Parts of this article were originally seen in “Woodworking Network“
Most of us have seen shops that are very labour intensive and others that are capable of doing similar volume with far fewer employees as a result of technology investments.
Compare for example, the casework manufacturer with CNC, where high volumes of precision parts are made with only a few workers, as opposed to another company, cutting panels to size on table saws, and then boring and grooving using several other manual machines. The labor content, part quality, and overall throughput will be substantially different, making the CNC operation much more cost effective.
This comparison is well-known and often taken for granted in our industry. It has become “conventional wisdom” for companies to make these kinds of machinery investments, as a safe and effective way to improve productivity. Companies that take these steps will enjoy much higher output, better and more consistent quality, all with fewer employees. As a result, more work can be taken and higher profit margins will follow.
Office Technology ‘Is Often Forgotten‘
However, that same conventional wisdom is often forgotten when it comes to front office productivity. When companies need more estimating, more purchasing, more project management… an ad is placed for an additional employee. The cost for such skilled workers is high in terms of wages and benefits, plus there will be extensive training and acclimation before the new hire becomes productive. And in such specialized areas, there is a high risk that the new worker will not fit, wasting huge amounts of time and money as the search starts over again.
Just as technology investments reap large returns in the factory, the same can be true in the front office. Implementing an integrated ERP system properly will almost always produce measurable productivity gains and cost reductions.
What is ERP?
Enterprise resource planning (ERP) is business process management software that allows an organization to use a system of integrated applications to manage the business and automate back office functions. ERP software integrates all facets of an operation, including product planning, development, manufacturing processes, sales and marketing.
ERP provides an integrated real-time view of core business processes, using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that entered the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.
By using ERP software, your business can be better prepared to reap the benefits of capital equipment investments. Your new CNC cutting equipment might be able to increase your production output by 35%, but if you can’t properly forecast your material and inventory needs, then that 35% benefit won’t be fully realized. There are numerous ERP software companies, but it’s important to find one that has been specifically designed for your company size and type.