ERP, ROI, and Your Manufacturing Business

ERP, ROI, and Your Manufacturing Business

March 6, 2018
Modernizing your ERP is a major investment in the long-term success of your manufacturing business.

Modernizing your ERP is a major investment in the long-term success of your manufacturing business. You’re probably worried about the cost, the potential disruption to your business, and the kind of return you can expect from your investment. For most manufacturers, there are competing demands on limited resources so you need a way to compare the value of one investment against the others in order to make wise choices between them.

Return on investment (ROI) is simply a calculation of the cost of an investment against the value that investment will deliver. Simply take the benefits minus your investment and divide by your overall investment. Here are some questions will help you determine your potential ROI and long-time value:

●       Does the ERP system support your business without disruptions? If you have to reassess the technology needed to run the system every few months or every time there is a software enhancement, then you’re dealing with major disruptions. A cloud-based system transfers the IT infrastructure and management to the provider so you can focus on improving your manufacturing business.

●       How will your employees adopt the system? To get the true value of your system, your people have to use it. The more users engaged across more areas of your business result in greater contributions and visibility for everyone. You want to look at adoption rates of the system, and since most systems come in at around 50 percent, anything higher will likely deliver greater value over time.

●       Does the ERP help you manage complexity? The business of manufacturing is complex enough. Multiple transactional systems typical of most ERP solutions mean extra steps, more opportunities for error, and out of date information. One system that contains a single source of truth for your entire operation enables your business to be more productive versus spending time getting separate systems to work together.

●       What else do you need to buy to complete the ERP system? Some ERP systems require additional costs like annual maintenance fees as well as databases and servers that each come with additional maintenance fees. If you’re looking at a true cloud system, you’ll only have to pay for the initial implementation services and an annual subscription fee.

●       Is the ERP built for manufacturing? A cloud ERP system that was built for the shop floor and includes capabilities like advanced quality, inventory control, and preventive maintenance—not bolt-on solutions—means you don’t have to go out and buy those solutions and deal with integrations to build and maintain. After all, the system should solve your biggest operational challenges or it shouldn’t even make your short list.

●       Can the ERP integrate easily with other systems? The system should also be able to integrate with others easily and without major disruption. Check with customers from companies like yours to hear straight from the source on how well the ERP integrates with others.

●       Will the ERP provider help you with continuous improvement? Using industry benchmarks like those from the American Productivity and Quality Center (APQC), you can see how you stack up against your peers. But not just your peers, as your company matures in the use of the system, you can benchmark against yourself. This is the key in being able to extend the value of your cloud ERP system over the long haul.

See what your long-term business value would be with the Plex Manufacturing Cloud: go to the business value calculator.

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