Upgrading Enterprise Systems for Success in Process Manufacturing
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© Copyright 2016. Infor. All rights reserved. UPGRADING ENTERPRISE SYSTEMS for Success in Process Manufacturing Aberdeen Group reports that Enterprise Resource Planning (ERP) is the foundation of a successful manufacturing organization. It’s responsible for promoting standards throughout the organization, discovering potential efficiencies, and managing front and back-end processes of the enterprise. Process manufacturers face multiple challenges; they must: reduce operational costs, comply with ever-changing regulations, and face increased competition. They search for new ways to operate efficiently, with agility, in this environment of constant change. Process Industry Challenges Need to comply with current and future regulations Process 14% 25% Aberdeen study highlights top pressures to improve operations. Compared to many other industries, the need for compliance is almost double the rate among process manufacturers. Compliance is key! What are the effects of process non-compliance? Every year compliance regulations increase in number and complexity. Companies that do not pay attention to compliance risk millions in lost revenue and fines associated with violations. Same time, maintaining compliance can raise costs, without operational efficiency. What causes non-compliance? The primary reason for non-compliance is outdated enterprise systems. According to the Aberdeen study, process manufacturers are at higher risk of non-compliance. This is because the average time between ERP system upgrades is 3.4 years for the process manufacturers, much longer than it is for all other manufacturers. They are also twice more likely to not perform ERP upgrades at all. Process Non-Compliance: Cause & Effect Process Leaders Vs Followers Leaders drive higher levels of compliance than the followers, 99% Vs 91%; this reduces impact on revenue from compliance fines. Leaders drive better process and operational efficiency, resulting in huge cost savings. Over all, the leaders beat the operating margins by 9% compared to the corporate plan, essentially increasing their corporate top line. Process manufacturing “leaders” comprise the top one-third and “followers”, the bottom two-thirds. All Respondents
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Transcript of Upgrading Enterprise Systems for Success in Process Manufacturing
© Copyright 2016. Infor. All rights reserved.
UPGRADING ENTERPRISE SYSTEMSfor Success in Process Manufacturing
Aberdeen Group reports that Enterprise Resource Planning (ERP) is the foundation of a successful manufacturing organization. It’s responsible for promoting standards throughout the organization, discovering potential efficiencies, and managing front and back-end processes of the enterprise. Process manufacturers face multiple challenges; they must: reduce operational costs, comply with ever-changing regulations, and face increased competition. They search for new ways to operate efficiently, with agility, in this environment of constant change.
Process Industry Challenges
Need to comply with current and future regulations
Process
14%25%
Aberdeen study highlights top pressures to improve operations. Compared to many other industries, the need for compliance is almost double the rate among process manufacturers. Compliance is key!
What are the effects of process non-compliance? Every year compliance regulations increase in number and complexity. Companies that do not pay attention to compliance risk millions in lost revenue and fines associated with violations. Same time, maintaining compliance can raise costs, without operational efficiency.
What causes non-compliance? The primary reason for non-compliance is outdated enterprise systems. According to the Aberdeen study, process manufacturers are at higher risk of non-compliance. This is because the average time between ERP system upgrades is 3.4 years for the process manufacturers, much longer than it is for all other manufacturers. They are also twice more likely to not perform ERP upgrades at all.
Process Non-Compliance: Cause & Effect
Process Leaders Vs Followers
Leaders drive higher levels of compliance than the followers, 99% Vs 91%; this reduces impact on revenue from compliance fines. Leaders drive better process and operational efficiency, resulting in huge cost savings. Over all, the leaders beat the operating margins by 9% compared to the corporate plan, essentially increasing their corporate top line.
Process manufacturing “leaders” comprise the top one-third and “followers”,
the bottom two-thirds.
All Respondents
Process leaders understand the pitfalls of obsolete technology. They take advantage of available upgrades to their business systems. Over 80% of the process leaders are on the latest release or only one behind. And when compared to the followers, leaders are 59% more likely to be on the latest ERP systems. System upgrades let the leaders handle new reporting and responsive requirements of regulations, and therefore staying compliant.
This raises the question: what are the process manufacturing “leaders” doing differently to enjoy such superior performance? Leaders build compliance and traceability into their systems. They have clear understanding and control of production processes, which in turn reduces dependence of testing to ensure higher quality. As a result, process leaders increase their chances of success in a highly competitive industry.
Process Leaders’ Advantage
Implemented on latest release One release behind
Leaders Followers43%
27%
40%
18%
Process manufacturers on the latest version of ERP software report higher operational KPIs, when compared to manufacturers on older versions. They enjoy higher on time and complete shipments. Process manufacturers on latest ERP versions see higher inventory reduction. Ultimately, they beat operating margin by 5% Vs the corporate plan.
Cloud can help keep the ERP systems up to date. It’s an attractive option when replacing, upgrading, or implementing a new ERP system.
Process manufacturers are under great pressure to maintain compliance, keep costs low, and gain competitive advantage. Process manufacturing leaders drive higher levels of compliance and enjoy better operational efficiency and higher operating margins. Leaders do so by keeping their ERP systems up to date!
Enjoy the success that other process leaders have seen. Learn more about upgrading your ERP by downloading this comprehensive report from Aberdeen Group.
ERP Upgrades & Operational KPIs
In Summary
On Time and Complete Shipment Reduction in Inventory Operating Margin Vs. Corporate Plan
94% 87%
17%9%
-2%+5%
Latest Version Not on Latest Version
© Copyright 2016. Infor. All rights reserved.
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