Should ERP & Related Supply Chain Technologies Be a Priority?

ERP and related technologies should only be a priority if you want to grow and succeed for decades to come. By utilizing ERP and supply chain technologies, you’ll maximize your efficiency and drive customer satisfaction. If not, it will be the same as if you said you wanted to stick with the horse and buggy instead of leaping into a Ford.

To put this into perspective, according to Deloitte Insights (from 20220), manufacturers’ average IT budget as a percentage of revenue is 2.14%. Of course, it depends on whether you are small or large, but the ballpark remains valid. If focused on ERP (as a modern ERP system is vital to success), a rule of thumb is that you’ll spend 5-7% of revenue (for the full project price and implementation cost). How do these compare with your budgets?

Why Should ERP & Related Technologies be a Priority?

The future will be for those who are innovating and using technological advances. Manufacturers and distributors are navigating a mountain of geopolitical, natural resource and rare earth issues in addition to navigating interest rate impacts and a host of other economic challenges that create negative headwinds on preparing for profitable growth and contributing to key financial indicators. Instead of pushing a boulder uphill, it makes sense to look for new solutions and strategies to solve old issues. One of these strategies is to maximize the power of ERP and related technologies.

Will my ERP System Suffice?

Of course, the answer to whether you should upgrade your ERP system is that “it depends”. Upgrading your ERP system isn’t for the faint of heart. 80% fail to achieve the intended results. Yet having a modern ERP system that supports your needs is absolutely essential to support growth plans.

No matter your situation, you can start immediately by better leveraging your underutilized asset. In almost 20 years of consulting, I’ve yet to find a client that couldn’t better utilize their ERP system to attain bottom line business results. Read our comprehensive article to find out how – The MacGyver Approach: Leveraging Your Underutilized ERP Asset. For example, an aerospace manufacturing client was struggling to provide high service levels to their customers while dramatically reducing their inventory levels with a wide breadth of products to support their growth goals. In addition to process improvements and common goals, a key ingredient to success was leveraging additional ERP functionality to improve their production and inventory planning processes across their production facilities.

However, as customer expectations have increased, supply chains have become increasingly complex, and margins have been squeezed with rising costs, having a modern ERP system is the only viable path forward for sustainable success. How do you know if your ERP system will suffice and whether an upgrade should be a priority? Read our article on find out the answer. If you determine you should modernize your ERP system, check out our guide for selection and implementation success.

What Technologies are Required to Support Success?

Again, of course, the answer is “it depends”. With that said, the answer is NOT that you can afford to sit still. What is absolutely clear is that only manufacturers and distributors that pursue advanced technologies will thrive in today’s volatile and complex age.

There are countless technologies that might be appropriate. No client should pursue all of them. If everything is a priority, nothing is a priority. The key is to review your growth plans and assess your SIOP (Sales Inventory Operations Planning) process results to set your technology priorities. A few of these technologies that pop to mind include:

  • Robotics: Almost every client is testing, trialing or using robots. There has been controversy over people vs robots in some circles although manufacturers are flipping that equation to people and robots. Read examples in our article, People vs Robots. It doesn’t make sense in every situation. In fact, one equipment manufacturing client chose not to pursue a specific robot because it didn’t provide a return on investment and slowed down the process after thorough testing. On the other hand, another client continues to add welding robots which automates repetitive tasks.
  • Artificial intelligence: Demand planning, also known as sales forecasting, is important for every company, and artificial intelligence can always add value to the forecast yet is especially key for hard to predict patterns such as those in consumer products industries. AI is used in countless manufacturing and supply chain technologies. Check out our recent article on AI, titled “ChatGPT & AI: Good or Bad?“.
  • Predictive analytics: Business intelligence, big data, and predictive analytics are proving essential. Every ERP system can provide you with an overwhelming amount of data. The issue is sifting through the data to get meaningful information for decision making. Read our article to get strategies to turn data into insights. Taking that a step further to using your data to predict the future can give you an advantage over your competition.
  • E-commerce (B2B and B2C): Consumer expectations continue to increase. After all, who doesn’t expect immediate deliveries from Amazon? What goes on behind the scenes to make that happen isn’t a no brainer. Read our articles on manufacturing opportunities in e-commerce and B2B, B2C & Associated Technology.
  • Digital twins: What could be better than simulating your factory, products, your supply chain etc.? Digital twins enable better designs, planning, and much more to contribute to customer success and EBITDA growth.
  • Autonomous capabilities: These capabilities are used widely in manufacturing environments to supply or move materials and components; in logistics and distribution environments to move items and in transportation and goods movement to move products.
  • And many, many more such as drones, blockchain, additive manufacturing, mixed reality/ metaverse, internet of things (IoT), 5G, etc.

The Bottom Line

Jump into the world of technology. Bring on experts and deep dive into those areas that will provide significant benefits to your business. Minimally, you should test and trial the use of advanced technologies. Perhaps you’ll even combine technologies in a new way or develop a new technology to support your profitable growth.

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Modernize Your ERP System: A Guide for Selection & Implementation Success