In our prior post (here) we looked at the success manufacturers told Aberdeen Research in a survey last year that they’d had in reducing costs and improving customer responsiveness as a result of implementing ERP systems. Today as promised we’ll continue that thread with a look at their top strategic actions related to ERP.
Aberdeen notes that one of the key benefits of implementing ERP is that it makes you more efficient and disciplined in your business processes. Their research over the past three years found that streamlining and standardizing business processes were the primary actions taken by manufacturers. Even the lowest performers (called the ‘laggards’, representing the bottom 20% on the success ladder of ERP implementations) cited these as their key actions taken around 60% to 70% of the time .
Specifically, their number one action was labeled as “streamline and accelerate processes to improve efficiency and productivity” and a close second was “standardize business practices.” Other actions these firms took to lower costs and improve their customer responsiveness included:
- Optimize the use of current capacity
- Provide visibility to business processes across functions and departments
- Modernize technology infrastructure and applications
- Reduce the number of disparate enterprise applications (translation: too many competing pieces of software, and way too many spreadsheets!)
Ultimately, the proof lies in the results, as voiced by the companies themselves, and they are impressive. The companies who did best at implementing ERP achieved:
20% reduction in operating costs… 18% reduction in administrative costs… 22% reduction in inventory costs… 17% improvement in completion and on-time shipments… and 18% improvement in manufacturing schedule compliance.
Most telling of all: even the poorest results (from the bottom 30% of those surveyed on ERP success) showed at least single digit improvements (from 3% to 7%) in every one of the aforementioned areas.
And finally, the biggest reason NOT to implement? The perception regarding the “internal effort” to implement, particularly cited by smaller companies. Not a surprising find among fast growing, smaller companies, one supposes. But still, one wonders: Do they think it’s going to be somehow easier next year?