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Report on Manufacturing and ERP: Part One

4/14/2015

Kevin Prouty, senior vice president, research, at Boston, Massachusetts-based industry analyst Aberdeen Group, recently gave a presentation on manufacturing and enterprise resource planning (ERP) based on an Aberdeen survey of manufacturers. Respondents were scored across selected performance criteria and companies were segmented into best-in-class (top 20 percent), industry average (middle 50 percent), and laggard (bottom 30 percent) categories.

Key findings of the research included:

  • A lack of visibility and predictability is driving manufacturers today.
  • ERP is the single most implemented enterprise application.
  • ERP lays the foundations for standard business processes among manufacturers.
  • ERP is a living system that is maintained, extended, and evolved after initial implementation.
  • Best-in-class manufacturers are much more likely to have a multi-ERP or federated strategy than average or laggard organizations.

Respondents ranked the top pressures in manufacturing as unpredictable demand (41 percent), increased volume and complexity of data (40 percent), availability of skilled resources (35 percent), inability to collaborate across the extended enterprise (22 percent), and maintaining the security and stability of data (22 percent).

A comparison of best-in-class manufacturers with industry average manufacturers across performance metrics shows significant differences:

ERPMFGTable


ERP is pervasive among manufacturers, with leaders indicating 97 percent adoption and followers 88 percent. The top five ERP extensions were CRM, warehouse management (beyond inventory management), standalone financial planning and budgeting, BI or analytical tools, and EDI translators. Across the board, industry leaders get more out of their ERP than followers; for example, seeing a 12 percent improvement in operational costs (versus 4 percent for followers), 39 percent improvement in inventory turns (versus 18 percent), and 20 percent improvement in stock-to-sales ratios (versus 7 percent).

An important finding of the study documented the benefits of mobile ERP:

ERPMFGTable2

 

These compelling figures point to why manufacturers are increasingly demanding mobile ERP capabilities.

In Part Two of this post, we’ll look at what the Aberdeen study said about upgrading ERP and the use of cloud-based ERP. Stay tuned.


Posted by Manufacturing Insights Team

 

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