In the midst of the most chaotic, uncertain months of 2020, manufacturers have found that the perfect antidote is to double quality and reliable delivery - by turning to their enterprise resource planning (ERP) systems for timely insights needed for guidance to the rapid changes in the market, demand and resources in their supply chains. Increased flexibility not only allowed for business continuity; it also served as a competitive advantage in attracting and retaining customers. And this laid the foundation for the growth of producers last year and will continue to develop in 2022.
"It's simple for us: can our ERP system help us keep our word to our customers and keep their trust?" This is the goal of quality and business continuity, "a founder and CEO of a large company recently told me. "We need to do everything we can to maintain customer trust, and ERP systems make this happen by looking at each production process and how it affects our finances."
It should be noted that ERP systems are not used in isolation. The past year has seen an acceleration in the adoption of nonconformity / corrective actions (NC / CA), corrective and preventive actions (CAPA) and improved product quality planning (APQP), while sharpening their focus on statistical control of processes (SPC), input quality management and supplier quality management. ERP systems provide safety railings that provide manufacturers with the data they need to improve supplier quality, the optimal mix of machines and the right work teams to deliver excellent quality to customer and industry standards.
Let's look at how ERP systems help ensure business continuity through quality, as well as review best practices for aligning quality with business continuity.
Using ERP systems to ensure better business continuity through quality
For some of the fastest growing manufacturers, ERP usually works in conjunction with a production execution system (MES) to enable supplier quality management, product quality management and real-time production and production monitoring, together with the financial statements. Real-time insights and the ability to analyze data enable these companies to reliably meet customer requirements - even in rapidly changing market conditions.
As noted by the Chief Operating Officer of a large plastics company, “The ERP systems and quality management indicators they provide, along with real-time process and production monitoring, mean that our word is equivalent to gold. We are more committed when we use ERP for quality management.”
Here are four key areas where ERP systems help manufacturers go beyond the first level of analysis in their manufacturing operations and understand how decisions affect product quality and related performance indicators.
Material Return Authorizations (RMAs) are a direct measure of product quality and product non-compliance with customer specifications and requirements. ERP system databases with quality management modules can perform real-time Pareto analysis and easily change the sampling frequency of data to identify sources of problems with RMA variations. For example, sometimes RMA percentages vary dramatically, even when product quality remains consistently high. Using an ERP troubleshooting system often finds that a new customer is using the product as a last resort - or an area of application that is tangential to its primary intended use.
Understanding CAPA events
CAPA, also known as the Corrective Action Request (CAR), is a measure of how well the initial engineering specifications, combined with construction instructions in the workshop, reflect customer requirements. ERP systems that have an integrated data platform can provide these metrics in real time and at any frequency that production quality engineers need.
Traceability and traceability
The consensus among the manufacturers we spoke to is that traceability and traceability in their ERP systems help stabilize quality and reduce operating costs, while providing the much-needed compliance data needed to meet a number of industry standards and government regulations. For the leaders of these companies, the implementation of tracking proved to be one of the most effective strategies in 2021 they have implemented.
The level of vendor quality assurance (SQA) is an excellent indicator of how efficient SQA systems and processes are for the manufacturer, and SQA metrics are an integral part of the quality reporting system of any ERP system. SQA's goal is to help manufacturers provide suppliers with an accurate, reliable framework for delivering the highest quality raw materials, components and assemblies used in manufacturing. Many manufacturers evaluate this indicator every 90 days with all suppliers to understand the relative quality levels by product and supply area.
Best practices for aligning quality with business continuity
In 2020, all producers had to take a firm stand on everything that does not contribute to quality or maintain their activities in order to be able to accept orders and execute them. Throughout the year and in 2021, four best practices emerged to address these priorities.
Use quality management and compliance to guide business continuity. The more integrated quality, supply chain management, production planning, logistics, finance and service, the more effective a manufacturer's contribution to its customers and partners will be.
Increasing cooperation with customers. Price competition in 2020 was a losing strategy, while guarantees of higher quality and scheduled delivery dates were considered the two most valued services among manufacturing customers. The most successful manufacturers also achieve greater compliance by anticipating further needs for a customer-focused audit.
Understanding the price of good quality. Manufacturers are increasingly recognizing the value of having an idea of the extent to which the price of good quality contributes to higher margins and recurring customer purchases, especially when viewed in relation to the costs of poor quality in the form of sales and declining revenues. When financial reporting, quality management, compliance, supplier quality, MES and ERP are part of the same platform, tracking the costs of good and bad quality becomes an automated workflow.
Following the roadmap for evaluation. When management teams build business continuity first on quality, they are better prepared to define an evaluation roadmap throughout the company. This makes it possible to see where and how product quality affects revenue, costs and financial results.
Quality enables the continuous operation of a business, and quantifying its contribution to revenue in a roadmap to value is the cornerstone of business continuity strategies today. When business continuity is based solely on revenue or, worse, simply on forecasts, there is too much room for variations in productivity. By using their ERP systems to help take control of quality - and selling its value first, including commitments on quality levels, delivery dates and custom configurations - manufacturers can compete by becoming trusted partners in navigation in uncertain times.