Of all the industry sectors in business, probably none has a greater need for the benefits of ERP than manufacturing. In fact, according to a recent survey by our friends at Aberdeen Research, nearly 40% of manufacturers cited a “lack of timely business information” as their number one business driver for an Enterprise Resource Planning system. ERP – the logical successor-derivative of the Manufacturing Requirements Planning (or MRP) need of the 1960s and 70s – can be the powerful “hub” for the company-wide access to data that today’s organization needs in order to make those timely decisions.
When employees are unable to access critical information in timely fashion, they lose out on major opportunities, like favorable prices for materials, or a spike in demand that might driver greater production, or they may be slow to react to negative events like recalls.
These kinds of drivers make ERP a hub for collaboration, which we’ll explore in this post.
Since it is a single repository for all the various types of important, relevant information needed to run a business, ERP can serve as a hub for collaboration. It contains records of transactions, communications, conversations, invoices, payments, production, quality issues… the list can go on and on, depending on the extent of the ERP implementation. Usually, it starts small, with just accounting, and then grows. But ultimately, it becomes the facilitator for all manner of interoperability, communication and collaboration across the enterprise. And as Aberdeen research has long confirmed, so called ‘Best-in-Class’ organizations are more likely than others to utilize ERP to accomplish those collaborative goals.
These Best-in-Class companies do other collaborative things with their ERP systems that serve their best interests. For example, compared to other manufacturers they are nearly 50% more likely to integrate manufacturing with customer service; over half integrate product design (like engineering and bills of materials) to manufacturing operations (for a continuous flow of visibility). These activities create both cost savings and efficiencies because linking these functions causes them to support one another: the result is fewer things ‘falling between the cracks.’
Moreover, ERP serves not only as the central hub of information — it’s also the portal that makes it happen. It provides companies with real-time cross-company collaboration. It provides the ability to exchange data among departments, and avoid situations that can hinder business. Finally, it allows for more agile and informed decisions.
Among Best-in-Class manufacturers, roughly four-fifths report the ability to drill from summary information down to transactions that form the fiscal and audit trail. Over half have the ability to automatically notify decision-makers when scheduled activities fail to occur or when certain conditions aren’t met. 70% can produce important variance reports, and many believe through ERP that they now have “a fully integrated view of all customer information.”
Now that’s what you call a serious competitive advantage.
And that’s why ERP has become so critical to improved performance in the manufacturing sector.