The decision to make the leap of faith into what seems like many jumping on the cloud bandwagon, would seem daunting at first. Of course that would mean having to replace your current on premise solution. However, despite the unnerving changeover, many companies have found the capabilities that cloud offers outweigh the adoption process.
Through the use of cloud-based technology, manufacturers can tap into a powerful ERP software that was once the purview of larger companies who could afford the on-site costs and maintenance of larger networked servers. Cloud technology runs through web-based interfaces so that you can use your software anytime, anywhere you have an internet connection. You don’t need special hardware to run it; any laptop, desktop, tablet or smartphone suffices.
Cloud ERP is creating quite a stir through the manufacturing world, opening up many new possibilities for companies worldwide. About 25% of small manufacturers use cloud-based software, while 20% are looking to expand into cloud software.
Cloud ERP Helps Lower Production Costs
Anytime you can lower production costs, you have an opportunity to increase profits, even without raising the prices of your goods. Manufacturers are learning the cloud ERP can help lower production costs.
One way in which cloud ERP can help lower costs is by providing useful data and accurate cost analysis. By combining data from various areas of the company into one system and set of reports, you can see at a glance the production activities, inventory status changes and more that can impact your business.
When you know what your inventory status is and you understand the costs of maintaining your inventory, you can make adjustments that improve inventory management. The results lead to lower costs with improved inventory accuracy and the potential for sustained growth.
Shifting IT Funds to Other Projects
How much are you currently spending to patch, repair, and duct-tape your existing information technology systems? If you’re like the average manufacturing company, you’re probably running several outdated systems and keeping them operational through plenty of hands-on work. That’s neither practical nor cost-effective in the long term.
Companies shifting to cloud ERP find that they can divert information technology resources away from propping up the existing IT infrastructure into more forward-thinking projects. Cloud ERP is updated automatically by the software vendor, so you do not need to worry about loading updates and managing patches. The vendor takes care of all of that.
While many companies also worry about security, and rightly so, cloud ERP tends to be more secure than typical on-site infrastructures. Cloud ERP vendors provide tight security to safeguard both their own reputations and that of their clients and implement the latest security methods to safeguard against code injections, viruses, ransomware and other nuisances.
Lastly, maintaining systems on site and ensuring they are working at peak efficiency does take up considerable IT resources. Many cloud ERP vendors provide assurances of up time in their contracts, with some guaranteeing up to 99% up time. That’s probably better than you’re averaging now.
Cloud ERP can help you save information technology costs as well as divert staff to more productive projects.
Lean Manufacturing with Cloud ERP
Cloud ERP can also help companies adopt a lean manufacturing philosophy. Many companies rely on multiple spreadsheets to run daily operations. With spreadsheets existing in every department, and multiple spreadsheets per project in some cases, managing data turns into a tedious and time-consuming task. Spreadsheets must be printed, tallied by hand, and selected data re-entered into new spreadsheets just to run reports or combine data.
Adoption of cloud ERP shifts the tedious task of data entry into automation, saving considerable time and effort. Once you can see the data, you can scale and shift production into more profitable ventures, and you can do so more quickly.
Employees using cloud ERP can view all customer orders at one time and batch production accordingly. This enhancement incorporates lean manufacturing processes and enables more efficient use of materials, equipment, and staff.
Studies have shown that overtime costs can be cut by as much as 60% after cloud ERP adoption because of lean manufacturing processes. With better use of time, equipment and personnel, companies no longer needed to add shifts to accommodate extra orders. This increases profits by lowering costs and increasing production time.