January 7

Manufacturing ERP Software Perspective

I was encouraged the other day when I read the NY times report on how Manufacturing is growing again in the US. Certain products and industries we still continue to dominate and our capital and technology leadership still favor production in the United States.

What restricts manufacturing from dominating is in the application software space. With all of the push today towards sexier technology use- social media, internet, etc. there still remains somewhat of a technological lag in terms of Flexibility and ease of use of Core Enterprise Resource Planning (ERP) software systems. The problem isn’t the way calculations are made and information is given but in the amount of information, the time and resources needed to make it work. At some point you need to ask the question at what cost is all of this information and what is my return on the investment by having it available?

Many firms today are tied to their investors or their bank and have to be precise in their financial reporting. The requirements are many and closing a month end takes time. Having information available on demand and in a usable customizable format is crucial for the management of business operations and financial reporting.

It seems most of my ERP clients struggle with managing the beast. They tend to be smaller and don’t necessarily have the administrative overhead needed to manage the system day to day. They need quick turn answers without having to jump through hoops to get it. They also complain about inflexibility. Most are a hybrid manufacturing operation. They are both “repetitive: manufacturers who find themselves on each job making modifications and needing to see what the profitability of each production run is like a job shop environment.

They tend to do a cross pollination of cost analysis. They may look at the purchase of their raw materials on a lot by lot basis due to landed cost issues, acquisition costs, etc. but on certain manufacturing goods they may be looking for labor efficiencies and want to see variances as in a standard costing system. This mixed mode, item by item, production runs by production run, build on the fly world is how today’s manufacturer stays in business.

It’s all about the speed of the transaction and you better be fast to stay competitive. Combine speed with flexibility and you get business agility. ERP systems vendors need to get this and understand how the US manufacturer works – lean and mean.


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