ERP in Manufacturing Abstract

ERP in Manufacturing

Defining the ERP Strategy

Abstract

The majority of manufacturing enterprises, almost three quarters according to Aberdeen’s survey respondents, use Enterprise Resource Planning (ERP) as their main business system. However, one aspect of ERP strategy that has always been assumed is that companies strive to have one single ERP system to unify all their parts and processes. The average manufacturing company in our survey had 1.9 separate and distinct ERP systems. This year’s research will not only show how manufacturers perform based on their ERP implementation, but also look at the impact of the overall ERP strategy. This sixth annual Aberdeen benchmark, based on over 120 survey respondents in manufacturing, explores Best-in-Class approaches to their ERP strategy and performance.

Best-in-Class Performance

Aberdeen used five key performance criteria to distinguish Best-in-Class companies and Laggards:

  • 18% reduction in levels of inventory versus 3% for Laggards
  • 97% inventory accuracy versus 89% for Laggards
  • 96% manufacturing schedule compliance versus 79% for Laggards
  • 98% on-time and complete shipments versus 79% for Laggards
  • 3.3 days to close each month compared to 7 for Laggards

Competitive Maturity Assessment

Survey results show that the firms enjoying Best-in-Class performance shared several common characteristics, including:

  • Top performers are 70% more likely to have a formal and structured ERP strategy to guide all parts of the organization
  • The Best-in-Class are three times as likely to have a multi-tiered ERP strategy to meet the needs of disparate parts of the company
  • The top 20% in performance are 75% more likely to measure the ongoing performance of their ERP system

Required Actions

In addition to the specific recommendations in Chapter Three of this report, to achieve Best-in-Class performance, companies must:

  • Establish standardized business processes for the entire organization
  • Provide a standard multi-tiered ERP strategy to support the varying needs of different parts of the organization
  • Provide visibility and access to business processes through the ERP system, regardless of user role or location
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