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Five Reasons Small Manufacturers Should Invest in a Modern ERP Solution

By Dave Lechleitner, Principal, Exact

We live in a world where technological advancements are being made every day, yet studies show that too many manufacturers are still running their businesses on outdated enterprise resource planning (ERP) systems. According to the Aberdeen Group, the average age of an ERP solution in midmarket organizations is about seven years, yet many companies are running "ERP systems" that are 10, 15, even 20 years old. Old systems often suffer from a lack of integration and modern programming tools, which in turn can have a dramatic impact on the operational performance of a company. In fact, additional research from the Aberdeen Group shows that companies have reduced operational costs by 30% by implementing new, flexible ERP systems.

So why aren’t more companies upgrading to more advanced software systems? Unfortunately, many business owners are simply overwhelmed by new technology and underestimate the value of modern ERP solutions. But as time goes on, more manufacturers are starting to realize that they can no longer afford not to invest in a modern ERP solution.  Advancements in mobile, social and big data analytics are forever changing the way we do businesses – not just for manufacturers, but in every industry. And business owners who decide to keep their current antiquated ERP system risk falling behind.

Below are the top five drivers of change that will force small manufacturers, who want to remain competitive and build successful businesses, to invest in a modern ERP solution. 

  1. Social media – Social media is completely changing the B2B dynamic. Because social media can be used to gain insight into individuals, it drives more collaborative and informed relationships.  Manufacturers can use this to their advantage. Modern ERP systems have enhanced social media capabilities, allowing for faster and easier communication between businesses and their customers. For example, some modern ERP solutions have Twitter feeds integrated right within the platform, or can send out automated tweets, helping you to connect with your customers.

  2. Mobile – As mobile platforms continue to evolve, traditional ERP systems simply cannot match the speed and agility of these new mobile solutions, creating a greater need to adopt an ERP system optimized for mobile. Mobile ERP provides an opportunity to eliminate gaps and streamline processes in real time. Companies can now access data from anywhere and streamline processes to run their business more efficiently.

  3. The Internet of Things (IoT) – Within the next few years, machines and devices will all be interconnected. For manufacturers, this means that devices will be able to send valuable information back to the seller or manufacturer.  Misperceptions about the security and privacy of cloud are holding manufacturers back from embracing this new reality. IoT can enhance ERP systems by allowing the real-time exchange of communication to help increase production efficiency. Manufacturers will soon have immediate access to the data they need to not only fix problems when they happen, but also prevent those problems from happening in the first place.

  4. Predictive and responsive analytics – The idea of using predictive analytics may be overwhelming to some manufacturers, especially those who are slow to adopt new technologies. But insights gained from the analysis of ERP and other data will be key to finding new ways to improve business processes, streamline operations and become more efficient.  Today’s ERP systems can be used to identify customer demands and sales trends, warn when inventory supplies are running low and alert manufacturers when machines are due for maintenance.

  5. Cloud – According to a report by Emergent Research and Intuit Inc., nearly 80% of small businesses in the U.S will be fully adapted to cloud computing by 2020, more than doubling the current rate of 37%. Manufacturers need to acclimate themselves to this transformation. Cloud-based ERP solutions provide a cost-effective way to harness other technologies, providing application scalability at reduced costs. ERP solutions in the cloud also allow manufacturers to deliver better system performance and accessibility, which enables them to create a competitive advantage. 

Integrating current ERP systems with the latest technologies may seem like a daunting task and the truth is, it’s not always easy to move to a new solution or platform. It requires careful planning, especially for companies that rely heavily on ERP, and will need to find a way to operate during the transition process. However, it is a process that is certainly worthwhile. Manufacturers that are able to successfully enhance their ERP systems are certain to reap benefits, including increased productivity and performance levels, and significantly lower costs. Think about the big picture and focus on applying technology not only to your manufacturing processes, but also to your business processes. When is the last time you changed or modernized your ERP system? If the answer is, "not recently" than it may be time to make a move.