What is in this article?:
Some companies, like engineer-to-order manufacturers, engineering procurement and construction contractors and even process manufacturers find their situation so demanding than even tier I ERP products cannot meet them completely.
Charles Rathmann is an analyst with IFS North America.
When it comes to enterprise software like enterprise resource planning (ERP) and enterprise asset management (EAM), not every company is created equal.
A manufacturer with predictable, repetitive processes may find a broad spectrum of software offerings that can meet their needs. But some companies, like engineer-to-order manufacturers, engineering procurement and construction contractors and even process manufacturers find their situation so demanding than even tier I ERP products cannot meet them completely.
One area that frequently is left wanting for this latter group is project management. Because ERP came from the world of materials planning for repetitive manufacturing and EAM often amounts to a glorified maintenance work order management system, these applications cannot address the more anecdotal, complex and dynamic requirements of real-time enterprise project management.
At least that has been our experience as we interact with executives at project-centric and asset-intensive companies. And that is also the conclusion of a recent study IFS North America conducted with help from Mint Jutras Principal Analyst Cindy Jutras.
We surveyed more than 200 executives with industrial companies with more than $100 million in annual revenue. We then ran frequencies on the data to identify the companies with more complex, project-centric business models. These companies proved to be:
- Companies engaged in engineer-to-order manufacturing.
- Companies delivering projects as an engineering, procurement, and construction contractor.
- Those involved in batch process, which would cause them to be involved heavily in enterprise asset management of process manufacturing plants and equipment.
Reviewing the data, it becomes clear that exposure to projects enters an organization in two different ways: Either the company relies on projects as part of its product delivery system or it relies on projects as a way to manage its capital assets.
Engineer-to-order manufacturers and engineering procurement construction contractors are examples of the former. They are involved in short run or one-off projects where the administrative and management overhead costs normally counted as overhead must be accounted for and managed just as aggressively as materials and manufacturing or fabrication costs.
Process manufacturers are an example of the latter. They plan, construct and then maintain process manufacturing plants and equipment to yield a return over a period of years or decades. That entire asset lifecycle may be considered a project that needs to be managed on a macro level. But on a micro level, there are numerous equipment installations, refits, overhauls and plant shutdowns that require aggressive project management to control cost, ensure a successful outcome and limit business disruption.
Many other manufacturers, according to the study, find their product lifecycles are short enough that they, too, are best managed as a project. The conception, engineering, design, prototyping and product launch cycle may come frequently enough that they represent a significant portion of the cost of a given product or product line. Again, project management is required on both the macro and micro levels.
Very few executives in this study reported having substantial integration between project management functionality and their underlying enterprise application, be that ERP, EAM or something else.