ERP for Small and Medium-Sized Manufacturing Businesses: Benefits and Challenges
Tags: sapbusinessone, sapinmanufaturing, erpsolutions
Published: 2023-05-25 12:54:52

SAP for manufacturing can accelerate the time to market (TTM), enhance production efficiencies, and reduce operational costs significantly in the manufacturing company. Simply put, the SAP ERP for the manufacturing company can bring automation and flexibility to various operations. As a result, manufacturers can leverage available resources more efficiently while increasing productivity.

Globally, the manufacturing sector has a lot of influence on our lives. Manufacturers tend to seek ways to meet the ever-increasing demand for various products. SAP ERP for manufacturing industry can help them find such ways through automation. In this article, we will discuss the role and benefits of SAP in manufacturing with different modules and features. But, before moving ahead, let’s find the answer to What is SAP in manufacturing industry?

## What is SAP for Manufacturing?

Like other core industry sectors, automation and digitalization are the future of manufacturing. Both these evolving trends are useful in meeting various complex challenges. Some of these challenges are- quicker turnaround, ever-changing demands, and supply chain constraints. Here, the SAP Business One manufacturing solution lends a helping hand. It makes the entire process more resilient and ready for the future.

SAP is a robust and powerful ERP (Enterprise Resource Planning) system. It benefits both SMEs and large companies. It is a feature-rich platform with high scalability, modularity, and customization capabilities. It can meet diverse business requirements. What’s more, it is simple to use for users and reduces implementation time significantly. SAP manufacturing modules are useful in monitoring all stages of manufacturing in real time.

SAP digital manufacturing solutions can optimize core processes. Here, a built-in tool SAP manufacturing intelligence, integration, and analytics can remain helpful.

As a result, manufacturing companies can get higher productivity and efficiency. But, you need to consult a reliable global SAP partner.

##Problems Facing Manufacturing Industries
Manufacturing is one of the core industry sectors that thrives rapidly across the world. But, increasing competition and economic uncertainties bring hurdles to the sector’s growth. Here are some of the most common issues in the manufacturing industry.

**Prediction of Demand**
Demand forecasting is one of the big challenges in the manufacturing sector. The lack of an advanced and real-time reporting system can worsen the situation. It prevents manufacturers from estimating how many products they will be able to sell in the coming time.

**Efficiency Issues**
These days, many manufacturers have to manage remote plants. It becomes challenging for them to reduce operational costs and improve productivity in these plants. As a result, manufacturers sometimes have to sacrifice quality to maintain efficiency.

**Lead Management**
Manufacturers have to manage and prioritize leads on a frequent basis. However, it becomes challenging for them in the absence of the right method. Though every lead has different requirements, manufacturers tend to tread every lead in the same way due to poor lead management.

**Inventory Management**
Managing and controlling inventory is another major challenge for manufacturers. The manual stock checking remains inefficient with the possibility of errors and inaccuracies. It leads to the conditions like shortages and overstock.

**ROI-Related Challenges**
Every industry needs a high ROI and the manufacturing industry is no exception! Manufacturers strive for increasing ROI in a relatively short time and as a result, they have to deal with several challenges.

Here, SAP for the manufacturing industry comes to the rescue and enables industrialists to overcome these challenges effectively. Let’s dig deep into the ways through which SAP helps the manufacturing sector.

##How does SAP Help in Manufacturing Industries?
We can mention many benefits of SAP in manufacturing companies, but here we will keep our list limited to the top ways SAP ERP can assist the sector to thrive. Be it managing inventory or handling multi-level bills of materials, SAP always remains helpful in the industry. SAP manufacturing ERP modules have a vital role to play in the production process by managing production orders and recording the usage of raw materials.

Let’s go through a list of the major business benefits of SAP ERP for manufacturing.

* End-to-end, automated process
* Enhanced implementation of resources
* Reduced time and operational costs
* Robust feedback mechanism
* Recording of the entire functionality securely

SAP implementation in the manufacturing industry can offer all these and other benefits to manufacturers that can lead to high productivity and efficiency. Let’s go through SAP manufacturing ERP modules to understand all the key business benefits of SAP ERP.

##SAP Manufacturing ERP Modules
SAP has gained ground as a leading ERP software maker globally. SAP modules for the manufacturing industry can be largely classified into two sections- functional and technical. Here are the SAP manufacturing ERP modules in detail. We will start with the most popular module which is used for accounting and auditing of the company’s transactions.

**Accounting and Financial**
As a reliable ERP Solution, SAP ERP for the manufacturing industry is useful for managing the finance and accounting processes with ease. This module, as per the name, is designed to record various transactions irrespective of the size and model of businesses. This module can integrate the financial data into a single datasheet for ensuring a seamless process. Manufacturers can easily complete all the account and auditing-related processes using this module.

**Material Management**
Availability of raw materials can remain a crucial aspect for the manufacturing company. Be it production or a supply chain, different core processes in the manufacturing company are based on raw materials. The material management module in SAP manufacturing ERP is useful in ordering, collecting, handling, and purchasing raw materials effectively. Also, this module is useful in managing the unit’s storage capability and making invoices for all transactions related to purchasing raw materials.

**Human Resource Management**
For any industry, employees are considered a valuable asset, and the manufacturing industry is no exception! The human resource management module can manage people and assist manufacturing companies in making them more dedicated to work. It enables manufacturers to work on human resources with more care and generosity. It results in the successful execution of projects and higher efficiency in employees. In a way, the human resource management module can make the manufacturing unit more profitable over the period.

**Quality Management**
Be it storing raw materials or finished products, it is always essential for manufacturers to maintain the quality of the product manufactured. A quality management module can help them meet this objective by enabling them to handle the storage of both raw materials and products. It assists manufacturers to handle manufactured products efficiently to ensure that their quality remains intact while managing raw materials properly.

**Sales and Distribution**
Inventory and sales management can play a vital role in thriving any manufacturing company. The SAP ERP can enable manufacturers to achieve this goal through a sales and distribution module. This module is aimed at keeping all the data of sales and orders for streamlining the distribution process for the manufacturing industry. It can assist owners and employees with audits and analysis in an effective way. As a manufacturer, you can easily track the stock situation and sales figures to make meaningful decisions.

**SAP Production and Planning**
This important technical module is designed to offer the right product planning and management to manufacturers. Here, the entire data is configured with Master Data to get actionable insights in real time. All the data, sales, planning, product distribution, operations, and requirement of materials can be stored in this module. Manufacturers can manage product transactions and plan operational procedures according to the data stored in this module.

**SAP Controlling**
It facilitates users to control the process of work, reporting, and monitoring various business operations. A manufacturer can set up the plan and track the process efficiently with the help of this module. SAP controlling can offer complete control over core processes while enabling business owners to monitor them in real time.

All these SAP manufacturing modules offer many benefits to the industry. Here we mention a few of these benefits in detail.

##Benefits of SAP Manufacturing
SAP Business One manufacturing ERP is loaded with many features and it is developed while keeping manufacturers in mind. As a highly functional ERP, it gives more functionality and flexibility to corporate users irrespective of industry sectors. SAP implementation in the manufacturing industry enables you to make informed decisions while managing the supply chain easily. Here is a list of the most important business benefits of SAP manufacturing ERP.

**Better Traceability of Stocks**
Manual tracking and inputting data of stocks or raw materials is cumbersome and prone to errors. It is also a time-consuming process and manufacturers find it difficult to manage it every day. SAP Business One can optimize stock to ensure that all item levels remain at a predefined amount. What’s more, manufacturers can also access product expiration analysis to trace components that become useless in the near future.

**Improved Inventory Management**
Every industry has to keep a tab on the movement of raw materials and products in the warehouse. Manual inventory management can have many limitations due to the time and effort it needs. SAP Business One has many built-in functions to streamline both inventory and warehouse management. One such function is a bin location tracking function that enables employees to get faster adaptation to stock changes.

**All the Data at a Single Point**
If manufacturing industries use multiple software or applications for storing and sharing data, employees may not get access to it in real time. Also, the management has to consider various data sources for getting actionable insights. One of the biggest benefits of SAP Business One in manufacturing is it stores all the essential data in one place. In a way, it enables anyone within any department to get access to specific information as and when necessary.

**Enhanced Planning**
Procurement and production processes need complex plans based on actionable insights and real-time reports from different departments of the company. SAP Business One is useful in Material Requirement Planning (MRP) with an MRP Wizard feature. It enables manufacturers to create different scenarios by selecting data sources and items. This will generate different outcomes or plans that can be used in the future.

**Higher Customer Satisfaction**
It is imperative to keep your customers happy. Companies that offer great customer experiences can get success in a relatively short time. SAP Business One can handle the customer’s queries and orders in an automated way to satisfy your customers. You can get the customer’s data from the system to improve production processes and customer services further resulting in higher customer satisfaction.

##SAP ERP Support Following Manufacturing Types
SAP ERP is an efficient software for all the core industry sectors. Talking about the manufacturing sector, customized SAP ERP solutions support the following types of industries.

**Process Manufacturing**
In this type, a product is created by refining the raw materials using a preset formula or recipe. We cannot break down the final product into its basic components. Pharmaceuticals, paint, and F&B industries are examples of this type of industry.

**Repetitive Manufacturing**
This type of manufacturing process involves automated assembly processes because here products are manufactured by following the same pattern. Small electronic goods and car component manufacturing are some of examples of this type.

**Discrete Manufacturing**
This is the most common type of manufacturing industry. The discrete manufacturing process enables manufacturers to come up with distinct finished products. Furniture, toys, and smartphone manufacturing are examples of this type.

##Features of SAP Business One for Manufacturing
SAP Business One manufacturing solution enables entrepreneurs to meet various challenges and simplify complexities through various features. SAP B1 is a complete solution for small and mid-sized manufacturing companies. Many of its features can manage all aspects of your manufacturing unit seamlessly. Here we mention some of its top features.

**Warehouse Management**
It is useful in managing inventory across various warehouses at once while maintaining cost-effectiveness in the production process. ERP software can help companies track the movements of stocks and reduce the instances of stock-outs or surplus stock.

**Machine Planning Process**
This feature is intended to reduce overspending and inefficiencies in the production process. It also assists manufacturers to increase savings and get a high ROI with accurate planning over the period.

**Production Planning Process**
Discrete manufacturing companies can leverage the benefits of this feature. It can be easily integrated with the PLC (Product Life Cycle) stages and merge with interdependent processes. This feature is also known as Articulated Production Planning Process (APPP).

**Cost Estimate and Actual Costs**
Manufacturing units can easily calculate profit margins thanks to the inbuilt functionality of SAP Business One along with customized add-ons. An inbuilt analytical feature can provide users with accurate predictions on machines and resources to improve the decision-making process.

**Key Product Costing**
SAP Business One offers structured data and values with integrated figures. It makes it possible to get the optimum output from the production process, inventory management, and other departments with a robust calculation engine HANA.

**Production Management**
Users can easily know the project’s status in real time and get cross-functional reporting on various aspects using this feature. You can manage production, logistics, cost accounting, and controlling with the help of the production management feature.

**Planning and Consumption**
SAP manufacturing ERP makes it possible to plan JIT (Just In Time) and FIFO while maintaining the optimum use of both these strategies. This feature can assist in managing lead times, transferring schedules, and monitoring resource allocation.

**Quality Control**
SAP Business One has preset configurations to monitor the quality based on international standards for better control. It can generate quality certificates and labels automatically to save a lot of time and effort for companies.

**Production Cycle**
SAP ERP for manufacturing companies offers end-to-end visibility across various processes related to the production cycle.

##SAP for Small Manufacturing Businesses
SAP digital manufacturing promotes standardization and brings automation to processes. Small manufacturing units always face difficulties in managing various business aspects with limited resources. Production, procurement, inventory, and supply chain management are important pillars for any industry, and fast-growing companies need to focus more on them to thrive amid increasing challenges and intense competition.

A powerful SAP ERP solution can give small industries an integrated view of business processes ranging from production, order, procurement, sales, and quality management.

**SAP Digital Manufacturing**
The ever-changing requirements of the manufacturing sector need a powerful and scalable solution. SAP digital manufacturing cloud solution can meet this objective effectively. It not only enables manufacturers to optimize their overall performance but also assists them to improve productivity. Let’s dig deep into the key benefits of SAP digital manufacturing.

**Enhanced Performance**
It is possible to keep all stakeholders on the same page and analyze the global manufacturing performance using the SAP ERP manufacturing solution. A preconfigured analytics feature can enhance performance over the period.

**Improved Visibility**
SAP digital manufacturing solutions are capable of acquiring data from Manufacturing Operations Management (MOM). These solutions also facilitate analysis and thereby improve the visibility of processes.

**More Consistency**
Consistency in reporting and real-time actionable insights can assist manufacturers to meet all the deadlines. Root-cause analysis and accurate reports can contribute to making meaningful decisions instantly.

**Higher Adaptability**
SAP digital manufacturing solution can enable you to meet market demands and handle product variability effectively. You can improve customer satisfaction and overall productivity without compromising on quality.

**Increased Efficiency**
You can keep MOM systems running seamlessly by optimizing the use of available resources and improving quality. You can increase efficiency significantly by utilizing assets more properly and reducing downtime.

##The functionality of SAP ERP Implementations in the Manufacturing Industry
Though SAP ERP implementation includes a wide range of functionality, here we mention the most prominent areas-

* Financials and accounting-related like accounts receivables, accounts payable, cash flow management, etc.
* Inventory and supply chain management, material movement including raw materials and finished goods, lot tracking, etc.
* Shop floor scheduling, real-time reporting, production and procurement management, estimated and actual costing, etc.
* Workflow tracking, collaboration, business intelligence, lot tracking, expiry goods tracking, resource and attendance tracking.
* Bills of materials, logistics, quality management, integration with business applications, capacity planning, and routings.
* Sales orders, order management, forecasting, invoicing, quoting, event management, and labor tracking.

##Why You Should Adopt SAP for Manufacturing Business?
SAP Business One ERP can streamline and manage all business processes. Manufacturers can get benefits in the form of more efficiency and productivity with increased automation and real-time data access. SAP Business One manufacturing solution assists companies to become more agile with improved supply chain management. On one hand, it facilitates cost reductions, and on the other hand, it can save the valuable time of employees.

SAP manufacturing ERP solution is also useful in improving quality management and customer relationship management. You can bring automation to various processes and increase the scalability of the manufacturing industry. Another benefit is manufacturers can integrate warehouse logistics and an eCommerce network with the SAP manufacturing solutions. It can increase overall visibility and assist industries to make real-time decisions.

##Why Silver Touch for SAP Implementation in Manufacturing Industry
Silver Touch Technologies is a reliable and experienced SAP Business One partner. We serve our corporate clientele by providing them with customized add-ons and SAP ERP solutions as per their business models. Our in-house team of experienced SAP developers can come up with robust SAP digital manufacturing solutions.

We assist manufacturing industries to grow with a range of services and solutions while following the best practices. Here are some of the reasons why we are a preferred choice for SAP Implementation in the global manufacturing sector-

* Advanced analysis and optimization of manufacturing processes.
* Planning, designing, and implementation of SAP solutions under one roof.
* Architecture and process consulting for optimum outcome.
* Integration of standard SAP MES solutions and customized add-on development.
* Vast experience in SAP integration in SMEs and large enterprises.
* 24x7 Technical assistance for SAP solutions as a global SAP Partner.

##Conclusion About SAP Manufacturing
In a nutshell, a Feature-rich SAP ERP for manufacturing industry can take small and mid-sized manufacturing companies to a new level. It has many features that are useful for the manufacturing sector. You can leverage the benefits of SAP ERP for your manufacturing company by finding the right SAP partner.