Manufacturers use enterprise resource planning (ERP) systems to manage and automate various business operations — including finance, accounting, human resources, production management, supply chain management, inventory management, and customer relationship management — to boost productivity, increase efficiency, and become more cost-effective.
Traditionally, ERP systems were implemented as on-premise software systems, which meant that manufacturing companies had to invest in expensive hardware and infrastructure to run the software on-site. But over the last few years, there has been a growing trend toward cloud-based ERP systems.
The numerous advantages of a cloud-based ERPs system help manufacturers stay competitive and succeed in today’s fast-paced business environment.
What Is Cloud ERP?
Cloud ERP, or cloud-based ERP systems, are ERP software systems that provide businesses with access to an integrated suite of applications over the internet or ‘the cloud.’
In contrast to on-site systems, cloud-based ERP systems are hosted on remote servers and can be accessed over the internet from anywhere, as long as there is an internet connection.
Cloud ERPs give manufacturers many advantages over on-premise systems, including lower upfront costs, greater flexibility, effortless scalability, and faster implementation. Additionally, cloud-based ERP systems typically offer automatic updates and maintenance, making it easier for manufacturers with no or small IT departments to ensure that they always use the latest version of the software.
Why Are More and More Manufacturers Moving to Cloud ERP?
There are many benefits to moving from an on-premise ERP to a cloud-based ERP system:
A cloud-based ERP system can be accessed from anywhere on any device — laptop, smartphone, tablet — with an internet connection. Cloud ERPs enable employees from different departments or locations to access real-time data to collaborate more efficiently, leading to increased efficiency and productivity. This is especially important for manufacturing companies with multiple locations, remote workers, or a field services division, as everyone can quickly access the accurate information they need to do their job.
As a manufacturing business grows, its ERP needs can change. A cloud-based ERP system can easily be scaled up or down to meet changing business requirements.
To scale on-site ERP systems, hardware and infrastructure must be upgraded or redesigned to accommodate growing demands. But cloud ERPs are highly adaptable and make it easy to increase or decrease resource usage as needed, allowing the ERP to grow with a business. A cloud ERP can easily adapt to handle a spike in hiring or adding new product lines or business units. For manufacturers who face seasonal demand fluctuations or rapid growth, this is especially crucial.
3. Better Real-time Data
Real-time data is one of the biggest advantages of an ERP system — and a cloud ERP can provide real-time data even more effectively than a traditional ERP system. With a cloud ERP, it is less likely that data used for reporting and projections contains errors, as data is always up to date because the application and information are hosted in a single, central cloud location.
Cloud-based ERP systems give businesses access to timely and accurate data, allowing them to make more informed decisions that can help them optimize everything from inventory control to production planning to supply chain management.
4. Improved Collaboration
Cloud-based ERP systems enable employees to collaborate more easily, as they can access the same data and work on the same documents from anywhere. The cloud allows employees to input, compile, and collaborate on data from any location, meaning different departments or business units can work together from multiple locations, as everyone has access to a single instance of the software.
Key decision-makers can also stay connected when traveling, offsite, or outside of regular work hours, making it easier to collaborate and move projects forward.
5. Lower Upfront Costs
A cloud-based ERP system eliminates the need for costly on-site hardware and infrastructure, making it more affordable for smaller manufacturing companies. Additionally, the predictable subscription-based pricing model of cloud-based ERP systems can help manufacturers better manage their budgets.
6. Faster Implementation
Cloud-based ERP systems can be implemented much faster than on-premises systems, as there is no need to set up hardware or infrastructure. Configuring on-premise ERP systems to meet specific business needs is more expensive, takes more time, and requires more IT resources than a cloud-based ERP, as everything needs to be done on-site.
However, with a cloud-based system, the ERP vendor activates the hardware and software. As a result, there is less downtime during the conversion to the new system. Manufacturers can get their new system up and running more quickly, making them ready to respond to rising demand or a changing market.
7. Automatic Updates and Maintenance
With a cloud-based ERP system, manufacturers don’t need to worry about installing updates or performing maintenance themselves. This is all taken care of by the ERP provider, freeing up their staff to focus on other, more important tasks.
8. Improved Security
Some manufacturers are still hesitant to use the cloud for sensitive data, including financial information, because of security concerns. But cloud-based software has better security than on-premise ERP systems.
Instead of manufacturers needing their own specialized resources to protect their on-site system and data, Cloud-based ERP systems are hosted by vendors who can devote more resources to security than individual manufacturing companies can. With strict security measures in place, Cloud ERPs can ensure manufacturing companies better safeguard their data and avoid security breaches.
9. Integration With Other Systems
Cloud-based ERP systems can be easily integrated with other cloud-based systems, such as CRM, distributor, or e-commerce platforms, to streamline business operations. As the vendor typically handles integrations, tailoring a cloud ERP solution to its unique needs is a more straightforward and less expensive procedure for a manufacturer than with an on-premise system.
10. A Greener Choice
Finally, cloud-based ERP systems can help manufacturers reduce their environmental footprint, as they don’t require as much energy or physical space as on-premise systems.
How to Know if Your Business Is Ready for a Cloud ERP?
As a manufacturing business grows, its operations become more complex, and can involve multiple departments, teams, and locations. If your business is finding it challenging to manage these complexities using your existing on-premise ERP system, a cloud-based ERP can offer you greater flexibility and scalability to support your expanding operations and business needs.
A cloud-based ERP system will provide numerous benefits to help you better manage your operations, stay competitive, and thrive in today’s fast-paced business environment.
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