Cindy Jutras: Don't overlook the basic plumbing that is ERP

ERP provides the necessary infrastructure that forms the operational and transactional system of record for manufacturers of all types and sizes.While an ERP evaluation was once thought to be a strategic five- to eight-year decision, Aberdeen research finds the average age of implementations to be almost nine years, implying the longevity of these solutions often exceeds the anticipated life.

06/01/2008


ERP provides the necessary infrastructure that forms the operational and transactional system of record for manufacturers of all types and sizes.While an ERP evaluation was once thought to be a strategic five- to eight-year decision, Aberdeen research finds the average age of implementations to be almost nine years, implying the longevity of these solutions often exceeds the anticipated life.

As a result, many aging implementations, based on outdated technology, are limiting the business evolution necessary to any company that wants to thrive amidst shareholder expectations of growth and increasingly demanding customers.

Best-in-Class ERP implementations can be a strategic weapon in standardizing and automating business processes, and providing the visibility needed for agile, data-driven decision-making.

A couple years ago, shortly after joining Aberdeen to run its Manufacturing research practice, I decided to benchmark ERP in manufacturing. Aberdeen's management at the time tried to talk me out of it. ERP wasn't a sexy topic. I would struggle to get survey responses, and nobody would care about reading the report that would be based on those responses.

I stubbornly persisted and in a world where we write good solid benchmarks based on 200 to 500 survey responses, in the summer of 2006, 1,245 companies responded to my call for participation, and more than 1,800 companies later downloaded the resulting benchmark.

When I repeated the process in 2007, survey participation grew to 1,716, and downloads exceeded expectations at 2,128. I guess somebody cares.

But a question persists. With its roots in material requirements planning (MRP) and a history that spans more than two decades, ERP has truly become a mature business application. In a world where industry observers are in constant search of the “next killer application,” can a technology that is viewed by many as a necessary infrastructure also be a strategic weapon that provides competitive advantage?

Aberdeen's July 2007 ERP in Manufacturing found the average ERP implementation used a weighted average of 31.2 percent of available functionality. Top performers implement 28 percent more functionality and are 100 percent to 280 percent more likely to use advanced technologies such as workflow and event management, yet ERP in general remains largely underutilized.

Simply taking better advantage of ERP basic functionality can yield dramatic results though. Because it is generally viewed as basic “plumbing,” potential benefits of ERP often are overlooked. Yet with proper attention to full integration and proper controls, Best-in-Class companies are able to achieve very impressive results.

Aberdeen's Best-in-Class boast reductions in inventory (24 percent); manufacturing costs (15 percent); and administrative costs (15 percent) while improving manufacturing schedule compliance (18 percent); and complete and on-time shipments (20 percent). These achievements can generate savings of hundreds of thousands of dollars while also impacting revenue through improved customer service and response times.

To participate in this year's ERP in Manufacturing survey, access www.aberdeen.com/survey/ERPinMFG08MBT/

In appreciation for sharing your time and thoughts with us, Aberdeen will provide complimentary access for you to the full benchmark report as soon as it is published.


Author Information

Cindy Jutras, who oversees research and client development related to manufacturing at Boston-based AberdeenGroup, has more than 30 years worth of ERP and supply chain-related experience. Cindy, a former director for a prominent enterprise vendor, has authored numerous white papers as well as a book titled ERP Optimization.




No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Leaders Under 40 program features outstanding young people who are making a difference in manufacturing. View the 2013 Leaders here.
The new control room: It's got all the bells and whistles - and alarms, too; Remote maintenance; Specifying VFDs
2014 forecast issue: To serve and to manufacture - Veterans will bring skill and discipline to the plant floor if we can find a way to get them there.
2013 Top Plant: Lincoln Electric Company, Cleveland, Ohio
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.
Electric motor power measurement and analysis: Understand the basics to drive greater efficiency; Selecting the right control chart; Linear position sensors gain acceptance
Protecting standby generators for mission critical facilities; Selecting energy-efficient transformers; Integrating power monitoring systems; Mitigating harmonics in electrical systems

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.