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Creating a Modern Effective Manufacturing Environment
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Creating a Modern Effective Manufacturing Environment with ERP. In today s manufacturing industry Enterprise Resource Planning. While ERP is widely ERP solutions have become ubiquitous In fact Aberdeen s. used by 2014 Business Management and ERP Benchmark Survey found. that 97 of Leading manufacturers utilize ERP in comparison to. manufacturers those 88 of Followers But just because an organization has. that use it most implemented ERP it does not mean that they are getting the. most out of their technology environment Rather top. successfully do a performing manufacturers ensure that their ERP solution is. better job of utilizing being used to its fullest extent by their employees in roles that. spread across the organization Further these modern. more of the manufacturers may supplement their solutions with supporting. technology that exponentially increases the benefits that are. solution s features, received from the functionality and data contained within ERP. and functions Continuous improvement has long been a cornerstone of the. manufacturing industry and in that spirit today s top. performers must find ways to extend ERP in order to compete. effectively in the modern environment This report identifies the. challenges that face the modern manufacturing environment. and illustrates how Leading manufacturers make ERP a. foundation for efficiency effectiveness and growth. The Modern Environment, Today s manufacturers are facing a series of pressures that. indicate that they need more out of their technology. environment Figure 1 For instance not only are they faced. with a huge influx of data to manage but they are actually. having trouble making use of that data With the wealth of. information available one would think that demand planning. would become easier However this is not the case Rather as. manufacturers expand globally they are exposed to more. potential customers in areas with varying levels of demand This. means that they could either be faced with surpluses or. shortages neither of which is a good situation, www aberdeen com. Creating a Modern Effective Manufacturing Environment with ERP. 3 In this report Aberdeen groups, Figure I Top Pressures in Manufacturing respondents into two maturity. Leaders Top 35 of, Unpredictable demand 41 respondents based on.
performance, The increased volume and complexity Followers Bottom 65 of. 40 respondents based on, performance, Availability of skilled resources 35. Inability to collaborate with the, extended enterprise suppliers 22. resellers customers regulators, Maintaining security and stability of. 0 20 40 60, Percentage of Respondents n 89, Source Aberdeen Group August 2014.
Of course the ability to communicate effectively with suppliers. customers and regulators can help with demand planning but. many organizations lack the sophistication to share data with. these stakeholders And when levels of demand are high a lack. of skilled resources can really hinder an organization as it. attempts to serve customers All of these pressures could be. better managed through technology that enables the. organization to organize share find interpret and utilize data. more effectively, But if the majority of all manufacturers have already. implemented ERP why are they having these problems Survey. takers were asked to indicate the reasons that they replace their. ERP solutions The top responses indicate that many. manufacturers have obsolete solutions that may not have all of. the functionality that they need in order to operate effectively. www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP. Figure 2 Additionally these solutions may not be easily. changed to support a growing and changing business Of course. In Aberdeen s 2014 Business implementing a new ERP solution can be a disruptive lengthy. Management and ERP Benchmark and costly process If the solution truly cannot do the things that. Survey respondents were ranked on a manufacturing organization needs then replacement may be. the following criteria, necessary But oftentimes organizations simply are not aware. Complete and on time, delivery that their solution can be expanded or used more effectively to. o Leaders 96 work better for the organization, o Followers 82.
Improvement in profit Figure 2 Why Replace ERP, margins over the past two. years Obsolete technology foundation or, o Leaders 14 infrastructure of ERP system. o Followers 4, Internal schedule Lack of features 24. compliance, o Leaders 93 Cost of maintenance and support 19. o Followers 81, Inventory accuracy, o Leaders 97 Lack of support from ERP vendor 18.
o Followers 87, Inability to tailor ERP solution to. integrate changes to the business, Percentage of Respondents n 89. Source Aberdeen Group August 2014, The Manufacturing Technology Environment. How can manufacturers get more value out of their ERP. solution Leading manufacturers have implemented more. modules of ERP at a higher rate than Followers Figure 3 These. modules are built to support specific business processes that. can help a manufacturer become more effective Whether these. modules support functions that all industries can benefit from. such as accounts payable or general ledger or are, www aberdeen com. Creating a Modern Effective Manufacturing Environment with ERP. manufacturing specific using more of the functionality that is. included in an ERP package can improve the value of the. solution and help to reduce complexity in the technology. environment, Figure 3 Modules Implemented by Leading Manufacturers.
Accounts Payable 90, General Ledger 90, Purchasing 87. Inventory Control 83, Accounts Receivable 80, Order Management 77. Material Requirements Planning MRP 73, Warehouse management 70. Fixed Asset Management 70, Forecasting Demand Planning 57. Master Production Scheduling MPS 57, Manufacturing Execution 40.
24 Followers, Percentage of Respondents n 89, Source Aberdeen Group August 2014. Of course there are situations where a manufacturer may want. to supplement the functionality contained within their ERP. solution In these cases it is extremely important that any. additional technology be integrated effectively but ERP should. persist as the foundation of a modern manufacturing technology. environment Still Leading manufacturers are more likely to. supplement their solutions by beefing up capabilities in areas. that they deem important Figure 4 For example as, manufacturing organizations increase their emphasis on service. www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP. as a product they may need enhanced insight into customer. data Therefore Leaders are 68 more likely to supplement ERP. with a Customer Relationship Management CRM solution. Additionally Leaders are more likely to utilize additional. technology like Business Intelligence tools to enhance the. utilization of the data contained within the ERP itself Business. intelligence tools can provide a more robust analysis of ERP data. that can be used for tasks such as demand planning In other. cases Enterprise Data Interchange EDI translators can enable. data sharing with the extended enterprise such as suppliers. These technologies expand the technology footprint of a. manufacturer with ERP as a foundation, Figure 4 Top Five ERP Extensions. Customer Relationship Management 67, Warehouse Management beyond 56.
inventory management 20, Financial Planning and Budgeting 54. stand alone 39, Business Intelligence or analytical 52. Enterprise Data Interchange EDI 52 Leaders, translator 44 Followers. Percentage of Respondents n 89, Source Aberdeen Group August 2014. In order to ensure that ERP is truly the foundation of a. manufacturing technology environment as well as take. advantage of the extensions and modules of ERP top performers. ensure that their applications are tightly integrated Note that. Leaders are 31 more likely to have business solutions. integrated to create a complete and auditable system of record. www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP.
Figure 5 Not only does this ensure that data is complete but. also that it is accurate and without redundancy due to solutions. such as Master Data Management Integrated systems enable. better decision making through Business Analytics which can. help organizations to get more value out of the data contained. within ERP Or manufacturers can supplement customer service. and delivery through integrated solutions for Customer. Relationship Management and eCommerce Ultimately Leaders. are more likely to create an integrated environment that can. support their manufacturing operations from end to end. Figure 5 The Integrated Environment, 70 66 Leaders Followers. Percentage of Respondents n 89, 40 35 33 32 31, Integrated business Master Data Business analytics Customer Ecommerce In memory. applications serve Management intelligence Relationship integrated into ERP analytics. as a complete and integrated into ERP integrated into ERP Management order technology. auditable system of integrated into ERP management. Source Aberdeen Group August 2014, The technology listed above can help to provide capabilities that. extend across the manufacturing organization Figure 6 For. example Leaders are almost twice as likely as Followers to have. standardized processes for production planning and execution. Aided with improved demand planning this can be a very. valuable capability Additionally Leaders are more likely to have. access to a variety of manufacturing specific capabilities such. as the ability to perform recalls essential in process industries. and the ability to proactively schedule maintenance of assets. www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP. Figure 6 Manufacturing Capabilities of the Leaders. 90 Leaders Followers, 80 77 80 79, Percentage of Respondents n 89.
50 43 40 43 40 43, Standardized Process for a Demand Schedule for Cross functional Real time Data is integrated Real time access. procedures for mock or real planning and preventative teams are visibility into with the to inventory of. production recall forecasting maintenance of responsible for status of all extended raw materials. planning and assets improving processes from enterprise WIP parts and. execution operational quote to cash tools and, Source Aberdeen Group August 2014. performance finished goods, Ultimately the capabilities gained through a proper ERP implementation in manufacturing. center on the main challenges noted earlier in this report improved visibility and. communication with data Top performers can utilize ERP for continuous improvement as. well as decision making and data sharing with the extended enterprise. The Results, Since Leading manufacturers do a better job of utilizing a wider range of ERP modules and. capabilities they naturally receive enhanced benefits as a result of their solution Table 1. These can have a significant impact on the performance of the organization But. manufacturers of every maturity class have reported benefits as a result of their ERP. solutions These include inventory turns time to decision complete and on time delivery. and profit margins In order to maximize these gains extend ERP to more roles and processes. throughout the organization, www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP.
Table 1 The Benefits, Improvement as a Result of ERP Leaders Followers. Improvement in inventory turns 39 18, Improvement in stock to sales ratio 20 7. Improvement in operational costs 12 4, Improvement in administrative costs 9 5. Improvement in complete and on time 19 8, Improvement in inventory levels 12 6. Improvement in schedule compliance 16 4, Improvement in cycle time of key 18 9.
business processes, Source Aberdeen Group August 2014. Key Takeaways, While ERP is used widely by manufacturers of all types and sizes. not every manufacturer is getting full use out of this important. but sometimes costly investment These solutions are not to be. taken likely Since these solutions are designed to support the. business from end to end business leaders expect to see. tangible improvements to the business Leading manufacturers. are able to drive significant improvements such as an average. 12 improvement in operational costs But how are they able to. get the most out of their ERP, They spread ERP across the organization Leading. manufacturers have implemented more modules of ERP. at a higher rate than Followers Whether these modules. support functions that all industries can benefit from. such as accounts payable or general ledger or are, manufacturing specific using more of the functionality. that is included in an ERP package can improve the value. www aberdeen com, Creating a Modern Effective Manufacturing Environment with ERP.
of the solution and help to reduce complexity in the. technology environment, Leaders supplement ERP with supporting technology. Leaders are more likely to utilize additional technology. like Business Intelligence tools to enhance the utilization. of the data contained within the ERP itself Business. manufacturing environment and illustrates how Leading effectively in the modern environm ent better decision making through Business Analytics

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