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ERP Mistakes How Manufacturers Can Avoid Common ERP Software Mistakes

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Although an overwhelming majority of manufacturers have invested in enterprise resource planning (ERP) software, many are not getting the biggest bang for their technology investment.

In fact, a whopping 74% of manufacturers have ERP solutions in place, according to Aberdeen Group's ERP in Manufacturing report. Despite this investment, many manufacturers are not fully using their ERP solutions and are, therefore, not reaping the biggest possible return. As software developers continue to unveil new features, manufacturers are using an increasingly smaller percentage of the application's overall capabilities, the research firm determined.

Some manufacturers continue to use out-dated solutions that do not take advantage of later advances, Aberdeen determined. Others are based on proprietary technologies that are less efficient and more costly to maintain, according to the research firm. The average manufacturing ERP implementation used a weighted average of 30.1% of the software capabilities, Aberdeen said, and went on to say "...in today's globally competitive markets, most manufacturers are essentially leaving money on the table by not taking full advantage of newer technology-enabled features and functions."

Top ERP Disappointments for Manufacturers

If it's time, then, to reconsider your existing manufacturing ERP solution or explore the possibility of investing in a newer iteration, it's worthwhile remembering some of the reasons that ERP implementations can fail or be more time-consuming and costly than originally anticipated. After all, you want to ensure you garner the biggest possible ROI from your new ERP solution, and avoiding common pitfalls is a great way to begin.

Here are 10 common errors or problems manufacturers face when it comes to implementing ERP software.

  1. Unrealistic Expectations
    ERP is not a magic bullet. To paraphrase the long-running Staples' commercial, there is no "easy" button to push. Rather, ERP software requires careful, long- and short-term planning, and a phased-in rollout. People will get frustrated, IT staff will be taxed and most likely productivity will dip for a short, learning-curve spell.

  2. Not Enough Training
    Managers and end-users must receive sufficient and ongoing training to maximize their use of the ERP solution. Without this upfront training, frustrations will rise - and executives will not have access to the wealth of decision-critical information available to them.

  3. IT's Mine
    Although technology lies behind ERP, the software does not - and should not - belong to IT. Of course, IT or one of its partners will install the software, but ERP is a corporate-wide tool and should be viewed as such.

  4. Poor Planning
    ERP software and operation does not belong to one particular department or executive. Rather, this company-wide asset requires input from multiple departments and managers to ensure all relevant data streams and processes are incorporated. After all, ERP's entire reason for being is to provide a centralized, accessible repository of the entire organization's information; missing a department or function severely limits its capabilities.

  5. ERP ASAP
    Of course, you want to reap the benefits of ERP software immediately, but recognize that this is not an overnight process. Rushing or avoiding key steps will backfire, potentially damaging the long-term benefits. It's important to set a schedule, but allot ample time for everything from vendor comparisons and training, to pilot testing and the corporate-wide implementation.

  6. Mis-Match
    There are an almost overwhelming number of ERP software choices so it's vital to take the time to explore each possibility and objectively eliminate - whether it's because of price, features, reputation, financial viability or customer feedback - from your list of candidates. Buying ERP software is not like purchasing a word processing application: Since ERP is so integral to your manufacturing business you really need a true partner that understands your business model, your goals and your processes. Select the wrong partner and you could be in for a messy - and expensive - software divorce.

  7. Lack of Commitment
    Given the cost and time associated with an ERP implementation, most likely you'll have buy-in from executive leadership. If not, you'd better wait until you have full-fledged executive sponsorship. The path to ERP success can be bumpy at times and you don't want to operate in an environment of finger-pointing and "told you so." Clear leadership is essential to ERP's success.

  8. No Digging
    One great thing about an ERP implementation, whether new or replacement, is the opportunity it affords to revisit old processes and cut out waste or inefficiencies. After all, you don't want or need to automate inefficient business processes that waste time or resources. Consider advances in other areas of manufacturing and integrate these into your ERP plan to truly drive cross departmental and enterprise-wide efficiencies throughout your organization. Don't forget to include these in your ROI predictions and post-implementation analysis.

  9. Bad Data
    Similarly, ERP solutions demand quality data: Without it, executives cannot accurately make the right decisions to drive your business forward. It is, therefore, critical to periodically check the accuracy of information stored in company databases to prevent errors in material procurement, manufacturing planning, inventory and purchasing, among others.

  10. Irreconcilable Differences
    Likewise, your ERP solution should not be an island. It must integrate well with your existing legacy systems and other back-office applications. If a vendor's software does not work with your existing enterprise software, it's probably wise to remove this ERP system from your list of candidates. Not doing so will only result in major headaches and additional expense.

Whether you're a member of the 36% of manufacturers that have yet to implement an ERP solution or are part of the majority and need to update your ERP software, it's important to wring the last dollar of ROI from your investment. Those manufacturers that best-leverage their Enterprise Resource Planning technologies reduce inventory by an average of 20%, cut both manufacturing and administrative costs by 14% each, increase manufacturing compliance by 20% and improve on-time shipments by 21%, according to Aberdeen.

Translate those percentage points into dollars, and it's easy to see how properly deployed ERP software can easily translate into ROI dollars. Whether you make potato chips or computer chips, making the most of your ERP implementation makes good sense for any manufacturer's business. End

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Manufacturers that best-leverage their ERP software reduce inventory by an average of 20%, cut both manufacturing and administrative costs by 14%, improve manufacturing compliance by 20% and increase on-time shipments by 21%, according to Aberdeen.

 

 

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