Types of Manufacturing Production and the Role of ERP in it

Are you a manufacturer? The manufacturing industry is one of the largest industries in the world. The pressure to fulfil the dynamic and growing demands of customers must be too high on you. Several logistics and production challenges also need to be tackled by you. Here is when implementing production ERP helps you in great ways. Additionally, it will help you out finding solutions for manufacturing production types. The ERP implementation in manufacturing productions will streamline the entire manufacturing process and increase profit margin.

In the whole production process, visibility and transparency are crucial aspects for the successful production of goods and delivery to the customers. Moreover, types of manufacturing productions are critical to understand the process and how production ERP helps them to enhance the working. Therefore, we are here to provide you with detailed insight into this topic.

First, let’s understand what manufacturing production is.

Manufacturing production is a methodology that states the efficient way to produce finished products to sell them in the market and to final customers. The strategies that manufacturers make to accomplish the ultimate goal of producing quality products help them to improve overall performance and growth.

Every industry has variables that impact the business operations and manufacturing production is also surrounded by that too. The major variables are market demand, labor cost, raw material availability, and inventory cost. Here is when types of manufacturing production come into existence. Two types of manufacturing production are the following:

1. Make-to-Stock

2. Make-to-Order

3. Make-to-Assemble

Let’s understand more about these two terms:

1. Make-to-Stock:

It is a production approach used by manufacturers in which they produce finished products in bulk to fulfil customers’ demands on time. With this system, companies can able to keep the inventory for the unwanted demand of customers at uncertain times. The items or goods that are most popular or being sold in the market are most likely to be produced on make-to-stock.

ERP helps in improving make-to-stock strategy by streamlining the procurement and purchase operations through its flexibility & scalability. ERP system monitors every step of the production process and mitigates risks.

The major advantages of make-to-stock are the following:

• Higher efficiency: Make-to-stock helps businesses keep the inventory level at a certain level to meet customers' demand. This process is comparatively easier and helps to improve the process efficiency.
• Better forecasting: The forecasting becomes easy and accurate. Since products are manufactured in advance, the demand is more predictable.
• Lower cost: Make-to-stock is for those product/s which has more demand in the market. This reduces the holding cost of inventory and helps to reduce the overall cost of the business.
• Reduced lead time: The lead time also become lower as the products are being produced without getting customers’ order. Due to this, no need to wait for the customers’ order before production.
• Goods resource capacity planning: With better sales and demand forecasting, you can effectively plan your production processes. When you know the number of units to be produced, it will help you to maximize resource usage to reduce wastage.

2. Make-to-Order:

Make-to-order is also a production strategy used by producers in which companies produce products based on customization specified by consumers. In this process, production is of a product only begins when a customer confirms the order. Make-to-order mainly happens for heavy and large products such as computers, vehicles, computer products, and other big-ticket items. In this system, companies face inventory issues but the customer wait time is longer than usual.

With a modern ERP system, it can easily track and configure prompt responses to new orders. It also helps to optimize the production processes and offer accurate lead time. The automation system of ERP helps to order new material automatically when required or when it reaches to re-order level.

The major advantages of make-to-order are the following:

• Minimum wastage: As a manufacturer, you must want to reduce production expenses. It can be accomplished as make-to-order allows you to reduce wastage during the production processes. The production begins after the confirmation of the customer's order. It helps to eliminate extra costs, resources, inventory, and other production processes.
• Lower risk of efficiency: Make-to-order allows you to reduce inefficiency in the production processes to adjust your production operations and reduce cost. This also helps you to use the unsold products produced in a make-to-stock strategy.
• Customization: One of the major benefits of adopting a make-to-order approach as it provides tailored products to the customers. However, these products are more expensive than others. Due to personalized requests, customers wait for a longer time, and helps to pick the exact product that they are looking for. It eventually increases the customer satisfaction and loyalty.

3. Make-to-Assemble:

Make-to-Assemble is a hybrid system between make-to-order and make-to-stock. In this approach, the manufacturer produces the components and assembles them after receiving the customer's order. The food industry is majorly using this approach.

Implementing production ERP system helps to track the time and resources used in each production line. It will also help you to suggest where to improve the processes. It helps to improve the business profitability.

The major benefits of using make-to-assemble approach:

• Lower cost: Make-to-assemble helps to reduce costs when production is done based on customers’ orders.
• Higher customer satisfaction: The production after order helps to increase customer satisfaction as they can get what they want.

EndNote

Are you looking for production ERP? Search for Absolute ERP – a reliable and leading ERP provider in India with extraordinary features.

At Absolute ERP, you will get your production and manufacturing processes streamlined. Enjoy competitive advantage and monopoly with us. We ensure effective business production at economical rates.