ERP software can be used by companies operating in almost any sector within manufacturing and can deliver value and benefits to them all. However, it's also true that ERP software invariably functions better when it is a specialist solution designed and tailored to the specific requirements of that sector, where the provider has a greater and deeper understanding of customer pain points than a more general ERP provider.

Electronics is a sector that can be complex and one that faces unique challenges. Whether it’s overseeing product life cycles, bill of materials (BOM), addressing traceability requirements, navigating global chip shortages or managing global regulatory compliance, thriving in electronics can be tough, and here’s why:

Rising costs

No one in electronics needs to be reminded about the many cost issues that have arisen over the past five years. These include: 

• Energy costs resulting from the energy crisis and geopolitical conflict.
• Price volatility in key materials such as copper, rare earth elements, and silicon.
• An ongoing global semiconductor shortage that has dramatically increased the price of chips.

Alongside escalating costs, UK electronics manufacturers also must be mindful of global competition, particularly from the Far East, where labour and production costs are generally lower. This further puts the squeeze on profit margins when concessions are made to try and retain market share. 

A tailored ERP solution can make a significant difference in managing costs, helping to ensure that businesses run as lean as possible. They can provide detailed cost analysis across the entire operation, including procurement, operational expenses, shipping, and more. This makes it much easier for users to identify inefficiencies and put in place measures to help address those and, in turn, improve profit. 

ERP also plays a vital role in forecasting, using many data sources and analytics to understand trends and forecast demand and production needs. Electronics manufacturers can iteratively adjust purchasing strategies, manage stock levels, and reduce the risk of costly overproduction or product shortages.

Managing the supply chain

In recent years, there have been previously unseen levels of pressure on the supply chains of electronics manufacturers in the UK. Brexit was the source of some of that pressure. Although it has been in place for several years now, there is little doubt that its effect can still be felt.

New customs checks, paperwork, and tariffs caused delays in importing components from the EU, from which many UK manufacturers bought. Those delays then had an impact on companies’ ability to manufacture on time and to order. The situation has levelled out now, as manufacturers adapted, but few would state it runs as smoothly as it did prior to Brexit.

It's similar to the global semiconductor shortage, which was triggered initially by the pandemic in 2020. This situation has stabilised, but certain areas of the semiconductor market are still experiencing supply challenges, such as the high-end chips used in AI that remain in high demand.

ERP gives real-time visibility into stock availability and planning. This insight allows users to track components, raw materials and final products at every single stage of production. It gives far greater control and understanding, making it easier to identify potential disruption early in the process and enabling proactive measures to mitigate subsequent delays.  

Regulatory compliance 

Electronics is a sector with more compliance requirements than most. Manufacturers need to comply with international standards and certifications, which adds to the administrative burden.

Although regulations such as the EU's Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE) directives have been removed post-Brexit, very similar UK versions have replaced them. This means that UK electronics manufacturers must comply with UK RoHS and WEEE regulations for products sold here, and EU versions for products sold in the EU. 

Electronic manufacturers should look for an ERP solution designed with batch traceability in mind, where all the information that needs recording and logging is stored in one place. As well as detailed production information, this can also include suppliers’ delivery notes or test results, for example, making everything easily accessible during compliance audits or when data needs to be analysed for quality purposes. This detailed level of traceability not only improves efficiency and the ability to demonstrate compliance, it also minimises the operational risk and potential long-term reputational damage associated with product recalls. 

ERP software built for manufacturers

Implementing a tailored ERP solution, such as 123Insight, can make navigating a complex industry significantly easier. It has been invaluable to many electronics manufacturing customers, as it streamlines processes from procurement to production and all areas in between. It provides access to real-time data allowing customers to make quicker and smarter data-driven decisions, improving their responsiveness and agility.