Top 4 Reasons to use ERP in the Furniture Industry

Summary: ERP in the furniture industry helps small, medium, and large enterprises to adapt quickly to changing market conditions and customer preferences. It helps companies carry out their business plan effectively, increase profits, optimize expenses, and forecast what customers are most likely to buy. It accelerates the entire business cycle by synchronizing multiple critical activities, such as: 

• Supply chain management 
• Financial & accounting management
• Production & manufacturing management
• Sales & marketing management
• Customer relationship management
• Vendor/supplier/distributor management
• Services management
• Project management
• Human resource management

Challenges in the furniture manufacturing industry

Future trends like the growth of online furniture sales and increasing interest in eco-friendly furniture show that this industry has a bright scope. Moreover, statistics show that the Indian manufacturing industry is expected to grow at a CAGR of 11.97% from 2018 to 2023. But this industry is also replete with significant challenges, such as: 

1. Low production effectiveness

Many companies, especially small ones located in remote regions, still rely on outdated manufacturing practices. As a result, they recruit a large workforce that increases their salary expenses and also shoots up the possibility of human-induced errors. They also hesitate to purchase advanced machines and business management solutions, compromising productivity and effectiveness. 

2. Organizational structures aren’t defined

Most furniture manufacturing companies in India lack a well-structured organizational and reporting structure. It means managers don’t have the required metrics to monitor employees’ performance, which deteriorates their efficiency in the long run. In addition, employees work in a chaotic environment where they don’t know whom to report to, decreasing their accountability.

3. Planning problems

Brainstorming effective strategies requires valuable business insights and informed employees. Unfortunately, furniture manufacturing companies lack advanced ERP systems that collect and analyze business-critical information, helping understand changing market trends and customer preferences. Without adequate planning, furniture companies fail to identify 

• market challenges
• changing customer preferences 
• procuring an exact quantity of raw materials.  

4. Lack of reporting and information systems

Furniture manufacturing companies that don’t implement ERP systems lack a coherent method of communicating business-critical data with verified stakeholders, resulting in information silos. They also fail to generate visually-rich reports that present data in an easy-to-understand way and can be quickly customized based on the selected parameters. As a result, different departments fail to collaborate on mission-critical tasks, bringing down the company’s overall efficiency and productivity.

5. High wastage of resources

Furniture companies procure high-quality raw materials from multiple vendors spread across various geographical regions. Without dedicated furniture ERP software, furniture manufacturers cannot set a benchmark for procuring the exact quantity of raw materials. Consequently:

• They may purchase more raw materials than required and lose money.
• They will fall short of manufacturing enough products and risk losing customer loyalty.

<<<Also Read: Top 6 Ways Furniture Manufacturing Industry Can Boost Productivity Using ERP Software With Enhanced Integration>>>

How can a reliable ERP system help furniture companies?

ERP in the furniture industry offers multiple benefits, such as:

1. Effective resource planning

Consider the following case. You get an order to construct a piece of furniture that requires various constituent materials, including sheets of metals, wooden barks, and fabric. So, you place orders with multiple vendors located in different regions to get raw materials. Unfortunately, you will face difficulties if you lack a unified management software to deal with numerous vendors simultaneously. On the contrary, ERP in the furniture industry will help you place orders instantly, generate quotes, and track the precise location of transport vehicles on the roads. In short, effective resource planning is the most critical application of a furniture ERP. 

2. Handling thousands of customer orders simultaneously

Furniture manufacturers deal with multiple customer orders, each with varying needs. These include unlimited product configurations of diverse styles, colors, designs, and materials. Managing all of them manually is a time-consuming task and is prone to human errors. ERP in the furniture industry provides a viable solution to this challenge by allowing you to configure the product in a thousand ways until you meet the customers’ preferences. 

3. Control production costs

ERP in the furniture industry automates business processes allowing your workforce to focus on mission-critical tasks and brainstorm effective strategies. Moreover, it also decreases waste, monitors product quality, and shares reports with the product service team if any product defects are identified.

4. Improves customer satisfaction

ERP in the furniture industry stores customer details in a data repository that can be accessed, edited, and shared with business stakeholders anywhere, anytime, and through any connected device. This feature helps process customer orders faster and provides solutions to their queries at the earliest. 

Benefits of ERP in furniture manufacturing

1. It improves inventory management

The primary benefit of implementing ERP in furniture manufacturing is better inventory management. It monitors where raw materials and finished products are stored in the inventory and warehouse, respectively. Moreover, recording the exact location of delivery vehicles and estimating the time when they will reach their destination has never been easier.

2. It makes the supply chain management even better

ERP in the furniture industry provides data-driven forecasts that help derive valuable insights. These insights are based on purchase history, seasonal changes, customer preferences, and future projections that enable streamlining a company’s inventory. In addition, this software ensures that a product is always delivered to the right customer, reducing product return orders. It can also track the real-time location of delivery vehicles, optimizing supply chain management.

 3. It makes the production process smooth

Furniture companies can efficiently customize products using a product configurator. Managing customized furniture’s cost and product specifications and reducing bottlenecks becomes simple with a furniture ERP.

Additionally, companies can track shop-floor activities, attain transparent work-in-progress (WIP) reports, and optimize labor requirements.

 4. It helps manage finances strategically

ERP in the furniture industry allows companies to comply with local and global financial regulations, including GAAP and IFRS. It also handles accounts receivable and payable to provide better financial visibility and identify cost-saving opportunities. 

<<<Also Read: 8 manufacturing industry trends that will shape the industry in 2022>>>

How do I choose the best ERP for my furniture manufacturing business?

Start by creating a list of your business goals before picking a suitable manufacturing ERP. Also, identify your most critical furniture manufacturing processes and the challenges & weaknesses you want to solve by implementing a furniture ERP. 

Then it would be best if you search for vendors that provide the features you want at the most affordable price. You should:

• Start by researching what your competitors are using?
• Confirm whether your competitors are satisfied with their existing furniture ERP software?
• Conduct a market reputation check of the selected ERP vendor.

An example of a market-leading furniture ERP solution is Sage X3. It has all the features you require to get ahead in the competition and deliver the best services to your customers. 

Here’s why Sage X3 ERP for the furniture industry is a cohesive suite of applications to help solve all challenges:

1. Furniture inventory management

Efficiently manage and configure countless products. Generate and share detailed low stock, excess stock, and no stock inventory reports quickly and efficiently. 

2. Multiple warehouse management

Fetch critical inventory data for multiple warehouses from a centralized database using any connected device instantly. 

3. Effective resource planning

Manage countless work orders and deal with multiple vendors situated across different regions using a single, integrated system.

4. Low production cost

Reduce waste and optimize cash flow by automating business processes. The best part is that quality analysts can monitor product quality and identify any manufacturing defects in the early stages. 

5. Robust and evergreen customer relationships

Sage X3 furniture ERP has a robust CRM module that allows different business departments, including sales & marketing, finance & accounting, production & manufacturing, logistics & distribution, and service departments. This collaboration will enable you to identify customer issues and solve their queries instantly.