In this final post in our three part series on how Panorama Consulting finds ERP being used in manufacturing today, based on client surveys, we come to the topics of benefits realization and levels of customization. (Our earlier posts discussed the reasons companies implement ERP with a slant on manufacturing, as well as project durations and typical reasons for cost overruns; those two posts begin with part 1 here.)
The realization of projected business benefits is a good benchmark for ERP success. According to Panorama’s surveys – of large firms, mind you – about 40% of implementations had a 30% or less realization of their anticipated benefits. The rest of the responses split fairly evenly among achieving 31-50% or 51-80%, or 81-100%. Only about 1 firm in 7 scored at the high range.
The most common benefit manufacturers realized was an increase in response time due to better availability of information (about 1 in 3 cited this) and “increased interaction across the enterprise,” cited about 1 in 4.
Among other benefits cited were “improved interaction with customers” with most of the rest split across reduced expenses (IT or maintenance in general) and improved inventory levels and interactions with suppliers.
The improved interactions enable manufacturers to determine whether and where they are losing production efficiencies and to make appropriate adjustments to eliminate quality defects and delayed shipments.
Finally, Panorama reports on levels of customization, which they show take one of three approaches:
1) Change business processes to accommodate ERP functionality, or
2) Customer ERP functionality to accommodate current business processes, or
3) Change business processes independent of ERP, then select or configure software to align with new processes.
About 90% of customers overall, including manufacturers reported modifying some part of their system, with a mean somewhere in the range of what they denoted as “some” customization, which was defined as 11-25% of code modified.
The relatively high degree of customization common to manufacturing is attributed to the high degree of specialization and complexity inherent in manufacturing. Most ERP systems do not meet the exact requirements of every operation. Common areas for modification include supplier lists, report formatting, and document exchange among trading partners, to name just a few (of many).
Panorama concludes its 2014 report with the same sentiment our own firm tries to convey to all prospective clients, one so critical we’ll simply quote it directly below…
The first step to achieving ERP success in the manufacturing industry is to develop a business case that includes goals and objectives from which your organization can benchmark actual outcomes. From here, your organization can tackle the unique challenges that come with implementing and integrating the specific modules that support your manufacturing processes.
We hope you’ve found the general conclusions of this three part series helpful. We think the lessons can be applied to all companies’ ERP efforts. And again, you can find Panorama’s original 2014 report here.