Creating a future-proof ERP system

Technology is a constantly moving target, and it can be challenging to know how a system or trend that's popular today will look five to 10 years down the road. Manufacturing operators need to ensure that their tools can last for the long haul and accomplish complex tasks.

Enterprise resource planning systems haven't always been associated with this type of flexibility, but they are significantly improving to bolster business capabilities. There are a few steps that manufacturers can take to create a future-proof ERP system that will support them in the years ahead.

1. Enable plug-ins

Adaptability is going to be important for any program or hardware that needs to weather major tech shifts. In the past, solutions were boxed with set features and then were only expanded or changed when a new version came out. Users now expect their system to incorporate functionality quickly, rather than months or years down the road. In an interview with Forbes, Pentaho's James Dixon suggested making it an open system configured with different components and plug-ins. This would provide a number of tactical advantages for handling one-off customer requests and provisioning as required.

Analytics can help future-proof an ERP system.Analytics can help future-proof an ERP system.

2. Leverage analytics

Gathering and utilizing data for better decision-making has become a priority across businesses. ERP must be able to not only deliver the necessary information for reporting purposes, but also ensure that workers are able to view these metrics on the floor. Many ERP systems come with built-in reporting tools, but it will be essential to ensure that they can handle the bulk of big data needs emerging within the workplace.

As CIO Review contributor Jorge Frausto noted, companies can evaluate ERP and other pillar applications that interface with the system to form a consistent, semantic data layer. This will help measure the success of ERP on all of these systems working together to increase productivity and enable teams to deliver on schedule and on budget.

3. Ensure mobility

"It will be important for manufacturers to choose an ERP system that enables mobility. "

The future looks to rely on mobile devices and associated technology, but ERP has largely been designed to stay put. As these systems continue to evolve, it will be important for manufacturers to choose one that enables mobility. TechTarget contributor Linda Rosencrance noted that with mobility, ERP systems help enhance customer relationships, improve worker productivity and empower manufacturers to be more competitive. There will certainly be a number of challenges like security and performance to consider, but mobility can help deliver value to users and boost future-proofing strategies.

"Users expect simple, intuitive, high-performance apps that leverage the native capabilities of the device," industry expert David Rowe told Rosencrance. "What's required for rapid user adoption and high customer satisfaction is a singular, consistent mobile experience, shielding users from the underlying complexities of individual applications."

Organizations want to ensure that their investments are going to be valuable for the foreseeable future and beyond. Future-proofing an ERP system will be integral to helping manufacturers adapt quickly while continuing to deliver quality products to their clients.

3 ways ERP advancements are benefiting manufacturing

Enterprise resource planning has been the quintessential tool for manufacturing for decades. The technology has considerably evolved from the use of pen-and-paper inventory sheets, and is continuing to advance in its capabilities. As ERP becomes easier to use and add in more functionality, it will be important to utilize this asset to its fullest. Manufacturers can benefit in three big ways from ERP advancements:

1. Fuller visibility

No matter how big of a shop you run, it can be difficult to monitor all parts of the manufacturing floor along with the rest of the supply chain. With pen and paper or Excel spreadsheets, it's easy for documents to get lost or contain inaccurate information. Collaboration or file sharing would also be a considerable challenge. However, ERP fixes these issues by providing one platform that houses information from across the business.

ERP provides better visibility into overall operations.ERP provides better visibility into overall operations.

ERP has evolved to ensure that staff members in shipping can accurately record how much product has gone out, and sales personnel can cross-reference this with active projects. The pricing associated with these objects can also be assigned to better monitor the flow of revenue throughout the organization. Cloud Computing News contributor Louis Columbus noted that real-time visibility afforded by ERP paired with other tools can help make planning easier and optimize production schedules. This will improve inventory ordering and order fulfillment, leading to happier customers and business partners.

2. More device options

Employee preferences are slowly siding with the ability to be more mobile and have necessary information from any location. ERP advancements are taking wearables and mobile devices into account to track operations and improve data accessibility. IndustryWeek contributor Dan Matthews noted that augmented reality glasses could provide a hands-free option to manufacturers to interact with ERP systems. This could be used for situations like double-checking orders or reviewing how a piece needs to be assembled. In addition, sensors within the manufacturing line could identify if maintenance is required or what assets aren't performing to their ability.

3. Geospatial context awareness

"What if you could track orders in real time?"

When you place an order for materials or if a product is sent out, there's typically a timeline attached to these processes. But what if you could track orders in real time throughout your supply chain? Connecting ERP tools with applications that have geospatial context awareness could have profound implications in how products are created and delivered. According to TechTarget contributor Ann Grackin, organizations will get real-time data including traffic, geopolitical conditions and weather conditions. This could help manufacturers determine what times are the busiest and plan out operations more effectively. The same can be said for monitoring progress on the floor to better understand where bottlenecks exist and how to mitigate them. 

ERP has significantly evolved over the years, and user needs are continuing to shape how it develops. Manufacturers can greatly benefit from the context awareness, device flexibility and better flexibility afforded by ERP solutions.

Millennial workforce is shaping ERP evolution

Over the past decade, our relationship with and expectations of technology have drastically changed. Millennials now represent the largest subset of the American workforce, and their preferences and views will differ from those of older staff members. The next generation of employees is not only making a mark on manufacturing operations, it's also shaping how ERP solutions evolve and dictating the capabilities that will be required in the future.

Incorporating mobility

When there's an app for virtually everything, why not have an ERP system that directly connects with one? Workers no longer want to carry around multiple devices for their job or be tied down to a desktop with legacy software. Staff expect to use their smartphones to access ERP data and order inventory and have a full view into manufacturing operations. TechTarget contributor Beth Stackpole noted that there's an expectation of immediately having information available. This type of accessibility will be attractive to new talent as older staff start to retire.

It's also important for the ERP system to have an interface that's easy to navigate. Workers can start using the software right out of the box with no training, providing value right away, but this is only possible if the solution is presented in a way that's familiar and simple to use.

Millennials in manufacturing have different expectations of their ERP solutions.Millennials in manufacturing have different expectations of their ERP solutions.

"A user interface is like a joke. If you have to explain it, it's not a good one," Jay Flores, STEM ambassador at Rockwell Automation, told Stackpole. "People expect a lot more intuitive interaction with machines because of touchscreens and the iPhone and iPad era. They need to be able to understand quickly what it is they need to do."

Collaboration is key

"An ERP system must enable workers to share knowledge and provide critical insight."

Millennials increasingly look to ensure that everyone is on the same page, but this isn't possible without the right tools. An ERP system must enable workers to share knowledge and provide critical insight. If workers are forced to go through multiple programs or spreadsheets to find the information they're looking for, that hurts their productivity. ERP systems should enable instantaneous communications and feedback, Manufacturing Business Technology contributor Stevie Hay recommended. This will help alert staff to critical tasks and anything that must be addressed right away. With this type of information, workers can head off issues and collaborate more effectively.

In order to attain optimal efficiency, ERP systems should also track key performance indicators across the board to monitor overall progress. Workers can use ERP solutions to easily search for information, ranking results according to their relevance. Manufacturers can even create and share custom reports with real-time data, ensuring that decision-makers have the most relevant metrics available. This will empower businesses to better predict future behaviors, plan out job costs and schedule projects.

Millennials and future generations have grown up with technology, and their expectations are changing the way ERP solutions look and function. ERP systems in the future must be more mobile and enable collaboration in order to provide the look and features the up-and-coming workforce anticipates.

3 essential features in a manufacturing ERP solution

Visibility into every aspect of the manufacturing floor is virtually impossible to accomplish without the right tools. Manual data entry can produce many errors that lead to incorrect inventory and cost management. Enterprise resource planning solutions have become a powerful tool for organizations to accurately monitor their operations and plan for the future. A capable manufacturing ERP solution should have three essential features to improve processes:

1. Inventory management

Organizations must be able to understand how much inventory they currently have within their facilities. This plays a huge part in manufacturing to ensure that current project demands are being met, while also buying more materials to prepare for future transactions. It's important for operators to monitor the flow of materials and products throughout the supply chain, and to have accurate information concerning these activities, IT Toolbox stated. ERP systems should have a feature that assigns numbers to parts that can be traced and watched to bolster production scheduling and inventory accounts. Operators should be able to say with confidence where each item is located as well as how many they have in stock. This will be critical to managing costs and planning out projects more accurately.

ERP can easily help improve inventory management.ERP can easily help improve inventory management.

2. Mobility

Employees no longer want to be tied down to desks or laptops for their operations. On the manufacturing floor, especially when working with other companies and partners, it can be beneficial to have access to an ERP system through a mobile device like a smartphone or tablet. Increasingly, staff are expecting to have flexibility in how they do their jobs, and mobility can certainly provide this. TechTarget contributor Linda Rosencrance noted that operators can create and approve expense reports easily from their mobile devices, among many other tasks. Although this still isn't heavily used within the industry, vendors are constantly improving the mobility of ERP systems and will likely shape the future of the sector.

3. Business intelligence

"ERP systems must be able to track, analyze and report actionable insights."

Within manufacturing, information is a critical part of operations. ERP systems must be able to track, analyze and report actionable insights that will lead to better decision-making. TechTarget contributor Mary Shacklett noted that ERP vendors provide pre-designed reports that will assess sales and operations. Many ERP systems can also data mine and create custom reports based on what metrics the organization wants to watch. Having this information on hand can be critical for identifying weak areas and strategizing how to improve. Business intelligence features will grant manufacturers with visibility into how well they're performing, what items are the most popular and other critical factors.

ERP can be a powerful asset for manufacturers, but only if it's utilized effectively. Organizations should particularly look out for features like analytics, mobility and inventory management to provide a higher level of visibility, efficiency and flexibility. With these functions, manufacturers can better control their operations, accurately forecast costs and provide workers with the tools necessary to do their jobs more effectively.

How small and medium-sized manufacturers are utilizing ERP solutions

Small and medium-sized manufacturers have different expectations than their larger counterparts in terms of their delivery and operational capabilities. Similarly, tools like enterprise resource planning were traditionally thought to be out of the realm of possibility for SMBs due to how complex they were and the resources required to actually support them. However, ERP has significantly evolved over the years to become more applicable in a variety of situations, and smaller manufacturers have started taking advantage of these solutions for their own benefits.

Increased production

Growth is a main goal of any business, but for smaller shops, expansion could be a driving factor in future success. The question, then, is how to get there. What strategies and assets can be leveraged to make this objective a reality? One manufacturer used a cloud ERP solution to help infinitely scale and expand as needed without disrupting existing services, CIO stated. The organization was able to increase its production by 60 percent using ERP tools.

ERP can help manufacturers access actionable insight.ERP can help manufacturers access actionable insights.

Businesses can use these systems for similar benefits, as well as adding inventory and product lines and improving production lead times. The beauty of this option is that companies don't have to be concerned that their size will limit them. They will have the same features and capabilities, putting smaller manufacturers on a more even playing field with larger ones.

Better insights

"Integrating ERP onto the shop floor can provide manufacturers with nearly real-time information."

No matter what size shop you run, it can still be hard to keep track of all of the inventory and related data without the right tools. There may be significant lag time to access, analyze and act on important data, creating problems with inventory control, supply chain, planning and customer expectations, CIO contributor Michael Nadeau noted. ERP solutions have been considerably improved to remove many of the barriers that once existed when implementing these systems.

Integrating ERP onto the shop floor can provide manufacturers with nearly real-time information right when they need it. Industrial digitization has made this capability a main priority to improve development processes and gain ROI. Visibility can help maximize efficiency and detect any deviations that you might not normally be able to see. With data from the ERP solution, manufacturers can make judgments about equipment effectiveness and will enable collaboration across projects.

"The system might identify a machine running at 3 percent lower efficiency over the past three days and send an alert to the service department," Nadeau wrote. "That drop might not have been noticed if the machine were not connected to the internet with a monitoring solution that was integrated with the manufacturer's ERP system. This is important, because even a tiny increase in efficiency in a high-volume manufacturing process can yield significant returns."

There are a lot of moving parts in manufacturing, but with the right tools, teams can manage their processes, no matter what size they are. ERP solutions have evolved to the point that they provide benefits to a number of use cases, and SMBs can leverage these systems as well for better insights and improved production, among other advantages.

Top 3 ERP trends to expect in 2017

If Enterprise Resource Planning solutions aren't part of your current business operations, they probably should be. Small and large organizations can benefit greatly from these systems in the form of more synchronized processes across departments.

If you are thinking about integrating ERP into your company, that's great! But the question we need to ask is, where should you start?

You want to be on the cutting edge of technology so it can keep up with how you conduct business. That's why we're going to focus on the top ERP trends we can expect for 2017 (and probably for years to come).

"Small and large organizations can benefit greatly from ERP solutions."

1. The continued growth of IoT
Have you ever heard of the term Internet of Things? IoT is the concept of transmitting data from objects (think ATMs, wearable devices and even cars) to the internet. In fact, Statista reported that close to 100 percent of cars (we're assuming new ones) will be connected to the internet by 2020. We'd expect similar numbers for many other devices in the coming years as well.

In the world of IoT, manufactures will be able to connect machines to the internet. These machines, in turn, will upload information – such as performance metrics – that could then allow employees to make improvements and optimize development and shipment times.

2. Mobile availability
Sitting in front of a desk and uploading or studying data is old news. Today professionals are constantly on the go, and mobile devices are their way of staying connected to the world around them.

Many ERP solutions are decreasing in size (but not capacity or output), so employees can easily access everything from dashboards to in depth charts and displays. 

3. Social connection
Social media isn't new, but its integration into ERP solution is continuing to evolve. ERP solutions help connect employees to different types of data but social networking allows them (and clients) to discuss these points in real time.

As you think about the type of ERP solution you'd like to adopt, keep in mind these trends. While older systems may be less expensive, they could also act as an anchor and hold your company back.

Companies must know how to properly integrate automation solutions

Enterprise Resource Planning solutions help synchronize business operations and assist employees in working more efficiently and productivity. These systems are growing in popularity because they're allowing employees to make more accurate, faster high-level business decisions. The ERP market is set to hit nearly $33 billion this year.

Yet, despite this upsurge in ERP usage, some businesses – particularly small, manufacturing ones – are struggling to adopt and integrate the software into their existing business model.

"Enterprise Resource Planning solutions help synchronize business operations."

And this is concerning, especially considering how much ERPs can unite different areas of their business, shoring up loose ends and driving revenue growth.

Here are a few things manufacturing companies must consider when trying to mold their systems into their current business model:

1. Employees don't like change
In fact, according to a study, employees hate change. In a report published by Root, a mere 30 percent of 1,000 U.S. employees strongly agreed with the following statement: "If my company was undergoing a major change, I would trust my managers(s) to provide me with all of the information I need to know."

This is a telling statement that indicates that managers are beginning their software integration at a disadvantage. No matter how helpful the ERP solution may be, employees are skeptical. This hesitancy can cause integration to stall, costing the company more money in the form of increased training time and poor job output.

Small companies need to thoroughly think through their ERP implementation strategy.Small companies need to thoroughly think through their ERP implementation strategy.

2. Companies struggle to fully implement ERP systems
Do employees have reasons to distrust upper management? Possibly. Panorama Consulting noted that 52 percent of organizations experienced "material operational disruption" as soon as the ERP solution was implemented. Many of these "disruptions" dragged on for 1 to 2 months, or more.

Problems occur for many reasons, but we're confident in saying that many of them are rooted in poor planning and organization. Wowed by the prospect of using a brand new shiny system (that will work), managers forget that ERP solutions are one critical component of their entire business model.

How do we solve this problem? Let's address that in the next segment.

3. Organizations must solve these issues prior to adoption
The best way to solve this problem is just to avoid it completely by developing a transition strategy. While this plan is company-dependent, it should address:

  • Employee concerns such as how it'll affect their jobs.
  • Future growth and stability at the department and organizational level.
  • Past problems that caused management to adopt an ERP solution (or at better one) in the first place.

"Roll out the ERP solution slowly and offer employees training classes and support during the process."

After creating the strategy, the next step is to introduce it to your workforce weeks – or even better, months – ahead of time. Give them time to prepare for change, adjust to new environments and processes, and ask questions to make them feel more comfortable with the process. Transparency will go a long way toward ensuring trust levels increase, which we noted was a major concern earlier in this article.

Roll out the ERP solution slowly and offer employees training classes and support during the process.

Finally, analyze the results during and after implementation. The worst thing you can do is integrate and forget, assuming your solution (or your original assimilation plan) will work. Again, we're talking about trust, and the more support you provide employees before, during and after installing an ERP, the better.

Where do small businesses stand?
Small manufacturing businesses that don't have the same level of automation as larger businesses can particularly struggle with ERP adoption. Many times they don't have the necessary resources (from a dollar or employee standpoint) in place to offer the level of support needed that we've suggested.

In this case, our best advice is to implement slowly. Do not rush.

Manufacturing ERP solutions will fuse together a whole range of processes ranging from product life cycle management and automated data collection to scheduling and quality management. The benefits are there for small businesses that don't have the financial capabilities to hire more employees to support additional processes. ERP can take the stress off of companies by, as we noted, uniting and streamline procedures.

However, in order for these small businesses to enjoy an ERP's advantages, it must address potential implementation problems including, but not limited to, mistrust and disorganized integration approaches.

Challenges small manufacturing companies typically face

Small businesses have a lot to worry about, from dealing with competitors and changing markets to everyday processes that help keep their doors open. That's why small manufacturing companies need a way to address their issues (some of which we describe in this article). This solution is Enterprise Resource Planning solutions.

Let's discuss each of these issues and how ERP systems are the perfect problem solvers.

"ERPs help integrate this data into a single point."

1. Manual data processing
We hope you're not manually logging data into Excel spreadsheets and then sending documents to their respective parties. A decade ago, you may have been able to get by doing this, but today's business world moves much quicker, and customers have become more savvy and competitors far fiercer. More so, it's difficult to track and report accurate data when multiple business silos exist.

ERPs help integrate this data into a single point, allowing employees in marketing departments to see the same information that others from sales are analyzing. This increases accuracy and minimizes do-overs.

2. Poor customer service
Great customer service can be the difference between hitting weekly sales projections or coming up short. Companies that are consistently missing their goals should think about turning to ERP solutions.

ERP solutions will provide sales members and other employees instant access to deal with interruptions or gaps in the supply chain. This information will allow them to provide customers accurate updates about delivery times and reduce cancelations and refunds. 

"The right ERP solution can increase throughput and profit."

3. Inaccurate scheduling
The right ERP solution can increase throughput and profit, reduce inefficient warehouse and manufacturing practices and improve on-time delivery. The end result is an improved bottom line due to an increase in sales and retention.

Many smaller companies have trouble with scheduling, whether that's with tracking employee hours or product delivery. The best ERP will allow you to consolidate procedures, reduce wasted overtime hours and better plan material shipments and orders.

4. Increased competition
Every business has competition, but small businesses really aren't as foolproof as larger corporations, which can practically have unlimited resources to fight off competition.

Smaller manufacturing businesses need to get more creative to ward off their competitors, and they can start by using ERP software. These systems will allow smaller companies to decrease operating costs by better streamlining processes.

Small manufacturing companies have a range of problems they must overcome on a daily basis. And it's often not easy to do so, considering how quickly their industries change. However, they can take stress off themselves by using the latest technology, such as an advanced ERP.

How to evaluate ERP vendors

These days, it can be difficult to differentiate between manufacturing ERP software vendors, as most offer seemingly comparable features and service plans. As a result of the numerous options, many organizations spend little time actually evaluating prospective software providers before making a decision. Unfortunately, this approach normally produces less-than-ideal results, CIO reported.

"Many of my best clients are 'sold' by the [vendor's] marketing team; however once the implementation is complete they are surprised by system functionality restrictions, lack of capabilities and the impact on existing internal best practices," technology consultant Shawn Casemore told the magazine.

To avoid a similar situation, you must look past the bells and whistles that vendors often showcase during demos and dig deeper. As you field proposals, keep in mind these essential ERP evaluation strategies:

Understand your own needs
Before you speak with any vendors, meet with the executive and information technology teams to establish high-level goals and single out the specific system components that might help you meet them, CIO advised. This way, you can go into each demo with a clear picture of the solution you're searching for and reduce your chances of succumbing to slick software salesmen who will try to entice your with extras you don't want or need.

"Your objective is to adopt impactful manufacturing ERP software that will allow you to address pain points unique to your industry."

Pinpoint ERP vendors with industry knowledge
Ultimately, your objective is to adopt impactful manufacturing ERP software that will allow you to address pain points unique to your industry. To accomplish this aim you must identify vendors with sector-specific offerings, according to Panorama Consulting Solutions.

While reviewing possible solutions, look for specific system features tailored to your field and speak with vendor representatives and implementation personnel to gauge their knowledge. You need partners who not only understand your goals but also grasp the industry-related challenges that might slow the product development and roll out processes.

Get references
Most legitimate manufacturing ERP software vendors provide references. Of course, many companies either don't do anything with these contacts or ask them innocuous questions about pricing or other incidental matters. Be sure to contact the references your vendors give out. Additionally, don't lob softballs during these chats – ask some hard-hitting questions.

Dig into the implementation process and ask these customers to cite any issues. Talk about service as well. Does the vendor offer strong support or do they leave clients to their own devices? You must know these things before establishing a partnership that could potentially transform your business.

Cloud vs. on-premise: Which ERP is works for you?

These days, organizations in the market for manufacturing ERP software must choose between on-premise solutions and cloud-based alternatives. Though the latter are gaining traction in multiple sectors, traditional on-site server-based ERPs still offer many benefits. With this in mind, be sure to consider all of the variables before selecting your platform.

Cost
Many chief information officers gravitate toward cloud-based ERP manufacturing software in an effort to cut costs. According to many industry experts, these business leaders are correct in thinking that server-less solutions will save them money. Cloud-based ERP platforms are cheaper to develop and deploy than their on-premise counterparts, Software Advice reported.

Plus, most are subscription-based, meaning companies can scale back should they so choose. However, in many cases, organizations with cloud ERPs end up spending just as much money as they would on an on-premise solution over the lifespan of their products, as subscription fees and data demands often change.

Of course, many offset these expenditures by cutting costs usually associated with maintaining on-premise solutions, ERP Software blog reported. For instance, once physical servers are out of the equation, organizations no longer have perform costly maintenance or reserve office space for on-site data centers. Additionally, most cloud-based ERP vendors provide backup services, meaning unforeseen periods of downtime and catastrophic server failures carry fewer financial consequences.

However, as you look over your options, avoid basing your decision entirely on money-saving potential. Instead, look for the system that works best for you and gives your organization the tools and insights it needs to grow.

Cloud-based and on-premise ERP manufacturing software offer unique benefits.Cloud-based and on-premise ERP manufacturing software offer unique benefits.

Deployment
Projected implementation times weigh heavy on the minds of executives looking into ERP options. Organizations in need of such software are hungry for change and often want to get a solution in place as quickly as possible. When it comes to deployment, cloud-based ERPs are much easier to install than on-premise solutions. The average cloud ERP platform takes 4 to 8 months to implement, according to PricewaterhouseCoopers. Conversely, implementation periods for traditional on-site solutions can be as long as 36 months.

Of course, cloud implementations feature some complicating factors. For example, cloud-based manufacturing ERP software is standardized to some extent, meaning adopters must reshape their business processes to account for these solutions. On-premise platforms are more customizable, allowing businesses to stick with their original workflows and develop a system that complements them.

"Cloud-based ERPs are just as secure as on-premise platforms."

Scalability
In today's mercurial business world, enterprises must have the tools to weather trends and changes in consumer behavior. This goes doubly for manufacturers, many of which already contend with wafer-thin margins. When it comes to scalability, on-premise solutions are no match for cloud-based ERP software. These solutions can evolve to match business needs.

If increased market demand necessitates more processing power and storage space, vendors can scale up to accommodate these shifts. And, once busy season dies down, things return to normal. 

For growing enterprises, this capability is especially enticing, as they can implement manufacturing ERP software that serves their current needs but can expand as they do. Augmenting an on-premise solutions is no easy task. The process takes time and requires substantial reinvestment. 

Security
CIOs in every sector balk at the prospect of implementing cloud-based ERPs for fear of suffering crippling data breaches. In reality, these systems are just as secure as on-premise platforms, TechTarget reported. Vendors offer robust data encryption services and employ security experts that monitor for new threats and code and apply system patches to address them. In the end, both solutions offer put up effective defenses against hackers.

With these variables in mind, carefully consider your options and choose the solution that works for your enterprise.