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Good manufacturing SMEs take their ERP systems very seriously, says Aberdeen
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07/01/2008
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Best-in-class SMEs are 16-times more likely to use event management functionality in their ERP and supply chain systems for exception management – and that results in 47% better schedule compliance.
That’s among key findings of research completed by analyst Aberdeen Group into the ERP systems being implemented in small to medium sized manufacturing businesses.
The study also finds that best-in-class SMBs are 240% more likely to use embedded workflow management, which, for example, enables them to take less than half the time to complete a month end close – now down at 3.1 days. It’s also the case that the best have 96% inventory accuracy and produce 97% complete and on-time shipments.
Beyond these, the best SMEs are 60% more likely to centralise selected functions using shared services – resulting in twice the reduction in administrative costs – while overall they are also twice as likely not to be running seriously outdated ERP versions.
Says report author Cindy Jutras: “It is important to measure planned versus actual growth and indeed 85% of SMEs surveyed were able to report on this metric. Companies should develop both near and long term growth strategies and factor these plans into any ERP decision.”
Interestingly, she notes that, whereas ERP system replacement cycles used to be around five to eight year, the research suggests that the average age of ERP implementations in companies under $50 million is just short of eight years – meaning that ERP systems have to change to accommodate business changes in what is a long timeframe.
The fact that manufacturing SMEs are 27% less likely to have implemented an ERP system they expect can grow with them, than larger companies, is thus an issue that needs to be addressed, she observes.
Jutras’ advice: “Look beyond the immediate needs and make software selection and deployment decisions that will carry you through the next five years... Your ERP system should be able to report on customer service performance metrics.”
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Author
Brian Tinham
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