The use of outdated ERP software hinders growth within the manufacturing sector. At many companies, financial managers say that the current software does not or insufficiently support the achievement of the intended growth targets. Here, lack of insight, insufficient sector knowledge, lack of functionalities and integration possibilities play a role
Yet many organisations are still 'stuck' with their current, outdated, ERP software, due to the fear of switching to new software and the potential risks involved. This concern makes sense; updating an ERP system or migrating to a new solution is complex and affects many primary business processes. At the same time, standing still is going backwards here too, because new opportunities cannot be exploited with the old software; opportunities to improve processes, make more accurate analyses and realise chain integration.
Implementing an ERP system is perceived as difficult. Most companies in the manufacturing industry already have experience with this from the past and are reluctant to go through such a process all over again. After all, it is more than installing a new software programme. Besides a financial investment, an ERP implementation requires the necessary labour and has an impact on the entire organisation and processes. It often requires employees to work slightly differently from what they are used to and sometimes requires additional training, such as ERP training. This change creates resistance and managing this resistance is a task in itself.
The importance of a modern ERP system
Despite this 'fear of switching' being understandable, the need to switch is often greater. The critical business processes of many manufacturing companies are now hung on the coattails of outdated software. Therein resides a major business risk. Should the systems fall over, this could have major negative consequences for the company. Also, a lot of workarounds or "islands" like Excel and Word are used, which is very inefficient. To name but a few examples: processes come to a standstill and it takes a long time to get them back up and running, information gets lost and cannot be retrieved, or employees do not look at the most up-to-date information
Outdated software also often lacks the right integration capabilities with other parties or with other business software. An organisation in the SME currently has an average of 14.3 applications installed, containing customer data. Cumbersome, not clear and inefficient. As a result, proper data analysis is not possible and decisions are made based on gut feeling. This is not future-proof, especially in a data-driven era. The transition to a new ERP system can become a lot more manageable if you consider it as two phases.
Phase 1: the selection
To carry out an ERP project thoroughly and efficiently, good preparation is crucial. It costs time at the front end, but this is amply recouped later in the process and saves a lot of frustration. To select an ERP system that suits your organisation, it helps to carefully go through the following steps:
Set up a project team with colleagues from the IT team and from the other business units that will be working with the software. List with them the requirements and wishes of the organisation and formulate the selection criteria. In doing so, also list the requirements for the implementation process.
Do desk research to find out which ERP vendors are potential candidates. Visiting a trade fair or talking to your 'neighbour' can also help to get a better view. This information provides the framework to arrive at a shortlist of a limited number of ERP vendors.
Invite these suppliers to an introductory meeting. This way, the supplier can also get to know the company itself. Then draw up a business case and have the suppliers give a customer-specific demonstration. . Then list the pros and cons of the packages, including things like implementation time, costs and learning curves. In doing so, also check whether the preferred system is supplied and implemented by an organisation that also suits your organisation. It is crucial to speak each other's language during the process.
Phase 2: the implementation
After selecting the ERP system, implementation follows. This takes time, patience and thought, and for this phase too, good preparation is half the battle. The focal points in the implementation phase are:
Involve the right employees; the project team from the selection phase perhaps the most important role in the implementation. Work with the ERP supplier and make clear agreements on the implementation process, milestones and budget monitoring. Record this in an implementation document.
First organise, then automate: clean up the processes, bundle them and see where profits can be made, precisely in consultation with the ERP supplier.
Involve the rest of the organisation: communicate all successes and progress, small and large! Deploy several colleagues to test and also consider training. Put the system 'live' and actively ask for feedback. This is because the tests do not cover all practical situations; tweaks will always be needed in the beginning. This way, the organisation really makes the ERP system its own.
Ready for the future
So what is the conclusion after this whole story? An ERP journey is indeed time-consuming and takes a lot of thinking, but the need for an up-to-date ERP system is many times higher. The steps in the different phases described above help to carry out an ERP project thoroughly. This will make the transition from an old to a new ERP system easier. In this way, your manufacturing company will also be prepared for the future.
