Top Ten Problems Solved by SAP Business One in Manufacturing.
Problem #2: Poor Material Planning in Manufacturing
This is the second in our series of blogs highlighting ten common problems addressed by SAP Business One. The first examined the problem of inaccurate inventory. In this blog, we highlight the problem of poor material planning.
The material planning problem
Poor material planning is a major and costly problem in manufacturing as it directly impacts profitability, customer satisfaction, and operational efficiency. Overstocking causes your working capital to sit on a shelf in your warehouse. Rushed orders and missed deadlines are expensive and damaging for your reputation. And if customers can’t trust you, competitors are only one click away.
Manual systems for planning are not simply inefficient; they are damaging for morale. Production and sales teams get frustrated with constant delays and changes. Management spends too much time firefighting rather than improving processes.
The root causes of poor material planning
- Fragmented systems for sales, purchasing, inventory and production
Information passed manually between departments is often late, incomplete, and inaccurate. This results in poor decision making. - Weak forecasting
Systems that depend on “gut feel” or quick fixes often lead to ordering materials too late or in the wrong amounts. - A lack of coordination
Planning that relies on undocumented procedures or one or two experts is inefficient and lacks visibility. Bills of materials may be inaccurate or out of date. Poor planning often leads to last-minute rush jobs, which can quickly disrupt production scheduling and cause delays.
How SAP Business One can help
SAP Business One helps by integrating material planning with sales, purchasing, inventory management and production. Departments and processes are all working together. All singing from the same hymn sheet.
SAP Business One improves efficiency by automating manual processes, and reducing the scope for manual error. It is also faster and scales better and avoids tying excess cash up in unused stock. On-time production and delivery drives improvements in the all-important customer experience.
And, lastly, SAP Business One gives you real-time visibility of your whole business. This helps you make better decisions with more accurate forecasts.
In summary, SAP Business One delivers the following key benefits to manufacturing businesses:
- Integration
Once a sales order is confirmed, the system automatically updates production schedules and triggers material planning. - Automation
Automatically generate documents based on transactions. For example, converting a sales order into a production order, or a goods receipt into an accounts payable invoice. - Accurate Bills of Materials
The systems ensure that every product has an up-to-date BOM with all components and quantities. Changes in design or material automatically flow into planning. - MRP Wizard
MRP calculates material needs based on current orders, forecasts, and minimum stock levels. It then suggests purchase orders and production orders for the exact quantities required. - Production Scheduling and Capacity Planning
SAP Business One aligns material supply with actual manufacturing capacity. A visual scheduling tool presents a Gantt chart style representation of production orders. Planners can see bottlenecks instantly and drag-and-drop jobs to reschedule without breaking dependencies or overloading resources.
Take the next step
In the next blog in this series, we focus on the problem of lack of real-time visibility.
To find out how SAP Business One from LAKE could help your business, download a copy of our SAP Business One Beginners Guide – Manufacturing.
By Fraser Dunlop