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Manufacturing hits a turning point – can a different breed of ERP systems bring manufacturers closer to their customers?

Debbie Baldwin Profile picture for user Debbie Baldwin April 23, 2024
Summary:
Manufacturing is at a new crossroads - and customer relationships hang in the balance. Can manufacturers bring customer demand signals across functional silos? Yes, says Debbie Baldwin of Acumatica, but a different approach to ERP is needed.

Industrial Laser cutting processing manufacture technology © zekeriya karatas - Canva.com
(© zekeriya karatas - Canva.com)

The onset of COVID-19 marked a significant turning point for the manufacturing industry, surfacing vulnerabilities in global supply chains and altering customer engagement strategies. After the pandemic, manufacturing output declined at a staggering 43% annual rate, and hours worked fell 38% in the second quarter of 2020 – the largest decline since World War II.

As customer behavior shifted towards digital platforms and disruptions in supply chains became all too real, manufacturers faced an uphill battle to adapt and grow. The aftermath saw a spike in operational costs, pushing businesses to explore alternative models and solutions for sustainable growth, most notably transitioning to direct-to-consumer sales models and prioritizing cost-cutting strategies.

The shift towards cross-industry functionality

In the wake of changing market dynamics, manufacturers have become their own retailers and distributors. They need comprehensive business management software that empowers them to operate in this new structure. ERP systems play a crucial role in these transformations.

Manufacturers are increasingly looking to bolster their online presence through e-commerce to keep pace with consumer preferences. This strategic pivot involves selling products directly to consumers, bypassing traditional retail channels while significantly enhancing the overall shopping experience. By leveraging advanced digital platforms, manufacturers can offer personalized shopping options, including customized product recommendations and interactive product visualizations. This personalized approach helps create a more engaging and satisfying consumer shopping experience, fostering loyalty and encouraging repeat business.

Manufacturers that adopt e-commerce sales strategies gain valuable insights into consumer behavior and preferences, enabling them to refine their product offerings. This transition represents an effort to meet modern consumers where they are — online — while also capitalizing on the efficiency and scalability that digital channels provide.

Additionally, manufacturing companies have begun to offer service provisions, like A/C manufacturers, that extend their offerings to include installation and repair services. Manufacturers also tap into construction, such as flooring or solar panel installation. Expanding into cross-industry functionality further underscores the need for versatile, comprehensive business management solutions that integrate manufacturing processes with e-commerce and project management and enable seamless workflows.

ERP’s essential role in modern manufacturing

To manage a changing consumer environment and take advantage of new opportunities, manufacturers need modern solutions that flex with the needs of their business and enable them to use resources effectively. The COVID-19 pandemic increased customer demand for self-service options when shopping online. This trend remains true for business-to-business or direct-to-consumer sales processes. Modern ERP solutions allow customers to better serve themselves by introducing customization capabilities, such as product configurators.

Even with these technological advancements, the labor market remained tight in 2023, with the manufacturing industry experiencing about 1.5 job openings per unemployed person previously employed in manufacturing. These labor challenges highlight the importance of self-service capabilities within ERP systems. For example, when vendors can log in to the system themselves to place orders or view reports, the manufacturer can reallocate resources and available employees to meet business needs and enable growth.

Meanwhile, unlimited user licensing options within ERP solutions empower vendors and partners to manage their interactions efficiently, fostering a self-reliant ecosystem requiring less staff. An added benefit of adopting a digital-first approach to running a manufacturing business is appealing to the younger workforce, who are attracted to more tech-savvy positions.

Additionally, ERP systems enhance visibility into production orders and material inventory, which is crucial for real-time decision-making and resource optimization. The systems’ project management features allow business leaders to track a specific project’s progress, ensuring that the manufacturer can deliver results on time and within budget.

Overcoming industry challenges with ERP

Countless manufacturers have leveraged comprehensive ERP systems to navigate these challenges and become more efficient, productive, and ready to scale.

Portacool, a cooling fans manufacturer, faced significant challenges managing its operations due to disparate legacy systems that hindered visibility and efficiency. Adopting a modern ERP solution marked a turning point for Portacool. The company’s strategic investment enhanced operational visibility, allowing for a more cohesive and informed decision-making process. Improved inventory management capabilities enabled Portacool to better anticipate and meet customer demand. At the same time, the integration of third-party applications through the ERP system created a unified platform, eliminating data silos and fostering a single source of truth across the organization.

The new system was put to the test during Portacool’s international expansion, particularly amidst record heat waves that spiked demand for cooling solutions. Portacool was able to swiftly adapt to market demands and scale operations effectively.

Curran, originally a distributor that evolved into a manufacturer and retailer of luxury flooring and outdoor furniture, leveraged a modern ERP solution to support its expansion. Customization of products is now possible, and a product configurator allows Curran’s customers to design custom flooring options easily. The configurator enhances the customer experience by personalizing selections and automatically generating unique stock-keeping units (SKUs) for streamlined inventory management. This platform provides crucial cross-industry functionality that supports Curran's diverse business processes, ensuring operational efficiency and scalability.

Navigating the evolving business landscape through post-COVID-19 challenges highlights the indispensable role of ERP systems in fostering adaptability, efficiency, and growth for manufacturers. As the manufacturing industry continues to evolve, adopting versatile and agile ERP systems will remain a cornerstone for manufacturers aiming to navigate the complexities of the modern marketplace, driving innovation and securing competitive advantage.

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