For any manufacturer with aspirations to grow, then an investment in manufacturing ERP is fairly essential. Manufacturing ERP, in short, is how manufacturers build those seamless links between sales order entry, purchasing, production, despatch, and eventual invoicing. One seamless system; one seamless way of working.
But ERP manufacturing software comes at a price. There’s software to license and implement, people to train, and IT infrastructure to build and maintain. Which begs an obvious question: where is the ROI of manufacturing ERP to come from?
At Kerridge Commercial Systems, we don’t think that it’s a question that is asked often enough. Or, indeed, searchingly enough.
“You have to have manufacturing ERP,” goes the argument. “Everybody does.”
And that’s true. But implementing manufacturing ERP because ‘everybody does’ will not necessarily deliver much by way of ROI.
So here are three pointers to maximising the ROI of your investment in manufacturing ERP.
Manufacturing ERP: turning efficiency improvements into value
Compared to having multiple systems—one for accounts, one for inventory control, one for sales, and so on—then manufacturing ERP is much more efficient.
That’s obvious. There’s far less re-keying of information from system to system, for instance, far less time spent correcting the inevitable errors, and far less time hunting for data.
But in terms of converting that improved efficiency into an ROI that’s discernible on the bottom line, too many manufacturing ERP implementations take refuge behind glib statements and wishful thinking.
The point is this: after your investment in manufacturing ERP, fewer people will be carrying out tasks such as re-keying. So what are they going to be doing instead?
That said, it’s not necessarily about redundancy, and people losing their jobs. Just as valuable—if not more so—is redeployment into tasks that add value, such as customer service roles.
Manufacturing ERP: slicker supply chains free up cash
Undoubtedly, for most companies an investment in a manufacturing ERP system means automatic access to improved supply chain processes. More sophisticated forecasting, for instance. Better inventory control and reordering systems. Greater visibility into supplier performance. Greater visibility into procurement spend. And so on.
And what’s more, these are knowns from the outset. Here at Kerridge Commercial Systems we routinely see such improvements when customers adopt our manufacturing ERP system—shorter lead times, reduced inventory levels, fewer stockouts, and less time spent processing sudden rush orders.
So plan for these improvements. Proactively target them, and consciously strive to turn them into bottom line benefits.
Put another way, if after implementing your manufacturing ERP system, you discover that lead times and inventory levels haven’t come down, thus releasing cash, then it’s time to ask some searching questions.
Manufacturing ERP: the enabler of a move to barcodes
Finally, a manufacturing ERP system is a great way of driving factory-floor and warehouse productivity improvements, as it provides a seamless ‘transaction backbone’, with orders and materials smoothly flowing through the system.
Most obviously, this makes a manufacturing ERP system an ideal way to leverage technologies such as barcodes and RFID tags—at a stroke not just reducing errors and eliminating mislaid inventory and orders, but also directly impacting factory-floor and warehouse productivity.
So if what’s always held you back from a move to barcodes is the absence of an integrated manufacturing ERP system, then it’s time for a re-think.
Putting it all together
So is an investment in manufacturing ERP a smart move? For the vast majority of manufacturing businesses, yes.
But too few of those businesses are being demanding enough in terms of seeking out and securing the hard cash benefits of their investment in manufacturing ERP.
Our message: don’t join them.