Whether a company is a “laggard” as defined in the Aberdeen Group’s report entitled ERP in Manufacturing 2010: Measuring Business Benefit and the Time to Value, or an “industry average” firm looking to move up to Best in Class, certain actions need to be performed in order to spur the necessary improvement. We’ll look at those in this installment.
The 2010 Aberdeen survey concluded that among actions the “laggards” should take to catch up are:
- Assign ERP ownership to line of business executives who stand to gain the most benefit from the implementation. Laggard businesses stop short of achieving cost reductions and business improvement goals. So assign specific responsibility to an executive measured by these criteria.
- Establish specific goals for obtaining business benefits from ERP – and measure progress. Only 15% of Laggards quantify the business benefits of ERP. Others fail to measure reductions in inventory or manufacturing or administrative costs. 100% of Best in Class companies measure all of these.
- Measure time to value. Best in Class companies are twice as likely to measure the time it takes to recapture value from their ERP deployment in real dollar terms. While improvement is ongoing and ERP is never “done” it is important to track time and costs relative to realized value and payback.
Meanwhile, the companies in the mid-tier “industry average” category, striving to become “best in class” should take the following actions:
- Take advantage of tools that review summary data and that provide dashboards and drill-downs. Best in Class firms know that this type of visibility, now usually provided directly within ERP software, makes a tangible difference in monitoring and improving business performance.
- Coordinate, collaborate and continuously improve.
- Broaden and deepen ERP usage. This is a recurring theme in ERP: Best in Class manufacturers make broader and deeper use of ERP, in terms of number of modules implemented and functionality deployed.
- Don’t let maintenance dollars go to waste. Another recurring theme: Stay current on your software and the new innovation each new release provides. Best in Class manufacturers are twice as likely to be current in their software as are industry average firms.
Finally, if you already are Best in Class, take action to:
- Improve real time visibility into the entire quote to cash process. Automatically notify decision makers when certain scheduled activities fail to occur as planned. Having visibility and taking action are often two different things.
- Manage by exception. You must be notified in real time as exceptions occur in order to react immediately. Event triggers in ERP software make both these actions possible today.
By following the principles outlined in this series of five posts, manufacturing firms – already leaders in ERP deployment – can enjoy much greater gains in efficiency and profit improvement. Take the steps outlined here to begin your own path to Best in Class. It’s worked for others. It will work for you.
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