As If There Weren’t Enough Reasons Why Manufacturers Need ERP

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Posted by: briansittley Comments: 0 0 Post Date: October 29, 2013

erp imageTwo years ago Aberdeen Group reported in its comprehensive analysis of ERP in Manufacturing how the best companies have gained quantifiable business benefits through the implementation of Enterprise Resource Planning (ERP) software.  Just to bang the drum a little louder, following are a few of their key findings (*):

  • They are 3.4 times as likely to report a reduction in operational costs
  • They are 85% more likely to report a reduction in inventory costs
  • The are 2.6 times more likely report an increase in (annual) profits
  • They are twice as likely to report improved inventory turns
  • They are 2.4 times as likely to report increased production

(*) The comparison is between what Aberdeen defined as “Best-in-Class” companies (i.e., the top 20% of those surveyed) versus all others in their 2011 study of 1,323 respondents, which reported that over 70% of manufacturers employed ERP, the highest percentage of any industry.
Aberdeen found that these top ERP-using performers also reported:

  • An 18% reduction in levels of inventory on hand due to ERP
  • 97% inventory accuracy (vs. 89% for lower performers)
  • 96% manufacturing schedule compliance (vs. 79% for lower performers)
  • 98% on-time and complete shipments (vs. 79% for lower performers)
  • 3.3 days to close each month (vs. a full week for lower performers)

Top performing ERP users in manufacturing were also:

  • 70% more likely to have a formal, structured ERP strategy to guide all parts of the organization
  • 3 times more likely to have a “multi-tiered ERP strategy to meet the needs of disparate parts of the company”
  • 75% more likely to measure the ongoing performance of their ERP system

Reasons enough?  ERP works!
So in our next and concluding post in this quick two-part series, we’ll take a look at what Aberdeen said manufacturers needed to do in the way of “required actions” to get these kinds of results.  Stay tuned…

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