Manufacturing Software in 2019. How MRP Platforms have Changed.

Manufacturing Software in 2019. How MRP Platforms have Changed.

In the past decade the manufacturing industry in Australia has changed dramatically, and so has Manufacturing Software (also known as MRP software). Interestingly, the concept of Enterprise Resource Planning software was born in the manufacturing industry. In the late 1960’s, two pioneers of early mainframe computing, Black and Decker and Toyota were the first two major companies to invest significant amounts of time and money in software that at the time was considered revolutionary.

The main functionality that was available on these systems was the ability to calculate material supply and input requirements and estimate production yields. For companies like Black and Decker, this meant that hey could more confidently increase production, demand and supply plans and streamline the administration of both new product design and continual production improvement.

Modern Manufacturing Software is Changing

In the 1980’s decade, the concept of ERP really became common terminology and the MRP software’s functionality started to expand into other areas of a manufacturers core operation.  At this point in time, different software vendors started to roll in more functionality, which made these software packages more useful across the wider business.

Most commonly, accounting and financial management functionality became a part of a core MRP Software’s functionality set, but it wasn’t until recently that software vendors started to look at the requirements of a growing manufacturing business more holistically.

When broken down, most business can be divided into a few key business units. These units should work together seamlessly from marketing and sales, through to procurement and production and finally in accounting and financial management.

Traditional ERP software was designed to help streamline only two of these key business areas. Demand and Supply Planning, and Procurement and Inventory Management. However, as time has progressed and technology has gotten better, modern manufacturing software has evolved into complete business solution, with the intent on providing a single system to manage an entire manufacturing operation.

So, how does Traditional MRP Software Compare to Modern Manufacturing Software in 2019?

When comparing modern Manufacturing Software, you should expect to see the same functionality as traditional and legacy ERP systems, as well as other integrated modules that extend the functionality of the application and eliminate the need for managing multiple systems.

Functionality

Traditional ERP/MRP

Modern Manufacturing Software

Customer Relationship Management (CRM)

Key Information about a customer and contacts in the organisation. Limited customer performance reporting due to separate CRM being used to manage sales and opportunity pipeline.

CRM and Marketing are on platform, and allows users to track leads, prospects, opportunities as well as define sales processes and automate workflows. Modern manufacturing software also provides customer performance reporting out of the box, to show any user key information such as customer order frequency, support calls, time to pay and more.

Quoting and Estimating

Traditionally, quoting and estimating is done outside of the system, usually in Excel spreadsheets and Microsoft word documents. Quotes are not kept in a single place, so the ability to forecast sales is difficult.

Modern Manufacturing Software provides out of the box functionality to quote and estimate based on existing BOM’s, previously completed jobs and more. In addition, a good manufacturing software will allow uploading of BOM and Work Order information, rather than having to key everything in from scratch if an order comes to fruition.

Invoicing

In older systems, invoicing is generally done externally to the MRP in a dedicated product like MYOB or Xero. These invoices are created manually, and then fed into the accounting and financial management system. This information isn’t linked to CRM or Support/Service Tickets which makes it more difficult to provide complete customer information or reports to management. 

Now, invoicing is just another stage in the lifecycle of a customer order.

What starts as a marketing lead or enquiry, can be simply upgraded to a quote, which can then be turned into an invoice in seconds. Because all invoice information, as well as previous purchase and order history, service and support calls and marketing information is in the one system, a complete 360 degree view of the customer can be achieved.

BOM and Work Order Creation

Most MRP solutions offer very robust BOM tracking and creation. Creating this BOM as well as tracking the required inputs and outputs after manufacturing is the core of what these systems are designed to do.  This however, is rarely linked to any other business data which means that reporting and KPI tracking is manual, slow and usually done retrospectively.

Newer Cloud ERP solutions provide the same, if not better functionality when it comes to the creation, management and updating of the BOM for both standard manufactured items and custom jobs.

These types of software are designed to be flexible, editable and make Work Order issuance and execution simple.

Production Scheduling

Whilst a lot of MRP software have some concept of production scheduling, due to the age of the technology they are rarely as sophisticated and integration as modern Manufacturing software. Similarly, because they are server based and generally on premise , attempting to digitise data capture on the shop floor can be expensive and inaccurate. Many manufacturers still rely on paper travellers and work orders because the scheduling functionality in their software is not flexible enough to meet their needs.

Modern Manufacturing software comes out of the box with smart scheduling and resource and work centre allocation functionality. Because these systems hold all master data regarding a customer order, or an internal work order they are able to generate sophisticated supply and demand plans that can automatically feed into the work order and production modules and define what should be manufactured and when.

Many manufacturers are now turning to tablet technology, to allow for fast and more frequent data capture on the factory floor, which means manufacturers are enjoying the benefits of more accurate job costing and costing. In an industry with shrinking margins, efficient use of machine and human time and effective materials planning is key.

Work Order Completion

Work Order completion, in an older MRP Software is an administrative step that is often taxing on back office staff.

This is because in most cases, work order completion data is captured on paper, and then manually keyed into the MRP system.

This creates two problems.

  1. Duplication of effort in capturing and recording data.
  2. High risk of data being inputted incorrectly, or not at all.

Modern Manufacturing Software is able to extend to the shop floor and provide a user-friendly way to capture manufacturing data.

In 2019, tablet technology can be implemented very cheaply, and Cloud based manufacturing software can be accessed on any device with a browser.

This means that as the shop floor workers are capturing data on tablets, for example waste, units produced in a time period, or time spent changing or maintaining machines and this data is feeding back into their ERP systems in real time.

The benefit is that now managers can get live information and see and rectify scheduling clashes or unproductive work centres quickly. 

Industry 4.0 and the IoT are changing manufacturers view of software systems.

We now live in a world that is increasingly connected. Smart Phones now have more computing power than top end PC’s just ten to fifteen years ago. Devices are connected. Data is aggregated.

Now more than ever, manufacturers are turning to technology to give themselves a competitive advantage and to increase the efficiency and effectiveness of their businesses. Hardware, software and sensor technology are now making it possible to automate the collection of information, and modern manufacturing software is giving manufacturers. Similarly, as technology progresses the equipment and machinery that form the core of a manufacturing operation are now coming with this type of sensor technology as standard, as well as controller units that are designed to be integrated too.

Modern Cloud Manufacturing solutions, such as NetSuite have an open API and a set of developer tools to allow quick and flexible integration. This means, that any data being captured by a machine, can now be sent to your ERP and used for business intelligence, dashboarding and reporting and planning.

The impact this is having on manufacturers is huge, as they can now access this information and actually do something with it. Rather than collecting data without an end game in mind.

Modern technology, like artificial intelligence and machine learning is now allowing unprecedented levels of automation on the factory floor. This is not only increasing the efficiency and production levels, but it is also driving lower cost of production.

Where this can be of real value, especially in industry with high risk operations, is the minimisation of manual/human intervention in the manufacturing process.

These automations and workflows can all be driven by the sophisticated in-built tools in a modern ERP/MRP solution.

Key Benefits of Modern Manufacturing Software, like NetSuite.

Modern cloud manufacturing process software is offering users many tangible benefits. These include

Increased Supply Chain Visibility

NetSuite manufacturing edition provides 360-degree visibility across all facets of supply chain, as well as the interrelated areas of the business, such as sales and marketing and accounting and finance. This wider view is giving manufacturers a complete view of their organisations and empowering them to make better decisions, fast.

More Efficient Production Planning

NetSuite provides sophisticated automation when it comes to production and capacity planning. The integrated schedule board can be viewed by either work order status or work centre which enables planners to get a real time view of what is happening on the factory floor, as well as the best way to plan upcoming work orders. Because NetSuite is a single system, everyone in the business can have visibility of planned, in production and executed work orders.

Improved Quality Control and Compliance Management

QC and compliance are integral to the manufacturing process. Now more than ever, manufacturers are being subjected to strict standards, especially in high risk areas of production such as food and beverage production and chemical manufacturing. Modern cloud systems like NetSuite can be implemented in a way that forces users to follow process and procedure and track all information in a central location.

Manufacturers ERP Guide

Finding this article good? Before you finish reading, download the guide to all the modules and technologies integrated into NetSuite, the cloud-based ERP that can support your Manufacturing Business growth.

Cloud MRP could be your unique competitive advantage.

Whilst a number of more forward-thinking manufacturers have been using modern ERP’s like NetSuite for a number of years, many still lag behind due to the perceived difficulty in undertaking a manufacturing software implementation.

Whilst any software implementation comes with unique challenges, the important thing to remember is that the end result is worth the short-term pain.

At Klugo, we have helped hundreds of Australian businesses migrate their existing technology cluster to a single cloud business management suite. Customers who made the leap have consistently reported significant improvements in comparison to their legacy software user experience.

These improvements include:

Scalability

When a manufacturing business is smaller, managing customers and contacts is relatively easy to do on a simple spreadsheet. However, as time goes by, the business grows and the day to day operation becomes more complex, many manufacturers start to gradually add new software solutions to fix siloed problems. This strategy is not scalable as many have found. Migrating to a single solution simplifies a manufacturers software strategy and gives them the ability to scale the software as their business grows and changes.

Efficiency

Our customers report that the overall efficiency of their team, their shop floor and their business in general sky rockets after moving to NetSuite. Because the system is designed with automation in mind, many tasks that were once very time consuming can now be automated, which frees time up for better planning and strategy execution. Moving to a modern cloud technology streamlines critical business functions and minimises wasted time spent maintaining and replicating data in a number of different systems.

Security

Manufacturing is a complex thing. Most manufacturers rely on their team and their knowledge to keep up with demand and to run efficiently. Whilst software will never replace their value a highly experienced team member can bring to an organisation, it does provide the opportunity to systemise that tacit knowledge to ensure that there is no single point of failure in the business.

So, who is using NetSuite Manufacturing Edition?

 Over the past 20 years, NetSuite has established itself as a leader in providing manufacturers across the world with a world class MRP and manufacturing management software.

NetSuite has customers across a range of manufacturer types. These include:

  1. Make to Stock/Forecast.
    Traditional Widget Manufacturing
  2. Assemble to Order.
    Assembling products from bought components after an order has been placed by the customer.
  3. Make to Order.
    Organisations that make a set range of products on order.
  4. Process Manufacturing.
    Customers who rely largely on formulas and recipes
  5. Configure to Order.
    Manufacturers who have a base level of product that can be configured to specific user requirements.
  6. Field Repair and Service.
    Manufacturers that also provide after sale field service and support.
  7. Engineer to Order.
    Design and manufacturing of large or complex products or systems.
  8. Project Driven.
    Project based manufacturers that wish to track project progress and job costing.

Need a specialist’s free advice?

Feel free to call an expert in Enterprise Resource Planning Systems for Manufacturers today. Find out how cloud-based technology can make your retail business a real beast.

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How Flooring and Carpet Businesses can Seize Growth Opportunities

How Flooring and Carpet Businesses can Seize Growth Opportunities

Industry revenue in the timber flooring and carpet retailing and distribution sectors has been affected by strong import growth and increasing competition from substitute flooring products. However, higher demand from the residential housing and construction market has helped sustained upward momentum in this niche industry.

Australia’s housing market price falls in the short term will be underpinned by a stable economic growth, record-low interest rates and a steady population rise. High overseas migration is likely to increase in the following years and with stable economic conditions supply is still expected to be less than demand. This is a good forecast for the construction market and its suppliers.

Seizing Growth Opportunities and Differentiation

To beat overseas competitors and stand out in an extremely competitive market, successful flooring and carpet businesses are seizing new opportunities to grow with cloud-based software designed to streamline the operations of the carpet and flooring retail, wholesale and installation industry. Leaders in this space are streamlining business operations in order to develop new products and services, improve supplier relationshiops and order and inventory management, meet customer demand, manage eCommerce, and make informed, data-driven decisions in real-time.

Whilst technology is enabling Australian manufacturers to migrate to Advance Manufacturing in order to deliver the personalised products the industry, Aussie companies are not focusing on modernising. The trend in the industry is to increase marketing expenditure, states the AMGC in their report: Advanced Manufacturing, a New Definition for a New Era, and the results haven’t been very promising.

In the report, it is concluded that more Australian companies introduced new marketing methods (18.5% – 25%) and new products (20.6% – 24.3%), but overall trading  fell 13.3%. Only around one-fifth (19%) of Australian manufacturing companies increased their IT spending but may not be getting the most out of their investment.

There is a huge opportunity for Australian manufacturing companies to modernise their business models. Only 8% introduced a new product-related service in 2013-2014, and only 6% used flooring industry specific ERP’s . The digital divide opens an interesting window of opportunity for companies to differentiate as ‘service champions’.

  • Investment in new marketing methods 25% 25%
  • Investment in new products 24.3% 24.3%
  • Digital spenditure 19% 19%
  • New services related to existent products 8% 8%
  • Specialisation of current products 6% 6%

Cloud Technology for Flooring and Carpet Businesses

NetSuite is a cloud-based, single business management platform eliminating the need to update multiple customer, vendor, inventory and marketing systems. Using NetSuite, a single system solution, provides you with the ability to:

  • Have a single customer record across the entire business, allowing you to profile, predict and push 1:1 marketing campaigns, using NetSuite’s unified CRM functionality.
  • Automate workflows across your business.
  • Gain real-time visibility into full business operations across all stores.
  • Use NextService, a native to NetSuite field service solution, to schedule deliveries and installations via mobile app, complete with GPS routing for drivers, compliance checklists for field service staff when they arrive at the job, and customer sign off upon completion.
  • Use the mobile app to schedule service calls – this could be for after-care treatment of flooring, repairs, maintenance, cleaning services and more.

Upgrading to a modern, scalable, cost-effective system means that your IT strategy is future-proof, providing you with more time to spend on building a seamless customer experience and business strategy.

Download NetSuite Guide for Manufacturers

Find in this guide all the modules and technologies integrated into NetSuite, the cloud-based ERP that can support your growth.

Need a specialist’s free advice?

Feel free to call our experts today and find out how cloud-based technology can make your Flooring and Carpet Business a manufacturing beast with NetSuite and NextService, our proudly Aussie field service app.

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MRP, ERP or BMP? Manufacturing Technology for 2019.

MRP, ERP or BMP? Manufacturing Technology for 2019.

It’s a relatively unknown fact that the Manufacturing Industry pioneered MRP and ERP technology, long before other industries caught up. In the 1960’s, two leading manufacturers, Black and Decker and Toyota were the first major manufacturing companies to make a significant investment into what was at the time known as MRP or “Material Requirement Planning” software.

This software, by today’s standard was relatively basic in the functionality it offered, however it provided a competitive advantage to organisations by providing the automation of calculations related to demand and supply planning. This information was used to optimise procurement, inventory management and warehouse management and was the starting point for the integrated business management platforms that are in use today.

So, what is a legacy MRP Software?

Materials Resource Planning, (which later changed to Manufacturing Resource Planning) provided a limited scope of functionality, mostly to do with optimising procurement, demand and supply planning and manufacturing WIP and Routing. Until recently, manufacturers would also need to maintain Accounting and Financial Management software, as well as Sales and CRM software to cover off all departments of their business.

The problem is though, that having too many disparate systems creates complexity, adds to IT overheads, and limits the usability of data being collected in each silo.

Enterprise Resource Planning (ERP) a new era for business software.

In the early 1990’s, a new breed of software packages started to gain momentum. Whilst MRP provided some support to manufacturers, they were wanting a more consolidated solution to manage the increasing complexities of manufacturing.

As manufacturing became more advanced, so too did the software that was used to manage the front and back office functions of a manufacturer. ERP, a term coined by Gartner extended the traditional MRP platform to include more advanced and integrated features such as Accounting and Financial Control, Warehouse Automation and Advanced Demand Planning. Whilst this was a step in the right direction, there were still several areas of a manufacturing business that were largely unsupported.

Cloud technology brings everything together.

Most recently, the concept of both ERP and MRP have largely been dwarfed by the concept of a complete Business Management Platform. These platforms provide deep functionality across all areas of the business including:

… the list goes on.

But the point of the software is to provide growing businesses with a single source of truth and a simplified software ecosystem. Cloud Business Management Platforms, like NetSuite offer just that. A modern technology stack to manage every facet of a growing manufacturing business.

By having everything in one platform businesses can get greater insights into their data and get better business intelligence to support strategic and operational decision making.

NetSuite is the world’s first, and leading Cloud Business Management Platform. With over 40,000 organisations across the world having already embraced the cloud BMP, it’s easy to see why NetSuite is chosen more than any other Cloud BMP.

For over 5 years, Klugo have been helping Aussie businesses embrace this revolutionary system and take back control of their businesses. NetSuite has solutions for all types of business, across a wide range of industries and at any stage of their growth cycle.

NetSuite Starter Edition

Big Software for Small Business.

NetSuite Emerging Markets Edition

For Growing Companies.

NetSuite Mid-Market Edition

Established businesses looking to consolidate their IT footprint.

So, what are the impacts of embracing a complete Business Management Platform Solution?

 

  • No Integration– Because a BMP is a single system across an entire business, there is no need to worry about building or maintaining integrations between different legacy systems. This modernising technology not only saves massive amounts of IT Overheads, it also minimises the risk associated with regular upgrades to the system. 
  • End User Personalisation – When a business is running on a cloud BMP, each user has more control over their dashboards and roles, to ensure that they are only seeing information and functionality that is relevant to them. One of the biggest gripes we hear for our customers when talk about their old systems, was the fact that navigating and finding information was difficult, largely due to the clutter that functionality which didn’t relate to their roles caused. With NetSuite, users can design how they wish to see information through drag and drop tools. Managers can empower their users and associates to make the most of the software and increase their businesses’ efficiencies. 
  • Simple cost structure – When looking at the IT costs of a business, companies who are not embracing True Cloud BMP’s face uncertainty and risk. Depending on the industry, businesses will be spending money on software licenses, maintenance and support agreements, hardware and infrastructure, API development and maintenance, servers, whether cloud or on premise, and the risks that come along with security, backups and storage. True Cloud BMP’s offer all these technologies rolled into a single powerful business differentiator for just a monthly fee.

Need a specialist’s free advice?

If you are interested in learning more about how NetSuite can help your Manufacturing Business grow and how reduce your IT overhead, contact one of our experts today.

Download NetSuite Guide for Manufacturers

Find in this guide all the modules and technologies integrated into NetSuite, the cloud-based ERP that can support your growth.

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Cloud Technology for a Competitive Manufacturing and Exporting Industry

Cloud Technology for a Competitive Manufacturing and Exporting Industry

The Australian manufacturing industry has undoubtedly contracted when compared to other booming sectors in the past two years. Due to this fact, many manufacturers are leading their industries by implementing more efficient and automated systems to not only support their individual growth but to allow them to scale without increasing overheads in an industry where margins are falling.

While MRP software has been around since the 1960’s and has gone through generations of technology upgrades, and system advances, its core the business use case of the software is still to increase efficiencies in ordering and procurement, streamline workflows on the shop floor, and provide more accurate data around demand and supply planning. Manufacturers with a single system that supports their businesses from end-to-end have a strong market differentiator. These innovating companies can get a clear picture of past, current and future performance and make educated decisions that ultimately save time, money and resources.

Australian manufacturing industry’s undeniable decline.

Over the past ten years, Australia has seen an undeniable decline in the performance of manufacturing compared to other industries. What does this mean for key Australian industry players that are exporting to Asia and Pacific region?

It means that businesses in this market need to pioneer new and better ways of managing their customers, their accounting, their systems and their operations, or they will face continued erosion of their bottom line.
A paper by economists Georgeson and Harrison,  states that manufacturing is still an essential part of the Australian economic growth plan. It produces $100 billion of output each year, ranking sixth among ANZSIC industries. Manufacturing accounts for over 930,000 jobs. The manufacturing industry is in the middle of a much-needed structural change, as it is in most developed economies.

However, we still see a decline in overall output in percentage terms. This lower percentage does not mean the industry is falling; it only shows that it is growing less than the rest of the economy. Therefore, there is a door open for manufacturers that want to differentiate in their business from the competition.

Manufacturing and exporting are rebalancing says economist Julie Toth: “In the last ten years, Australia switched to produce more consumables and fewer heavies.” There are growth pockets in products and services including food, beverages, groceries, specialist machinery, pharma, cosmetics, vitamins, supplements, building materials, textiles and furniture.

23% of the industry had moved to Advanced Manufacturing by 2013. Advanced Manufacturing or Industry 4.0 is the ability of companies to capture customers’ needs and transform them into products quickly through the use of integrated systems, sensors and technologies.

These leading companies combine the competitive advantages of a multidisciplinary team and digital transformation. The market niches in which they compete have low volumes. These smaller niches require a specialised service that offers quick response, cost-and value competitiveness and after-sales support.
China, South Korea and Japan need support to fulfil their demand for efficient buildings, sustainable energy, and new transport infrastructure. These cities offer excellent international trade opportunities for innovative manufacturers.

The specialisation of the industry will lead the way in manufacturing for Asia and Pacific markets. Australian’s technology and engineering skills can respond to the region’s rapid urbanisation. Over the next decades, there will be an incremented demand in the Asia trade for specially-designed and custom goods. Gregory O’Brien, Australian Government’s labourer, in his paper “Australia’s trade in figures,” said eight of our top ten markets are in the Southeast Asia region: China, Japan, South Korea, India, New Zealand, Singapore, Malaysia and Taiwan. 

Australia’s top ten export markets.

  • 1. China.     AU$ 91 297 millions 28.8% 28.8%
  • 2. Japan.     AU$42 355 millions 13.4% 13.4%
  • 3. United States.     AU$22 114 millions 7.0% 7.0%
  • 4. South Korea.     AU$20 014 millions 6.3% 6.3%
  • 5. India.     AU$3 574 millions 4.3% 4.3%
  • 6. New Zealand.     AU$12 577 millions 4.0% 4.0%
  • 7. Singapore.     AU$11 044 millions 3.5% 3.5%
  • 8. United Kingdom.     AU$8 815 millions 2.8% 2.8%
  • 9. Malaysia.     AU$7 966 millions 2.5% 2.5%
  • 10. Taiwan.     AU$7 479 millions 2.4% 2.4%

Technology relieves complexity and supports exporting through automation and systemisation.

Companies exporting to the Asia Pacific region know well that the process takes time and requires high and continual investment. If supported by robust domestic demand, exporting it’s a noble path of growth with a substantial return.

The export path requires strategic controls that allow managers to lead and adjust the supply chain quickly to different market demands. Australian Business models may be unfitting in other countries for cultural, regulatory, and other reasons.

Modern cloud systems provide levels of control and flexibility that have not been easily achievable in legacy on-premise MRP solutions. These systems improve operational efficiencies and provide a robust framework to ensure the business can grow and expand, while still have full visibility on the overall performance of each area of the company. 

ERP systems are essential for any business that is wanting to scale in the manufacturing sector. With the complexities that arise when considering the transactional relationships between inventory, procurement, panic and preventative maintenance, multi-location warehousing and distribution, foreign currencies, taxes, laws, languages and many other global preferences.

“Manufacturing businesses should focus on centralising their data in the cloud and making it easily accessible by users in different locations and satisfying different roles and responsibilities within the organisation.” Said Klugo’s consultant, Michale Dean.

Companies with systems operating in silos will spend countless resources on communication technology to connect their databases with APIs and integration. While these types of solutions may get to the point where they are working, there will always be added risk with an increase in the number of software vendors a business’s needs to deal with on a day to day basis. Also, the ability to report across siloed systems means data is rarely live, and often inaccurate. 

In contrast, Cloud ERP solutions, such as NetSuite provide a single platform technology which eliminates the need for integrations, offers live and accurate data and does it in a way designed for delivery over the internet. 

Download NetSuite Guide for Manufacturers

Find in this guide all the modules and technologies integrated into NetSuite, the cloud-based ERP that can support your growth.

Investing in dynamic systems from the start gives a manufacturing company an edge over the competition in an increasingly competitive space. It is smarter to start with the right platform than trying to move into it in the future.

Also, for modern manufacturers involved in exporting, ERP software provides a lot of digitally transformative opportunities to automate and simplify global trade and investment with full automation and support of multi-company, multi-entity, multi-currency and multi-language requirements. 

NetSuite has customers all over the world, and a particularly strong following in manufacturing from the European Union, Hong Kong, and Southeast Asia.

NetSuite Manufacturing Edition is a fully featured solution to cater to the needs of a growing manufacturer. The platform provides a single solution that includes: 

  • Sales and CRM Management.
  • Accounting and Financial Control.
  • Advanced Inventory and Demand Planning.
  • Warehouse Management.
  • Import-Export
  • MRP functionality to manage Work Orders.
  • Complex WIP and Routings.

Need a specialist’s free advice?

NetSuite has thousands of clients all around the world, who have made extensive use of the sophisticated functionality that is on offer for a growing manufacturer. To find out more about how NetSuite can support your growth, contact Klugo today.

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Seize Distribution OpportunitiesThe downfall of wholesale distribution has been highly exaggerated in recent years. Yes, manufacturers have more opportunities nowadays to sell directly to consumers, but there are two main reasons why distributors are...

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GABS Beer, Cider and Food Festival Highlights 2018

The Best of GABS 2018

GABS 2018 was held in Melbourne on 18-20th May and our Marketing team couldn’t resist the opportunity to check it out, do a little industry research, and of course support our Aussie craft brewers. It’s safe to say that the beer, cider and food festival did not disappoint! The annual  GABS ‘specTAPular’ was held at the Royal Exhibition Building, and was packed with entertainment and more beers than we could ever dream of tasting – not forgetting the Yenda Ferris Wheel (the only ever indoor ferris wheel at a festival), a Stomping Ground ‘Broolander’ silent disco, Milawa cheese and prosecco bar, Holey Moley mini golf, beer hall games, and street food stands galore.   GABS boasted 170+ beers and ciders made exclusively for the event, with brewers across Australia and New Zealand embracing the opportunity to be creative, push boundaries, and show off their talents. Many of the beers and ciders exhibited were unique, one-offs, with a selection of tasting paddles made up of the limited release beers for the crowds to enjoy.  

Snapshot of Top Five GABS Hottest 100 Beers 2017

  1. XPA – American Pale Ale (Balter, QLD)
  2. Pacific Ale – Australian Pale Ale (Stone & Wood, NSW)
  3. Crankshaft – American IPA (BentSpoke, ACT)
  4. Newtowner – Australian Pale Ale (Young Henry’s, NSW)
  5. Single Fin – International Pale Ale (Gage Roads, WA)

Find out More

If you’d like to find out more about how we help growing craft breweries, please download the brochure below or get in touch.  

Top Three Cashflow Tips for Craft Breweries

Top Three Cashflow Tips for Craft Breweries

If there is one business goal that a growing craft brewery needs to focus on, it’s this: don’t run out of cash.

In recent years, the craft brewery industry has seen increased demand and competition. More microbreweries are entering the market, with even more regional breweries expanding nationally.

As with any manufacturing business, the pressure to ensure steady supply and maintain growth is important, but the ability to optimise inventory control and production planning is critical.

The nature of cashflow in craft brewing can mean that it’s often delayed. Whilst a sale might be recorded, it could be weeks (if not months) before the cash for the transaction physically hits the bank account for reinvestment.

Similarly, breweries require high levels of capital investment to get started, which can include facilities, equipment, vehicles, and more. This often means that a growing brewery is running on a very tight budget, and not having the ability to report live on the impacts of decisions and transactions presents a high level of risk.

So, what can you do to better control your cash?

There are three main ways that a brewery can better control their cash.

 

1. Accounts Receivable

The impact of your invoice terms have a huge impact on your cashflow, because this dictates when customers are required to pay. Negotiating these terms with customers should be done carefully, with a balance struck between removing barriers to sales, whilst optimising your cashflow for reinvestment.

Similarly, by working with your customers to decrease late payments (or even incentivise for early payments) could be the most straightforward way to improve your overall cashflow. This also means that you can reinvest into the business more quickly and regularly.

Takeaway: Do you have visibility over your “average debtors outstanding” trends? Do you have brewery management software systems in place to automate payment reminders or overdue notices? Could you benefit from a system that would allow you to do this?

 

2. Inventory Control

When speaking to our customers, better inventory control and the ability to automate demand planning and purchasing are two of the key drivers to looking into upgrading their existing brewery management software. Most businesses have progressed from spreadsheets to basic inventory management/warehouse management but have never built the link between sales, inventory, warehousing and accounting and finance. By streamlining this flow of information, brewery owners can make better decisions about purchasing, inventory min max policies and stock on hand.

Takeaway: Does your system allow you to automate demand planning based on sales pipeline, historical sales or upcoming marketing initiatives? If not, you might be missing a huge opportunity to make your cash work harder for you, and minimise waste and lower inventory holding costs.

 

3. Accounts Payable

Cashflow is key for any business, and your suppliers are no different. As a brewery grows, it gains more traction with its key supplier base, which provides an opportunity to build on the relationship – and potentially gain better contract terms. This could include price breaks for high volumes, or discounts for paying early.

If your wholesalers are anything like you, they will value the opportunity to be paid quickly, because it helps them reinvest into their own businesses. Many brewers find that once they have reached a certain size, they have been able to negotiate additional “early payment” discounts of between 1-2% depending on what they’re purchasing. There is really no easier way to lower your COGs, and what might initially seem like a small amount invoice by invoice quickly adds up and goes straight to the bottom line.

Takeaway: Are you able to see dashboards for your vendors? Can you quickly and easily see how much you’ve bought, purchasing trends or on time/late payment metrics? This information is power for a brewery and being able to quickly access this can be a powerful negotiation tool for new and existing contracts.

 

There are numerous benefits to having a holistic system to manage your growing brewery. If you’d like to find out more, please feel free to get in touch.

 

This article was written by Michael Dean, Business Consultant and specialist in ERP for Growing Craft Brewers at Klugo Group. Klugo is the exclusive implementation partner for Crafted ERP, a business management suite built on the NetSuite platform. Find out more about Crafted ERP.