When you’re dealing with suppliers, demand, inventory, quality, and the other complexities of running a successful manufacturing business, the last thing you need is another IT headache. Yet many manufacturers are attempting to operate with multiple systems that end up causing multiple problems: high infrastructure and people costs, information silos, slow processes, and out-of-date information.
You'd think that adding layers of solutions to handle different problems and dealing with the cost and complexity of this solution is the only way forward. The reality is it may be more difficult for some manufacturers to shift their thinking than it is to solve these problems because there is really only one solution.
High Infrastructure and People Costs
Maintaining, installing, supporting, and upgrading multiple systems is expensive. In fact, Computer Economics reported that 70 percent of IT budgets are spent on ongoing support.1 Your systems should support your process automation and productivity initiatives—not burden your business.
With SaaS-based cloud ERP, there is no software to install or maintain; it not only lowers your total cost of ownership but can also reduce your IT spend by as much as 15 percent.2 SaaS makes it easy to expand to new locations and scale because there is no infrastructure to install and maintain—it's all handled by the vendor as part of the subscription.
The inability to share or access data prevents you from gaining the visibility and control manufacturers need. Manufacturing Enterprise Solutions Association (MESA) International found that 48 percent of manufacturers cite lack of collaboration across departments as a major challenge.3 When you can’t get an accurate view of what’s happening on your shop floor, it’s difficult to make informed decisions about how to optimize production or deal with problems.
With one version of the truth, you can get rid of this headache once and for all. Cloud ERP makes it much easier to share and integrate data (2.3 times more likely).4 By eliminating data silos, everyone in the enterprise gets the visibility they need to be more productive and efficient with more accurate data delivered instantly.
From barcoding inventory moves to enforcing quality standards, an ERP system built from the shop floor turns manual, error-prone processes into automated workflows that not only increase efficiency and accuracy but also create a digital record.
Process manufacturers can turn compliance and quality into a competitive differentiator instead of a cost center. Discrete manufacturers can reduce scrap and increase inventory turns. An LNS research report on closed-loop quality management showed that manufacturers who rely on a system that incorporates quality management best practices translates into a 12.7 percent higher rate of successful product introductions. The same report cited a 67 percent lower median supplier defect rate for companies who use quality management best practices—which could help avoid a major product recall.5
Gaining a real-time view into what is actually happening on the shop floor and how that affects your ability to deliver on time is a game changer. A single source of accurate operational data, consolidating all facility information into a single cloud database, is available to anyone in your company over any device, from anywhere. You can see and understand every aspect of your operations to make more informed decisions with data you can trust.
Manufacturers with a complete ERP solution are 52 percent more likely to gain real-time visibility into all processes, and those with that visibility perform much better for on-time delivery, schedule compliance, and inventory accuracy. In fact, a complete ERP even impacted profitability—companies with this system saw an eight percent improvement over two years.4
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- IT Spending and Staffing Benchmarks: Discrete Manufacturing, Computer Economics, 2014-2015.
- The Economic and Strategic Benefits of Cloud Computing, Computer Electronics, February 2014.
- Manufacturing Metrics that Really Matter, MESA International and LNS Research, April 2014.
- The Unified Manufacturing Environment, Aberdeen Group, April 2015.
- Closed-Loop Quality Management: Connecting the Value Chain, LNS Research, November 2014.