Odoo ERP provides many more rich and detailed financial reports, including the basic options. Such as cash flow forecasts based on inventory management, order status, and accounts receivable based on customer order pipeline. These reports might help the manufacturer run the business effectively.

ERP system enables automation in workflows and integrates different departments.

An ERP solution like Odoo ERP removes the process of data re-entry and avoids duplication as it is integrated with other documents. 

Bank Synchronization, Managing Bills & Expenses, Invoicing can be quickly done with a simple dashboard. 

 An accountant can control the department even from the mobile app. 

Human Resource Challenges for Small to mid-sized manufacturers:

Many organizations still give less importance to the HRM as it is not directly connected with the production. So, they compromise the investment for HRM.

Using traditional and disjoint platforms for workforce management or HRM activities might result in lower productivity in the long run.  

 

How ERP Systems Address Human Resources Challenges:

With an ERP system like Odoo ERP, leaves, Allocations, Timesheets, Expenses, Appraisals can be managed with a modern, user-friendly dashboard.

For timesheet, leave, expenses, there is request, justification, and approval options to get more professional transparency.

A company can hire using the ERP system's intelligence tools for posting job recruitments on different platforms, received all applications on account and scanning resume, etc. 

Conclusion:

After going through all the points above, it can be said that it is impractical for any manufacturer to continue using manual or disjoint systems to handle the business. A robust ERP solution like Odoo ERP can easily carry out complex, even daily repetitive tasks without human presence all the time. By advancing operational efficiency, increasing workforce efficiency, and improving customer satisfaction, an ERP strengthens manufacturers to maximize returns. 

References:

1. https://www.hashmicro.com/blog/overcoming-common-manufacturing-challenges/

2. https://www.tradegecko.com/inventory-management 

3. https://www.odoo.com/

4. https://www.globaltrademag.com/4-procurement-analysis-issues-facing-manufacturing-companies/

5. https://bluebackglobal.com/ten-accounting-trends-every-business-should-follow-2020/

6. https://www.mmmatters.com/blog/the-role-of-crm-software-in-manufacturing

About us:

Ahad Mahmud, Business Analyst

Ahad is an IT- Business Analyst at High Tech Masterminds. He strives to create informative, well-researched, digital content. He is often designing and developing course contents and materials to assist customers in Odoo ERP implementation. He has 3+ years of experience in evaluating stories, shaping content, and accelerating overall work quality in electronic media.

LinkedIn Profile |  Ahad

High Tech Masterminds Pty Ltd is an Official Odoo partner in Australia. We believe that every manufacturing business can benefit from modern information systems and digital technology in its digital transformation journey. You can book a free consultation session today with one of our experienced consultants (No salesperson!) to talk about how digital technology can help you scale up.

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