Building a Modern Manufacturing Environment with ERP
Enterprise resource planning (ERP) software is nothing new, and is actually quite commonplace in the manufacturing industry: Recent Aberdeen research found that 97% of leading manufacturers utilize ERP. However, with 88% of “followers” also using it, it’s not a question of whether or not an organization has implemented the software, but how well they use it.
The recent Aberdeen Group report, Creating a Modern, Effective Manufacturing Environment with ERP, looked beyond the yes/no question to find out what leaders were doing differently, offering advice for followers looking to make the most out of their ERP investment in 2018 and beyond.
What Leaders Do Differently
While it could be said that nearly everyone uses ERP, there are some notable differences in how they use it.
Properly Use Data
Day-to-day, month-to-month, or year-to-year, one of the biggest challenges faced by manufacturers is demand planning. This is nothing new. However, what has become clear is that followers—even those who have made the move to implement an ERP solution—weren’t able to use the data properly to plan for demand variance, and the study found that the problem only looks to get worse if the manufacturer looks to expand.
Leaders, on the other hand, were able to leverage the data they had available in order to plan more effectively and efficiently, utilizing additional modules, better collaboration functions, and smarter data management in order to predict and prepare for changes.
Aside from using data to inform decision making, leaders were able to take advantage of another key selling point of ERP: Its ability to simplify internal and external communications. Those leaders, as defined by Aberdeen, had the sophistication to share data with key stakeholders including suppliers, customers, and regulators, as well as those within the organization.
Where Followers Come Up Short
So, what’s to blame for the shortcomings? While the most commonly cited reason was “outdated technology,” this may not always be the case. Too often, followers aren’t making the most of their ERP investment, and fail to implement necessary modules. Among manufacturers surveyed, leaders were much more likely to employ additional modules. Across the board, leaders were more likely to implement both general and industry-specific modules than followers, with the biggest gaps occurring in warehouse management (70% vs. 45%), fixed asset management (70% vs. 53%), and general ledger (90% vs. 75%).
Beyond that, followers also were less likely to extend their ERP by connecting it with other functions. Whether in the form of CRM integrations (67% of leaders, 40% of followers), advanced warehouse management (56% vs. 20%), or standalone financial planning and budgeting (54% vs. 39%), followers consistently came up short.
Learn More: Creating a Modern, Effective Manufacturing Environment with ERP
While ERP is commonplace in manufacturing, proper ERP use is not. We invite you to download the entire Aberdeen Group Report, Creating a Modern, Effective Manufacturing Environment with ERP, provided free courtesy of Acumatica and Central Data. Download the entire guide here.