1. ®
® Article
Driving ERP Success at
Manufacturing and Distribution
Companies
When ERP projects succeed, businesses generally derive incremental value from two sources: 1) automation of
streamlined processes, and 2) an ability to make more effective data-driven decisions. The road to ERP success
starts with selection.
Succeeding at selection involves much more than the mere picking of an off-the-shelf software package.
It requires an informed assessment of how to effectively fuse business and technology. From a technology
perspective, this calls for an understanding of ERP innovations that, if implemented, would generate positive
value. From a business perspective, this calls for a granular, process-level understanding of business operations;
including key drivers, gaps, and issues. ERP operates at the process level and, as a result, a process-level
analysis is non-negotiable.
An Overview of ERP Technologies and Innovations
ERP gives manufacturers and distributors an opportunity to integrate their various organizational demand
and supply functions. ERP evolved from material and distribution planning requirements (MRP and DRP,
respectively) systems that provided an integrated view of demand and supply, and enabled optimization of
inventories throughout a supply chain by. ERP systems have taken the concept of enterprise integration,
and have extended to all functions. Businesses now have the ability to integrate some or all of the following
functions: finance and accounting, customer relationship management, supply chain management, purchasing
management, supplier relationship management, production management, human capital management, service
management, and project management.
ERP vendors continue to innovate, both in terms of extending the enterprise and deepening decision-support
capabilities. When evaluating ERP solutions, it is important to understand trends and innovations, because
they may fill present or anticipated gaps. Current trends impacting manufacturers and distributors include the
following:
Software-as-a-Service (SaaS). This technology refers to software delivered in the cloud, where multiple
companies share a single instance of the software or its underlying architecture. Benefits of SaaS generally
include anywhere/anytime access, ease of scalability, and reduced burdens on internal IT resources. Risks
generally relate to reduced control over mission-critical data and a reduced ability to customize the software to
fit business requirements.
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2. Ziff Davis | Article | Driving ERP Success at Manufacturing and Distribution Companies
Mobility. Mobile access provides opportunities to transact business from locations that are not accessible via
laptop or desktop. Mobile handheld scanning technologies, for example, give businesses an ability to track and
manage labor costs and throughput in near real time. As another example, mobile customer service applications
provide remote field service teams with abilities to query and allocate inventory on-demand. Additional benefits
may accrue to traveling business executives and sales personnel.
Business Intelligence (BI). BI provides businesses with tools to synthesize and analyze ever increasing stores
of data. Business leaders rely on BI to make more effective decisions more quickly.
Human capital management (HCM). HCM solutions provide opportunities to add resource planning rigor
to the human resources side of the business. Value may accrue to businesses plagued with high turnover,
impending workforce demographic issues, and succession planning challenges.
Social supply chain technologies. These technologies provide opportunities to create tighter integration
among a company, its suppliers, and its customers. Abilities to create ad-hoc groups, workflows, and document
management offer a streamlined and structured alternative to email for the management of institutional
knowledge and work tasks.
Green technologies. These provide opportunities to better track and manage certain environmental operating
costs, including electricity and water.
A Business Justification for ERP Selection
Of course, the extent to which any ERP solution or related technology is appropriate depends on resultant value,
including return on investment (ROI). This, in turn, is a question of how well the proposed solution(s) satisfies
business needs.
Businesses that make effective ERP selection decisions typically start with an assessment of strategies,
business models, organizational structures, business processes, and personnel. Three main purposes of this type
of assessment include:
1. A business case for ERP. An analysis of ROI and other value-based metrics provides a justification
for the investment as well as a definition of project scope.
2. A definition of business requirements. This is often achieved through business process mapping.
This analysis provides a visual justification for the processes and data that an ERP system should be
capable of handling.
3. An assessment of readiness for organizational change. ERP projects can only succeed if the
stakeholders adopt the required changes. A readiness assessment highlights readiness gaps, and
provides a basis to develop a responsive change management plan.
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3. Ziff Davis | Article | Driving ERP Success at Manufacturing and Distribution Companies
Three Keys to Driving ERP Success
Understanding how business and ERP will collectively deliver value is a good first-step towards ERP selection
success. Translating that understanding into executable steps is the next major challenge. Here are three critical
success factors for keeping your business on the right path:
1. Build the right team. Business should ensure that they have the right expertise to guide them to
an appropriate decision. Generally, their team should include people with business analysis, ERP, and
technology procurement expertise.
2. Avoid Canned, Generic Procurement Practices. The goal of ERP selection is to find a solutions
provider that will help your business meet its unique collection of needs. Generic templates were
not made for your business. As a result, they cannot lead it to a well-fitting solution. A best-practice
recommendation is to design your selection process, RFP, evaluations scorecard, and demonstration
scripts around actual business requirements.
3. Don’t take due diligence shortcuts. Just because an ERP system has the right features doesn’t
mean that it will be the right fit. During selection, it is important to evaluate ROI, implementation
capabilities, and post-implementation maintenance and support. Further, since ERP is a long-term
investment, it is also important to assess the proposed software’s development path, as well as
the likelihood that the vendor will be around for the long-term to provide critical development and
support activities.
About the Expert: Jonathan Gross
Jonathan Gross is Vice President at Pemeco Consulting (www.pemeco.com), a vendor
agnostic firm that advises clients on their IT strategy, selection, implementation, and
optimization projects.
About Ziff Davis
Ziff Davis, Inc. is a leading digital media company specializing in the technology market, reaching over 40 million highly engaged in-market
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