Enterprise resource planning software is becoming so common for businesses that not using such an offering may become a significant disadvantage.

The shift in paradigm from ERP being viewed as an optional benefit to a necessary tool for businesses to keep up with their competitors was recently highlighted by industry magazine Canadian Manufacturing. Organizations trying to decide how to best go through with an initial ERP implementation or how to optimize a current solution – like the Microsoft Dynamics NAV software often used by those in the manufacturing and warehousing industries – may want to consider a strategy focused on making sure the most business objectives are met in the most efficient manner.

Theory of constraints
Canadian Manufacturing recommends using the theory of constraints as a guide to decision-making when choosing an ERP solution. This concept, developed by Dr. Eliyahu Goldratt, focuses on three major factors related to industry productivity: throughput or overall sales, inventory and operating expenses.

An organization choosing between ERP providers can apply the three principles listed to see how a management system can benefit their operations. Although many programs will be more focused on maintaining optimum inventory levels and reducing operating expenses, a platform that ties in customer data to informational concepts from other departments can help drive throughput as well. Developing a clear picture of which areas have the most room for improvement for your business can help drive effective ERP choice.

A changeable system, like the NAV setup and Microsoft Dynamics modules, provide more flexibility than the more monolithic ERP offerings. Companies can select specific modules that focus on unique business practices or needs, as well as ones that are geared toward industry requirements or conventions.

Keep tracking constraints
Businesses shouldn’t stop paying attention to the theory of constraint components after their initial ERP choice is set up and operating. Tracking the changes to sales, inventory levels and expenses can lead to further benefits, especially with modular ERP systems. An organization can decide to start with a more basic platform when dealing with tracking overall stock levels and then explore solutions that may provide further cost savings and efficiencies. The use of modular ERP software can make such additions easier to implement and integrate into current systems.

Learn how to define your ERP strategy by downloading the white paper entitled “ERP in Manufacturing: Defining the ERP Strategy” from the DMS website today.