Modeling Your Manufacturing Business in Cetec ERP

The advantage of an ERP (enterprise resource planning) software is having a centralized platform that houses a company’s data and business processes. This improves data accuracy, efficiency between departments, and real-time reporting and visibility to what is actually happening on the floor. You need to know accurate inventory levels, where work orders are on the floor, how long a job will take, and to know if you are actually making money on a product you make. Often, there are industry-specific requirements like inventory traceability that force you to use an ERP.

However, implementing ERPs can be risky and costly. There are horror stories of failed ERP implementations tanking large corporations, and the expectation is that an ERP implementation is a major - perhaps insurmountable - expense. Historically, ERP was only for the big corporations. In an age of digital transformation, however, ERP is both more accessible and more necessary for small and medium manufacturers to operate efficiently and ensure viability and resilience as a business.

Cetec ERP works to remove all obstacles a small or medium business faces when implementing an ERP. As a Saas ERP solution, it is a budget-friendly solution for SMB manufacturers that is highly practical and built for manufacturing. ERP can be simple, straightforward, and affordable for any manufacturer.

To minimize the risk and cost of an ERP implementation, you need a system ready to go that you can quickly model your business on. Custom systems can work to model operations, but are expensive and slow. Due to their isolated nature, users are pigeonholed into a solution that is difficult to maintain long term, doomed to grow outdated.

Other ERPs are ‘out of the box’ ready, but cater to a large number of industries. This means workarounds and customizations are required to model the sensitive and tricky pieces of your business. A monolithic ERP system is not familiar with or geared towards your industry best practices.

Manufacturing cloud ERPs, like Cetec ERP, are built with the realities of your industry in mind. A system built for your field allows you to easily model your business, streamlining your ERP implementation and keeping implementation costs low. The software is constantly improved and updated, keeping your digital tools sharp and fresh.

To successfully model your small or mid-sized business in an ERP, you need to be able to model your BOMs (bill of materials) of your products with related documents, your chart of accounts and ledger postings for accurate reporting, your production floor for tracking and scheduling, and flexibility to create custom fields for unique operational or sales reports. These basic foundations form the bedrock of success in an ERP implementation.

There are five major ways that Cetec ERP makes modeling a small or mid-sized manufacturing company easy. They represent the cornerstones of an ERP built for manufacturers. Let’s walk through the list together.

1/ Multi-level BOMs and flexibility in order entry. The crux of the manufacturing process is the bill of materials (BOM). It captures all of the material requirements, needed labor and processes, and documents needed to ship a product. The structure of a BOM ranges widely amongst different manufacturing industries. A true manufacturing ERP is capable of modeling anything from a simple kit with few components or raw materials, all the way up to a complex BOM with multiple levels of subassemblies.

You also need a straightforward, automated way of generating work orders to build this BOM. The production process ranges in complexity between industries. Process or batch manufacturing has different needs than a medical device manufacturer, both of which are different from a machine shop welding together a large piece of industrial equipment.

Cetec ERP’s streamlined approach to BOM creation and order entry is robust enough to support all manufacturing methods. Check out our video guide on entering orders for complex BOMs here: Handle subassemblies and multi-level BOMs

2/ Using product codes (PRCs) to categorize parts. Cetec ERP’s version of smart part numbering is called PRCs, or product codes. PRCs are three-digit, alphanumeric codes that append to your sku/part number as a prefix. They should be used to make identification easy for the shop floor - categorizing subassemblies as SUB or connectors as CON. They can also be used to organize purchasing and material planning. You can assign buyers or product managers to each PRC, to be used on MRP Buy or MRP Build. Each PRC also can have specific GL mappings to ensure accurate inventory costing that can be reconciled back to operational inventory reports. For more information, visit our video guide on PRCs here.

3/ Setting up and modeling the production floor. One of the core value-adds of an ERP built for manufacturing is the ability to actually model your shop floor and production process. This means you can fully implement lean manufacturing and kaizen principles, stop losing orders by successfully tracking their movement on the floor, gather real-time labor data easily, schedule efficiently based on shop floor or machine capacity, and implement precise production control processes.

Let’s review a quick list of hallmarks for modeling a shop floor:

• Production lines & Work locations - Production floors are typically divided into departments or production lines. Within each department, a manufacturing company will have production steps or actual machines.
• Costing - Setting up labor rates by company, user, or work location, allows you to track actual labor time for strong manufacturing cost accounting, as well as extensive efficiency reporting.
• Scheduling - Each work location has specific capacity based on employee time or machine capabilities. Time estimates per BOM revision allow you to quickly schedule work orders according to available capacity, then reshuffle the schedule when openings arise.
• Work order tracking - Having a clear picture of where jobs are in the production process is a huge step forward for small manufacturing companies coming off Quickbooks and spreadsheets. Having work orders in-process kills cash flow by tying up inventory in WIP. Lost jobs on the floor mean you can’t move high-revenue jobs through the system, and impedes on-time delivery. Work locations modeled to your floor and production process keep things organized, clear, and simple for every employee in your organization.

For a more in-depth explanation on modeling a shop floor, you can review our video guide.

4/ GL Transaction Mappings With inventory modeled and labor time logged, you need operational transactions to post to the ledger and reflect in your financial statements. Cetec ERP does this in real-time, reducing duplicate data entry. With your easily importable Chart of Accounts set up in Cetec ERP, you will be able to set up the GL Transaction Mappings. GL Transaction Mappings control the debits and credits of a system-posted transaction, like invoicing an order. This provides accurate Profit & Loss and Balance Sheet statements that reflect the actual operational activity of your company. Our video guide offers an in-depth overview.

5/ Bonus columns to create custom fields and custom reports. Finally, reporting and measuring is critical to improving and managing your business. There are standard data sets that should be provided in canned reports in an ERP, but every manufacturing company has unique needs and requirements in their reports. Cetec ERP gives the ability to add custom fields and make them reportable, customize filters and column layout on reports, ability to quickly export to excel, and, for larger customers, a Power BI (business intelligence) reporting tool called Metabase. This provides an exhaustive list of options for a small or medium-sized manufacturing company to create the reports and KPIs they need for their business. Watch a video guide here.

Modeling a manufacturing business is complicated - but it is one of the most critical pieces of fully realizing ROI in an ERP system. Cetec ERP provides a transparent, robust and configurable solution for any manufacturer to run their entire business out of the box.