ERP system for production
ERP systems are tools that work in manufacturing companies of all sizes. While they may sound complex, their core function is quite simple: they help integrate various business processes in one place. For a manufacturing company, this means that everything—from raw material management and production planning to the distribution of finished products—is integrated into a single system. This simplifies management, and decision-making is based on current and accurate data.
For many companies, especially those facing the challenge of production optimization, implementing an ERP system can prove crucial. Instead of operating in separate silos, departments such as purchasing, production, warehouse, and sales can collaborate on a single platform, streamlining information flow and reducing errors. This not only saves time but also money.
Although implementing such a system requires commitment, the benefits of using it are invaluable. Therefore, more and more companies are deciding to take this step, recognizing that modern tools can truly support growth and market competitiveness.
ERP system modules in production management
Vendo is an advanced ERP system. To fulfill its role in a manufacturing company, it has specialized modules (subsystems). These primarily address production and warehouse management and are an integral part of the Vendo production management platform.
ERP for production, or the mysterious 3-letter abbreviations: MRP, APS, MES, WMS:
Vendo Production – an MRP (Manufacturing Resource Planning) program. This part of Vendo is responsible for streamlining production management. This module enables production order management, product structure management (BOM) and production technologies, material requirements management, tool management, and workshop aid management.
Alice APS – Advanced Planning and Scheduling. APS (Advanced Planning and Scheduling) is an IT system that extends ERP. It is responsible for advanced production planning operations.
Vendo MES – Manufacturing Executing System – MES (Manufacturing Executing System) is a type of software used for the ongoing management and monitoring of production processes. In short, MES enables the ongoing tracking and documentation of the production process from raw material to finished product.
Vendo WMS – Advanced Warehouse Management – WMS (Warehouse Management System) is a program for managing the movement of goods within warehouses. It operates based on warehouse locations, barcodes, and data collectors. This allows Vendo WMS software to quickly and accurately locate goods within the warehouse and control inventory turnover. As a result, it streamlines all warehouse processes.
How to choose and implement an ERP system in a manufacturing company?
Choosing software for a manufacturing company
When selecting an ERP system for a manufacturing company, it’s crucial to identify the company’s specific needs. Consideration should be given to features essential for process optimization, such as resource planning, inventory management, quality monitoring, and integration with production machines. The software’s flexibility in scaling and adapting to changing requirements is crucial, as is an intuitive user interface, tailored to employees at all organizational levels. System compatibility with existing IT tools and ease of integration must also be ensured.
When selecting a supplier, consider their experience in a similar manufacturing industry. References from other manufacturing companies should also be checked. It’s important that the supplier offers comprehensive technical support and is available in case of issues. The supplier’s flexibility in adapting the program to the company’s specific needs should also be assessed.
ERP system implementation
First and foremost, implementing ERP in a manufacturing company is a collaborative effort between both the supplier and the future user. Therefore, it requires careful planning and commitment from everyone involved.
- First, a pre-implementation analysis must be conducted. This analysis identifies the organization’s key requirements and needs and maps core processes.
- Secondly, the supplier, based on the analysis, configures the system to meet the requirements. This sometimes requires introducing new functionalities into the system, resulting in a more complete fit for the company.
- Third, user training is crucial to the effective use of ERP software. This allows users to learn the new program and provide feedback on its operation.
- Fourth, data migration. Companies have their own history and data. In short, they want to have it implemented into the new application. Besides, it can’t launch without key information.
After completing these four stages, production go-live occurs, meaning the system goes live. Production go-live often requires supplier assistance to address potential issues.
Post-implementation service
Following a successful implementation, we move on to the next stage: post-implementation support. Generally speaking, this includes:
- user support,
- software updates,
- problem-solving,
- further development as needed.
Technical preparation of production in the ERP system
What is technical preparation of production?
Technical production preparation (TPP) ensures efficient production by properly defining all necessary resources and operations in the software. This includes the development of production documentation, in particular the selection of materials and the definition of technological processes.
Technical preparation of production in the ERP system for Vendo production consists of:
- defining the product structure (BOM),
- development of implementation technologies,
- technical documentation management,
- planning and quality management,
A BOM (Bill of Materials) is a composite of materials and semi-finished products for a given product. In production involving multiple components (e.g., machine manufacturing), it occurs in a multi-level nested format. A product is composed of semi-finished products, and semi-finished products are composed of further semi-finished products or components and materials.
Technology defines the production route. It is a sequence of production operations (e.g., cutting, bending, drilling, welding, assembly) along with the definition of stations, processing times, tools, and more detailed execution instructions.
Technical drawings are an integral part of the technology. They should be accessible for download and work completion registration.
As part of technical production preparation, it is also important to develop quality control and product testing plans. This ensures that the final product meets all quality requirements and standards.
Technical preparation of production – benefits and risks
Benefits and risks associated with full Technical Preparation of Production in ERP software:
Benefits
Technical preparation of production enables:
- management and control of the production process in the system,
- balancing enterprise resources,
- scheduling of production processes,
- calculation of the demand for materials and semi-finished products (MRP Loop),
- ongoing measurement of production implementation,
- settlement of actual costs in relation to assumed costs.
threats
- high workload and, as a result, increased costs for the technology department related to entering data into the system,
- delays in starting production in the event of delays in the creation of the TPP.
Handling production orders in ERP software
A production order is the basic document in the Vendo production ERP program. Generally speaking, it specifies:
- product,
- quantity to be produced,
- deadline for completion,
- orders from the recipient (MTO – Make to Order, ATO – Assemble to Order, ETO – Engineering to Order),
- sales forecasts, analysis of stock levels and inventory turnover (MTS – Make To Stock).
Production guides – a key functionality of the ERP system in production management
In short, production guides are documents intended for use on the shop floor during the production phase. They are most often created as a result of the BOM and technical production preparation developed at earlier stages.
What do Vendo ERP production guides contain?
- product/products and quantities to be produced within the guide,
- production route, i.e. detailed descriptions of the subsequent steps of the production process (operations) through which the product or semi-finished products pass,
- the number of operations expressed in units of registration of a given operation,
- time standards of the operation, i.e. preparation and completion time and unit production time,
- station/stations at which a technological operation can be performed,
- tools,
- technical drawings, especially photos or diagrams, that make it easier to understand the instructions,
- measurement cards and other guidelines for quality control and verification processes,
- materials used in the production process along with their standard quantities.
What are production guides used for in an ERP system for manufacturing?
Production guides are primarily used to control the production process of a given product or detail. They “travel” through the production hall along with the product. Using reporting panels (part of the Vendo MES subsystem), employees record completed production operations and account for used material batches. Furthermore, the guides ensure that employees are properly informed about production processes, quality standards, and safety regulations. They enable the rapid onboarding of new employees, minimizing the risk of errors. In this way, they contribute to improving product quality and production efficiency.
What are the next steps after issuing production guides?
- planning (scheduling) of production processes, i.e. the APS Alice system,
- recording information about the execution of a given operation, in particular the name and surname of the employee, the number of pieces produced, working time (Vendo MES),
- information on materials used, indicating the quantity and batch of a given product (MES, WSM),
- recording quality parameters, and especially determining the number of compliant and non-compliant items.
Summary
Production guides provide, firstly, full control over actual production costs versus planned costs. Secondly, they improve production quality and provide full traceability by tracking which employee, on which machine, and from which materials manufactured the product, along with monitoring quality parameters.
Production planning
Production planning is the foundation of effective production management in almost every company. In the Vendo ERP software, the goal of production planning is to ensure that production orders are completed on time and, conversely, that all production resources are optimally utilized. This results in meeting market demands while minimizing costs and maximizing profits. These goals are achieved in the production planning system through:- optimization of production processes,
- reducing downtime, i.e. reducing the number and time of changeovers
- effective inventory management,
- ensuring timely execution of orders.
Masterplan
The name Masterplan comes from the Master Production Schedule (MPS). A master plan is a medium-term production plan because it is typically created for a 3-4-month timeframe. It specifies:- what is to be produced,
- in what quantity
- when the production is to be completed.
- Sales plans,
- Orders from customers,
- Framework orders,
- Inventory levels,
- material requirements planning (MRP, Material Requirements Planning),
- planning of workload (CRP, Capacity Requirements Planning),
Operational production planning
Production scheduling creates a detailed production plan. As a result, each production operation has a specific start date, end date, assigned workstation (machine), and employee.
The Alice APS module is responsible for the operational planning process in the Vendo ERP system.
In the process of such planning, Vendo takes into account:
- orders, in particular their priorities and deadlines,
- hierarchical structure of the product and operations, in particular time standards, waiting periods,
- machines, i.e. work calendar, occupancy, planned inspections,
- employees, i.e. attendance calendar and competence matrix
- materials: availability, time parameters (e.g. delivery time), deliveries in transit
Material procurement in ERP software for manufacturing
MRP loop – Calculating the demand for materials and components in the ERP system for production management
Vendo determines which materials and components are needed to produce planned products, in what quantities, and when they will be needed. This process minimizes storage costs and helps avoid production downtime due to lack of essential materials and semi-finished products.
Material calculation using the MRP loop – step by step
- Analysis of production orders, open orders, sales plans – Determining what, how much and when is to be delivered to customers is the starting point for further calculations.
- Analysis of the technological structure of the product, i.e. BOM – List of semi-finished products and materials and the relationships between components).
- Analysis of material and component inventory, deliveries in transit, and work in progress.
- MRP loop algorithm – Based on the above, the amount of materials necessary for production is calculated.
Handling requests for quotes and orders for suppliers
After calculating the quantities and expected delivery dates of materials, we begin selecting a supplier and creating inquiries and orders. In Vendo, the ERP system for manufacturing, this process includes the following steps:
- Creating a Request for Proposal (RFP) – Based on the calculated material requirements, requests for quotations are created for selected suppliers. The RFQ contains information about the required materials, their specifications, expected quantities, and delivery dates.
- Supplier Quote Analysis – Supplier quotes are analyzed based on price and lead times. The ERP helps select those quotes with the best price or delivery date.
- Orders to suppliers – After selecting the offer and negotiations, formal orders to suppliers are created in the ERP system, containing all agreed terms of cooperation.
- Offer monitoring – The software automatically monitors order fulfillment dates and informs about possible delays, as well as enables supplier evaluation in terms of OTIF (On-Time In-Full).
Handling warehouse management in production using the WMS module in the ERP system
Efficient and effective warehouse management is crucial for effective production. Implementing an integrated ERP application for production, along with a WMS (Warehouse Management System) module, improves the level of automation, accuracy, and speed of warehouse operations.
Przyjęcie materiału na magazyn
In Vendo WMS, the process begins with a delivery notification generated based on the order to suppliers. This notification confirms the quantity of material being delivered and the delivery date, and initiates preparations for receiving the material. The use of data collectors enables quick and accurate verification of deliveries based on the order. Delivery information is recorded in real time. This increases the efficiency of the receiving process and minimizes the risk of errors.Distribution of goods into locations
The WMS module allows for optimal management of warehouse locations, guiding the process of placing goods. The system suggests warehouse locations based on the type, size, and turnover of materials. This ensures efficient handling and quick access to materials.Logistics unit service
Support for logistic units and integration with the GS1 standard enables unambiguous identification and tracking of goods in terms of pallets and collective packaging.Barcodes
The use of barcodes, including advanced 2D codes supported by barcode readers, significantly accelerates warehouse processes, from goods receipt and storage to the issuance of materials for production. As a result, it enables rapid product location, ensures full batch traceability, and minimizes the risk of errors.Batch management
Vendo WMS supports batch management, including serial numbers, lot numbers, expiration dates, and certificates. The system automates the process of printing barcode labels, which is crucial for effective batch identification and tracking. Batch tracking in warehouse circulation is achieved through the use of data collectors and barcodes.Quality assessment in the Quality Control module
The Quality Control module allows for precise verification of material compliance, recording any discrepancies, product parameters, and certifications. This allows for a quick response to any material quality issues..
Settlement of the order to the supplier
Upon receipt of materials, the ERP program automatically generates a delivery document, which is used to settle the order and delivery. This ensures fast and transparent communication with business partners and efficient order management.Issuing materials for production
Through integration with Alice APS production schedules, the WMS generates warehouse orders to move specific quantities and batches of goods to the workstation. Using barcodes to confirm operations ensures precise batch tracking and minimizes the risk of errors.Receipt of finished products
Finished or semi-finished products are received at the production site and marked with a label printed from Vendo, indicating the batch, production date, expiration date, etc., which enables their unambiguous identification and tracking in the system.Packaging and delivery of products to the customer
WMS software automates warehouse order generation based on customer orders, supporting the packaging, pre-packaging, and shipping processes. Integration with freight forwarders enables efficient handling of waybills and delivery logistics to recipients. Warehouse management using Vendo and its WMS module is key to effective production and logistics management in modern enterprises. Automation, precise control, and optimization of warehouse processes not only increase operational efficiency but also contribute to improving customer service quality and building a competitive advantage in the market.Support for cooperation in the ERP system
Production often requires a range of specialized operations that exceed the technical capabilities of a given company, or that the company simply doesn’t want to handle. These operations are then outsourced to subcontractors. Outsourcing production operations allows a company to focus on core competencies while maintaining high quality and production efficiency. Support for subcontractors is an integral part of an ERP production management system.
What does cooperation support include?
- Shipping to a Subcontractor – Managing the shipping process for subcontractors requires careful organization. This includes not only ordering the service but also establishing delivery deadlines and preparing and submitting appropriate release documents. All these activities must be closely coordinated to ensure smooth production processes and avoid delays.
- Monitoring completion dates and quantity control are crucial to maintaining production deadlines. This requires regular supervision, communication with suppliers, and the use of systems that enable ongoing tracking of completion.
- Incorporating collaboration into production schedules – Collaboration requires consideration at the production planning stage. This means that all operations outsourced to external partners must be integrated with the internal production schedule, allowing for optimal workflow and resource management.
- Acceptance of a Semi-Finished Product from a Subcontractor – The qualitative acceptance and quantitative settlement of semi-finished products from a subcontractor is the next step in the process. The qualitative acceptance allows for verification that the delivered components meet established standards. Quantitative settlement, in turn, ensures that all commissioned work has been fully completed.
- Recording collaboration costs – To ensure full financial transparency and control over production costs, it is essential to accurately record collaboration costs in the actual production costs of a product or semi-finished product. This not only allows for accurate calculation of the profitability of individual products but also identifies areas where cost optimization is possible.
Summary
Managing collaboration in production processes requires planning, coordinated execution, and continuous monitoring. The key here is not only the selection of appropriate external partners but also effective management of communication, timeliness, and service quality. An ERP system simplifies and automates these processes and integrates them with other production and logistics activities.
Production settlement
Vendo, as an ERP software for manufacturing, enables tracking of all production processes, resulting in accurate production cost accounting, performance analysis, and operation optimization. Production cost accounting consists of:
Material Cost Calculation – Based on data from production guides, production management software calculates the consumption of materials for production, taking into account their purchase prices and any waste. This allows for the accurate determination of material costs for each product based on actual acquisition costs.
Direct labor accounting – ERP software tracks the working time of employees directly involved in the production process, thus allowing labor costs to be assigned to individual production orders or product batches.
Cooperation costs – Invoices for cooperation services performed are included directly in the production costs of a given batch.
Indirect Cost Accounting – Indirect costs, such as machine depreciation, energy, and shop floor maintenance, are accounted for through allocation based on appropriate allocation keys. The ERP system allows you to establish and apply these keys, distributing indirect costs across products.
Manufacturing Cost Calculation – After collecting all data regarding material costs, direct labor, and indirect costs, the ERP system calculates the total manufacturing cost for each product. This allows for determining margins and selling prices.
Quality Control in the ERP system for production
Quality control is a crucial process for virtually every manufacturing company, ensuring that manufactured goods meet specific quality standards and requirements. In ERP systems dedicated to production management, it encompasses a range of activities and procedures, including:- Control of compliance and quality parameters of materials – verification of compliance of raw materials with the required standards at the stage of acceptance into the warehouse, including analysis of certificates and conducting tests.
- Releasing raw materials for production, which means that until quality approval is obtained, the materials may be blocked for release
- Monitoring and controlling the production process, including the use of measurement cards – supervising production processes, determining whether the product after a given operation complies or does not comply with standards and using measurement cards to record data and identify deviations.
- Ensuring traceability of material batches throughout the entire production process – tracking batches throughout the production process to quickly respond to any problems
- Approval management – Managing appropriate documentation (approvals, certificates) ensures that the materials used fully comply with requirements. ERP systems should support this process by automating record-keeping and document management.
- Supplier evaluation – regular supplier evaluations in terms of the quality of materials supplied and on-time delivery
- Final inspection and certification of the finished product, i.e. verification of the finished product in terms of meeting quality requirements before shipment, including functional and visual tests
- Managing employee training and qualifications – supervising employee professional qualifications and organizing training to increase employee competences and awareness of quality standards
