How ERP Software Streamlines Electrical Component Manufacturing

Companies that manufacture electrical components encounter different obstacles to maintain competitiveness in the marketplace; specifically, those obstacles require the need for accuracy, compliance, and visibility in real time. This means many electrical component manufacturers rely on an ERP solution that can manage large volumes of complex Bills of Materials (BOM) associated with their products, maintain quality throughout production, and comply with various regulations. ERP solutions provide a platform for integrating all aspects of producing an electrical component.

Why Electrical Component Manufacturers Need Specialized ERP Solutions

Manufacturers of electric components have complicated procedures and traditional management systems are typically unable to process this type of activity efficiently due to the multitude of SKUs, strict quality requirements and ever-changing regulations surrounding this type of manufacturing. Many manufacturers experience problems with inventory discrepancies, production delays, and compliance issues when operating without integrated systems to keep up with the complexity of electric component manufacturing.

Key challenges in electrical component manufacturing include:

·     Correctly managing the complex multi-level Bill of Materials containing precision components

·     Properly tracking component traceability to support quality assurance and recall

·     Ensuring compliance with industry standards for products such as RoHS, REACH, and UL certifications

·     Coordinating the efforts of Design, Engineering, Production and Supply Chain teams

·     Efficiently handling variable amounts of demand and customized orders

To help manufacturers address the challenges of electric component manufacturing, Enterprise Resource Planning (ERP) software creates a single point of access to the organization and seamlessly links each department and process.

Core Benefits of ERP in Electrical Component Manufacturing

Enhanced Inventory Management and Material Planning

Electric component manufacturers can be profitable or bankrupt based on inventory management. The real-time access to material needs, work-in-progress, and finished product inventories is managed by an ERP system and typically may carry between multiple sites.

An ERP solution provides the automated calculation of the amount of materials required throughout the week, therefore eliminating the possibility of running out of materials as well as carrying too much. Enhanced forecasting tools allow manufacturers to take a more proactive approach to stocking their inventory, giving them a possible savings of up to 25% in carrying costs. Examples of these advantages include:

Inventory management advantages:

·     1. Availability of real-time visibility of stock levels across warehouses and production areas

·     2. Automated calculation of reorder points, based on demand and the amount of time it takes to get items to you from the supplier

·     3. Tracking of batches or serial numbers to provide complete tracking of inventory

·     4. Seamless integration with vendors through electronic transactions

Streamlined Production Planning and Scheduling

Producing electrical components requires great production efficiency due to the high level of customer expectations and slim profit margins. An ERP system is the best possible resolution for a manufacturer needing to produce their product according to several variables on a continuous basis (labor, machine capacity, material, and order priorities). ERP systems can assist the manufacturer in developing realistic production schedules that will minimize downtime between product changes and maximize the speed of production. If there is a disturbance in production, ERP systems automatically recalculate the fastest way to reschedule production activities and notify producers so as to minimize disruptions to delivery commitments.

Quality Control and Compliance Management

An effective quality control program for the production of electrical components is not optional but rather a requirement. ERP systems provide a framework for establishing quality control checkpoints throughout the entire manufacturing process, from the point at which materials are received to the point at which the finished product is tested and approved.

Quality management features include:

·     Quality Management Features of ERP Systems

·     Workflow for automated quality inspections utilizing digital checklists

·     Utilization of statistical process controls and real-time dashboards

·     Tracking of non-conformances and management of corrective actions

·     Generation of certificates of compliance, along with the storage of compliance documentation

ERP software is designed to facilitate and maintain an audit trail of all activities performed within the ERP environment for regulatory compliance and certification renewal purposes. Should any products need to be recalled, the ERP software will allow for immediate identification of all batches and customers affected.

Financial and Supply Chain Integration

Cost Tracking and Profitability Analysis

ERP systems provide accurate tracking of product costs through the capture of all cost elements, such as materials, direct labor, overhead, and logistical costs. Having this accurate information helps to understand how much the final product will cost to manufacture, as well as through accurate allocation of all these costs to the various product lines.

Manufacturers can also identify areas of cost variance in logistical costs. cost variance between estimated costs versus actual costs, cost variance costs, identify operational inefficiencies, and make data-driven decisions regarding pricing and production strategies. The ERP system will also allow for detailed profit analysis of customers, products, and orders to identify which segments of business provide the highest profit returns.

Supplier Relationship Management

Manufacturers of Electrical Components profit returns. Electrical components have an extensive supplier network for raw materials and sub-assemblies. raw material sub-assemblies. By using an ERP system, the manufacturers sub-assemble. are able to access centralized supplier data, manufacturers' centralized supplier data, including supplier performance metrics, and facilitate the supplier collaboration process. supplier performance metrics, supplier collaboration process.

The ERP system will automate the generation of purchase orders based upon the material requirements for scheduled production orders. production orders. It will also automatically compare supplier quotes and production orders. supplier quotes and automatically monitor delivery performance of the various suppliers, thereby allowing manufacturers to reduce time to procure and to negotiate better terms with their suppliers. term suppliers.

Demand Forecasting and Sales Integration

Modern ERP systems allow for seamless integration between sales and operations. sales When sales enters quotes, operations, and/or orders into the ERP system, it automatically checks material availability and production capacity to provide accurate delivery dates.

Forecasting modules are able to analyze historical sales data, seasonal trends, and market activity in order to identify demand requirements. This enables manufacturers to prepare for upcoming production requirements and to eliminate the need for expedited shipping charges and/or rush orders

Digital Transformation and Industry 4.0 Readiness

The emergence of modern ERPs transformed how businesses operate and conduct operations into a digitalization strategy that allows for integrating machine data from different devices (Internet of Things, IoT) as well as robotics and automated guided vehicles used within the manufacturing procedures.

Industry 4.0 capabilities include:

- Collecting machine data in real-time on the production floor and analyzing that information

- Ability to develop a predictive maintenance schedule that will notify the manufacturer when the machine requires preventative maintenance to avoid machine downtime

- Ability to remotely monitor machine activity and provide approvals of workflows through mobile devices

- Use of business intelligence and analytics dashboards

- Use of CAD/CAM systems for the design of products and for developing engineering change orders.

The above components enable electrical component manufacturers to respond more quickly to changes in their product markets, reducing waste throughout the manufacturing process and continuously improving their overall manufacturing efficiency.

Choosing the Right ERP for Electrical Component Manufacturing

It is highly recommended that the solution chosen has demonstrated an ability to meet the needs of electrical manufacturers, has a flexible method of customizing itself, and has strong vendor support.

Companies considering cloud-based solutions should be aware that this option typically has less initial funding required to purchase it; however, some manufacturers prefer to purchase an on-premises solution so they have more control over their sensitive data.

While implementing ERP will typically take six to 12 months to complete, it does require buy-in from both executive management and every department. Successful implementations include significant emphasis on change management, thorough training of all individuals, and rolling out the implementation in stages to minimize the interruption to business continuity.

Conclusion: Transform Your Electrical Manufacturing Operations

The use of ERP software has moved from solely supporting the back office to enabling electrical component manufacturers to leverage ERP as a strategic advantage in the marketplace. ERP integrates the functionality of all aspects of the business to provide manufacturers with greater visibility within their operations, facilitates data-based decision-making, and allows companies to reduce expenses and improve the quality of their products, while giving customers exceptional customer service.

For more information on which ERP software will work best for your electrical component manufacturer, contact us today at Softwares in Demand to find out how we will provide you with the most effective solution for your electrical assembly and component manufacturing needs.