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Manufacturers are committed to developing lean procurement and production processes, but these same principles are often overlooked in the back office. Inefficient workflows and disparate silos are often the norm in the accounting department, where the volume of transactions is ever increasing.
So the manufacturer will seek a solution, often in the form of ERP. Not surprisingly, 74 percent of manufacturers have implemented an ERP system according to a recent “ERP in Manufacturing” report. ERP systems excel at handling data and the financial components of an organization. So a company settles in to their ERP and a few of their A/P (Accounts Payable) processes are made electronic and everyone’s happy.
Except that many of the same problems are still occurring. Approvals are still not being processed in a timely fashion, PO and invoice matching are a time consuming struggle and significant cost saving opportunities are being missed. The ERP is managing their data just fine, but what about the invoices, purchase orders, contracts and quotes that are required for effective and proper management of A/P? These hidden issues are a plague to manufacturing, eating up costs and labor yet remaining unresolved.
To truly streamline manufacturing A/P processes, there needs to be an overarching system that can capture documents and unstructured data, connect the disparate silos in the organisation, link the data and content across the enterprise and automate the routine tasks that bog down operations.
Forward thinking manufacturers are starting to look beyond their ERP to content and process centric technologies. Traditional enterprise solutions, such as Enterprise Content Management (ECM) and Business Process Management (BPM), are beginning to find a strong foothold in the manufacturing sector. These systems are not meant to replace your ERP but rather to integrate and connect with it.
As Research Director Alan Pelz-Sharpe states:
“ECM will on the one hand ultimately dwarf ERP… but it will be less visible to the user - as in many respects ECM will simply take ERP and Business Apps in general to the next generation of sophistication, rather than displace them.”
Imagine a system that brings in an invoice and automatically matches it to the correct PO. Or routes approvals to the correct person and alerts them to the task, which can be completed immediately from any location. Or eliminates the need for manual data entry into the ERP. These are the exact scenario’s being realised with ECM/ERP integration.
Aligning content, processes and data is the key to streamlining manufacturing A/P processes. ECM facilitates this goal through:
- The automatic capture of critical A/P documents
- Increased visibility into A/P processes; nothing falls through the cracks
- Automatic linking of data and content across systems
- Elimination of manual tasks: paper shuffling, data entry, approval routing, information retrieval
The next generation of manufacturers has already begun to realise the benefits of ECM/ERP integration, and quite frankly, would rather keep it under wraps. In fact, the AIIM “Connecting ERP and ECM: Measuring the Benefits” report found that A/P was named the number one process in need of ECM integration and 68 percent of respondents considered that linking ERP and ECM gave a better or much better ROI than other IT integration projects.
In addition, an IOMA survey indicated that high levels of automation enabled A/P to process nearly three times more invoices and expense reports per month. In a real world scenario, Antigua Shirts implemented ECM and took a three-day document intensive process and reduced it to only 24 hours.
Accounts Payable is the lifeblood of manufacturing. Despite this, it rarely receives the care and attention that customer management or production receive. Manufacturers stand to gain a considerable edge in their A/P department through ECM integration, if only they could take a second look.