How ERP de-risks the use of new materials

The manufacturing world is evolving; and nothing more so than mass production as businesses demand more customised, personalised and faster goods. With this evolution comes continual and incremental changes in the types of materials being used in production. Already industry is developing lighter cars for better performance and more effective fuel consumption, enhanced prosthetic implants that last longer, electronics that are cheaper and smaller, and aircraft parts that perform better and are safer. This drive towards adopting new materials in manufacturing is accelerating but it can come with risks to the supply chain if not managed properly.

The long lag time for new materials to realise meaningful revenue can be a concern for most businesses. In some cases, as many as 20 years can pass between the time a new material is researched and the time it starts to yield a return on the R&D investment. The introduction of new materials into the supply chain can potentially disrupt production continuity, play havoc with inventory management and can seriously affect productivity and bottom line revenue if not researched thoroughly. This makes it potentially a dangerous game for manufacturing, but one which needs to be played if businesses are to remain responsive to the ever-changing requirements of industry. But what if there was a way you could level the playing field? What if you could eliminate many of the risks and costs involved in new materials adoption? What if your SYSPRO ERP solution was the game-changing technology you need?

Cost Control

De-risking new materials adoption begins with the financials. Before you even consider introducing a new material to your supply chain, you need to make certain that you can actually afford to do so, and ascertain whether or not it gives you a cost advantage over the materials you are currently using. Manufacturing businesses spend years importing transactional information into their ERP systems and very little of that time extracting it out again. Using the information contained within ERP, businesses can examine the unit price of new materials compared to the prices currently paid. A large percentage of new materials introduced to manufacturing come from abroad, so make sure you factor in import costs and distribution expenses. What is the new material replacing? If you’re an automotive manufacturer you may be purchasing a lightweight material to build active aerodynamic components, replacing the need for hydraulics. This is a substantial saving over the amount of weight coming into your supply chain not just in distribution costs, but for inventory as well. Lighter materials can be stored securely and safely on racking, whilst heavier components may only be able to take up floor space.

Planning and Scheduling

Once you’ve established the true cost of purchasing new materials for manufacture, it’s important to analyse just how this will affect production in the longer term. One of the primary reasons for introducing new materials into the supply chain is to accelerate production. Lighter, more flexible materials often have the capacity to be manipulated more quickly than broader, more rigid materials. SYSPRO’s forecasting functionality uses a material’s historical consumption data and chooses the relevant forecasting model to predict the material’s future demand. It allows planners to forecast any type of material, existing, old or new, and can accurately predict the impact of a new material on the production process. It is also capable of analysing historical order data to predict spikes and reductions in demand, so you can discover how these will change over time once you do introduce new materials into production. For example, it may be that a smaller, light weight and more tensile material can accelerate production by 20%, giving you capacity to take on more jobs, or even out production schedules in order to eliminate quiet periods.

Responding to customers through MRP

Once you have established the impact of new materials on production, you can start to take this a step further and calculate the right inventory levels of materials you will need in order to reach the required levels of customer service. Most ERP systems have some Materials Requirements Planning functionality to enable businesses to match the supply of purchased and manufactured parts to demand, but SYSPRO takes this beyond simple supply and demand forecasts. The solution’s Inventory Optimisation Modules use historical inventory and demand data, together with manual sales forecasts to more accurately suggest batch loads that need to be purchased. This can often be far more effective than instinctual, or manual calculations.

There’s little doubt that the manufacturing world is becoming smarter in its material usage, as part of the ongoing quest to make products more efficient, effective and competitive. It’s a risky business but one which many manufacturing businesses already have the tools to prepare for. Much like the rising popularity of servitization, the dawn of the circular economy and the adoption of the Internet of Things, the risks associated with new materials adoption is significantly reduced for businesses utilising their critical business systems to their full potential.

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