The following is the final installment in a two-part IFS survey series that details how and why the manufacturing industry has evolved into a project-driven business. The first installment of the survey series, provided some background and context, touched on the importance of project management, and outlined the common methods for project management applications. This second installment focuses on risk management, how enterprise software relates to the recovering economy, the dependence on project-based solutions, and the future reliance on project-based manufacturing. Both installments includes information gathered from MBT readers
RISK MANAGEMENT
Many companies feel, to some degree, that their manufacturing and production operations may be at risk and could result in ineffective visibility of supply and demand, a lock of adherence to government regulations, poor workforce management and labor skills requirements planning, and inadequate overall project management, scheduling, and forecasting.
One significant finding resulting in answers to this question is that only five percent could actually execute risk mitigation steps directly in their ERP system. This points to a potentially dangerous disconnect between risk mitigation plans that are created in a project management application and the ability to communicate what those steps are to others in the organization. Also absent will be the ability to ascertain and document that steps had been taken as necessary.
Risk Management Functionality
It’s perhaps not surprising when looking at the level of risk management functionality for project management systems by company size. Large corporations ($2.5 billion or more) run solutions offering a complete risk management application while smaller manufacturers ($100M - $500M) are more exposed.
ENTERPRISE SOFTWARE AND ECONOMIC RECOVERY
Manufacturers are finding that their businesses, their industries, their customer demands, and other variables are becoming more episodic. Change is happening rapidly enough that even for repetitive manufacturers, project management is becoming the core business discipline because continuity of operations and stability of business dynamics can no longer be assumed.Economic recessions and recoveries can be seen as project variances, and enterprise software can allow executives to recognize those variances in real time and manage them intelligently. During the recession of 2009-2010, for instance, many manufacturers laid off a significant portion of their workforce as if this reduced economic activity was permanent, without consideration for how this would harm their ability to respond to the economic recovery. Now, these same manufacturers must staff back up, and will find that these newly-hired workers will not immediately be as productive as those they laid off. Planning an appropriate lay-off, determining how to repurpose workers instead of laying them off, and managing the ramp-up during re-staffing during a recovery, are all examples of how business changes can be managed with enterprise software.
However, survey results show that the role of ERP software is to identify and plan for supply and demand surges, like those caused by a recession and subsequent recovery, are not understood as widely as is the potential for managing capital expansions and new product launches.
Future Applications for Integrated ERP - Project Management Solutions
As the economy moves toward recovery, manufacturers say they will hire more labor, leverage technology to get more out of current employees or both – all in equal measure. Businesses expect to follow lean practices and will equally look to do more with less and leverage their enterprise applications.
Labor Management as a Result of the Economy
BENEFITS OF PROJECT-BASED SOLUTIONS
Project-Based Solutions (PBS) is an emerging category of enterprise software for project-driven businesses. Approximately one out of four respondents to the study (23%) were familiar with the term PBS while slightly more than one-third (37%) had, at the very least, heard about PBS.Respondents reporting the highest levels of project and ERP integration reported a number of key benefits. Capabilities reported most frequently include the ability to capture and attribute indirect front office costs and link them to a project, product or program, being able to manage the outcome of a project independent of financial reporting periods, and the ability to embed project tasks in to-do lists in the ERP system to ensure task tracking to completion are all seen to have great appeal. Only 20 percent of respondents claiming ERP-Projects integration claimed the ability to buy and make things without an item number - which is absolutely essential for manufacturers that need to begin ordering and working on long lead-time items even before the total product structure and engineering is complete.
FUTURE DEPENDENCE ON PROJECT-BASED MANUFACTURING
The movement to greater dependence on projects is expected to gain momentum in the upcoming years. During the next five years, two-thirds of these manufacturers will be doing more project-based manufacturing. This method will allow manufacturers to further optimize processes and increase productivity, attain a higher level of tracking and accountability, control costs, enable growth, increase sales, and address the complexities created by balancing inventory supply and demand, government regulations, labor management, etc. Only a small percentage (5%) does not see project manufacturing increasing in the future.Check out www.ifsworld.com to learn more.
