ERP Systems Not Delivering As Expected, Manufacturers Say

Survey of 1,500 manufacturers showed that only a third saw the ROI they anticipated; visibility and variability cited as key issues.

According to a recent survey of 1,500 manufacturers by Invistics, a developer of manufacturing performance optimization solutions, only slightly more than a third of the respondents felt that enterprise resource planning systems had the return on investment that they anticipated.

A lack of visibility, lack of support for Lean principles and no awareness of variability were listed as the key problems.

“While ERP solutions work well as corporate business information systems, critical gaps remain in their ability to improve manufacturing performance. Chief among these gaps is that ERP systems are designed for manufacturing in a ‘perfect world’ that does not exist for complex manufacturers awash in variability and constantly changing dynamics,” said Tom Knight, founder and chief strategy officer of Invistics.

“Virtually all manufacturers have invested heavily in an ERP solution as a platform for running their business, yet few feel like they’ve achieved the manufacturing performance gains they expected,” adds Knight.

He said that is especially true for factories characterized as being highly complex as opposed to high volume - those with hundreds or thousands of products, dozens of work centers, and significantly more process and demand variability. These manufacturers especially are recognizing the need for a solution that can address their unique challenges and translate the vast amount of ERP data into improved decisions that optimize plant performance, Knight said.

Plants with diverse manufacturing processes and shared equipment with a variety of products produced have fluctuations in customer demand, supplier lead times and machine reliability. ERP software is limited when it comes to managing waste and cycle time, and pushes products to market regardless of demand.

By not taking variability into account, ERP can add significant costs in inventory, Knight said.