Skip to content

Insights

A workflow for manufacturing businesses on an ERP system

blog

ERP stands for Enterprise Resource Planning, an overall organisational resource-management system that helps consolidate and manage core business processes — such as production, finance, sales, marketing, and human resources (HR) — on a single platform, so data flows smoothly and can be used to make decisions more efficiently.

To make the picture clear, we’ll explain a workflow for a manufacturing business, divided into the main processes that connect to the ERP system, as follows:

1. Production Planning

  • Sales Order: It begins when a customer orders goods. The sales team records the order in the ERP system, which becomes the source data for the entire process.

  • Inventory Check: The system checks whether raw materials or goods are ready to ship.

    • If goods are ready to ship: proceed to the shipping process.
    • If goods are not ready to ship: proceed to the production-planning process.

  • Material Requirements Planning (MRP): The system calculates the quantity of raw materials and components needed for production per the order and compares it with the materials on hand.

  • Production Order: Once the material requirements are confirmed, the system creates a production order to inform the production department what to produce, how much, and when.

2. Purchasing

  • Purchase Requisition: If raw materials are insufficient, the system creates a purchase requisition — automatically or by an employee — to inform the purchasing department.

  • Purchase Order: The purchasing department reviews the requisition and sends the purchase order to a suitable supplier.

  • Goods Receipt: When the supplier delivers, the warehouse department receives the goods and records the data in the ERP system, which updates the raw-material stock quantity automatically.

  • Invoice Verification & Payment: The accounting department verifies the invoice received from the supplier and makes payment according to the agreed terms.

3. Manufacturing

  • Material Issue: The production department draws raw materials from the warehouse as specified in the production order.

  • Production Execution: The production process begins, and employees record production progress in the system.

  • Production Reporting: When production is complete, employees record the quantity produced, and the system deducts the raw materials used and adds the finished goods to the warehouse automatically.

4. Warehousing & Shipping

  • Finished Goods Receipt: Finished goods are brought into the warehouse and recorded in the ERP system.

  • Picking & Packing: When the delivery date arrives, the warehouse department picks the goods per the order.

  • Shipping: The goods are shipped out of the warehouse and the shipping data is recorded in the ERP system.

5. Sales & Finance

  • Invoicing: Once the goods are shipped, the system creates an invoice for the customer automatically.

  • Payment Recording: When the customer pays, the accounting department records the payment in the system to update the accounts-receivable status.

  • Reporting: The ERP system can generate various reports such as the profit-and-loss (P&L) report, the balance sheet, and sales-analysis reports to help with business decisions.

These workflows work together in the ERP system to keep data current in real time, so executives can check production status, sales, and financial status quickly and accurately, increasing the organisation’s work efficiency.

Back to all articles