Discover a Major Growth Driver for Manufacturing Firms

January 2013 - 1 ERP - a strategic growth driver for manufacturing firms January 2013 - 2 Editorial 3 The challenges facing manufacturing firms 4 Information systems for superior 8 productivity and added value Technologies as a driving force for innovation 10 and development Sage - the partner for manufacturing firms 12 Our customer testimonials 13 Sage ERP X3 in brief 15 ERP - a strategic growth driver for manufacturing firms Sage© 2013 – All rights reserved – SAS (simplified joint-stock company) with a share capital of €500,000 - Registered office: North Park, Newcastle Upon Tyne, NE13 9AA - a public limited company registered in England and Wales under company registration number 2231246. The information contained in this document may be modified without prior notice. All logos, product names and companies mentioned in this document other than those belonging to Sage are used for identification purposes only and may constitute trademarks registered by their respective owners - Photo credits: Fotolia, Kerry Harrison - S787_MME 06-13 - Contents January 2013 - 3 ERP - a strategic growth driver for manufacturing firms Manufacturing firms are in a state of constant change in their effort to keep pace with the ever-developing face of the business environment, such as the increasingly globalised marketplace, growing competitive pressure and changing business practices. These are just some of the factors prompting companies to review their business strategy and lead organisational change. Changes are therefore required at every level, whether in terms of the range of products and services on offer, the organisational structure and business processes, or the IT infrastructure. At the same time, the use of new technologies is spreading like wildfire and ushering in a wealth of prospects for ramping up business growth and creating value for clients and customers alike. ERP, the very backbone of the information system, also needs to evolve in a bid to factor in the company’s structural changes and new challenges. In addition to satisfying companies’ traditional needs, ERP system also needs to fuel their development by fostering superior performance and innovation. Editorial Isabelle Saint-Martin, ERP Market Manage, Sage Mid-Market January 2013 - 4 • Automated manufacturing and lean production, which are essential for safeguarding profitability in every key stage of production, picking, planning and analysis. • Flexible skills and resources, including temporary staff. • Increasingly globalised marketplaces, trade, production and supply chains, requiring companies to find opportunities away from home. • Continuous innovation in the company’s practices and tools in a bid to sense client needs and deliver high value-added services. The challenges facing manufacturing firms The information system challenges facing manufacturing firms In today’s world, manufacturing firms have a number of concerns in common, an indictment of the winds of change sweeping through the sector and the new challenges threatening their competitive advantage: Process manufacturing Discrete manufacturing Raise the bar on operational efficiency and productivity Streamline scheduling and manufacturing to reflect demand Gain a complete insight into business performance and profitability Minimise inventory and WIP levels, and monitor margins Guarantee product and service quality for greater customer satisfaction Performance - Innovation - Development ERP - a strategic growth driver for manufacturing firms January 2013 - 5 The information system challenges facing manufacturing firms January 2013 - 6 Risks and constraints fuelled by the economic climate Ever fiercer competition on a global scale is accentuating the trends already mentioned and their impact on the company’s management constraints. Furthermore, customers are ratcheting up their requirements and altering practices in response to the economic crisis. • The onus is on manufacturing firms to achieve a competitive advantage through the quality of their products and services. To stay in the running, small businesses often have no other choice than to focus on an increasingly specific range of products in niche or ever narrower markets. • They need to maintain a solid bottom line, despite seeing their margins eroded by rising costs and a growing number of lower-cost manufacturers. • They need to constantly improve their speed of response, flexibility and efficiency in an effort to meet customers’ expectations in terms of commitments, lead-times and quality of service. ERP - a strategic growth driver for manufacturing firms January 2013 - 7 Changing management practices within and between sectors Globalised trade, shifts in consumer behaviour, technical progress and changing legislation are just some of the factors influencing management practices across the board, whether design, production, trade or logistics: Product lifecycle Product lifecycles continue shrinking, while each day yields more new technologies than the one before. If companies are going to protect their margins in such a climate, minimising design and production costs is a must, but this approach will hamstring their ability to diversify their product ranges or take manufacturing complexity to the next level in their quest to fend off cut-throat competition. Keeping technical data under control will have a direct effect on the profitability of a given activity. Compliance New measures aimed at protecting the environment have tightened up the standards that require manufacturing firms to implement and carry out extra checks and controls at every stage in the production and shipment cycle. Compliance with these legal constraints may be harder to achieve when activities are spread over several logistics and manufacturing sites or divided among a group of companies operating in the same sector of industry. Globalisation International development is key to achieving growth in today’s global marketplace, meaning that companies need to be more clued into the different rules and tools. Furthermore, companies need to step up their efforts at implementing a global production process if they wish to pursue a strategy of extended production chains and distributed manufacturing systems involving a wider network of subcontractors. Silo-breaking Management practices are morphing across the entire manufacturing industry and also spreading into other industries. Outsourced production, diversified products and sales channels, and the advent of bundled services are just some of the reasons why manufacturers are drawing inspiration from the practices used by merchants, importers, retailers and distance sellers. Such sales professionals and manufacturing firms alike can secure a major strategic advantage by improving customer relations and marketing, streamlining their supply chains and implementing multi-channel distribution systems. ERP - a strategic growth driver for manufacturing firms January 2013 - 8 New dimensions for supreme performance Manufacturers’ management systems have often been pieced together over time and consequently represent a patchwork of solutions with varying levels of technological maturity. The result most often seen is an array of hybrid solutions that have been added on in response to the constraints of the moment, sometimes including specialised tools and sometimes proprietary developments. Interfacing and repository consistency issues, data traceability and reliability problems, and system maintainability and obsolescence are the main reasons prompting companies to abandon their piecemeal system in favour of integrated software solutions. At the same time, streamlining administrative, logistics and production processes may require specialised solutions, such as PLM (Product Lifecycle Management), APS (Advanced Planning and Scheduling), MES (Manufacturing Execution System), CMMS (Computerised Maintenance Management System), WMS (Warehouse Management System) and CRM (Customer Relationship Management). A whole range of software add-ons is available from specialised vendors, most of which are missing from traditional ERP solutions, except for solutions designed for key account customers. In terms of the benefits of implementing an end-to- end ERP solution incorporating such leading-edge functionality, companies can expect to streamline and control their business processes to produce superior quality products in accordance with applicable standards, while improving customer satisfaction and reining in costs: • Ramp up product development and accelerate the time to market. • Increase production and curb costs. • Guarantee quality through improved control, traceability and compliance with inventory management rules. • Satisfy legislative requirements using workflow mechanisms, audit trails and document management systems. • Improve supply chain management and forecasting. • Raise the bar on customer service by improving order processing, automating deliveries and interacting with on-site and roaming customers. Information systems for superior productivity and added value Manufacturing firms have absolutely no choice but to raise the productivity bar if they wish to withstand the pressure in their ever-changing business environment, while constantly breaking new ground to keep ahead of the competition. The information system and its underlying ERP solutions represent a major step forward in achieving those aims. Companies can install an ERP solution to not only meet their operational needs, but also streamline their IT infrastructure and deliver support when pursuing new strategies. ERP - a strategic growth driver for manufacturing firms January 2013 - 9 Today’s ERPs need to offer a broader set of functionality than earlier-generation solutions and tick all the boxes with an explicit range of suitability criteria. The market requires standard, integrated or consistent solutions featuring an extensive array of modern technologies for improving process performance and management practices, while responding to the constraints facing small and medium-sized fi rms. The need for an open and collaborative system within the company and with its ecosystem ERPs raise individual and collective performance within the company by offering real-time shared access to the same repository using a set of tools that meet the business requirements of each user or area of expertise. In reality, the ERP’s mission is taken far beyond the company’s internal business processes due to enterprise-wide operations and management practices between companies. Logistics can be improved by boosting the global performance of all parties involved in the same supply chain. Manufacturing fi rms are required to keep tabs on their own stock as well as goods held by partner companies, while sharing the same forecast and traceability data. On a different level, fi rms that belong to a national or international group often run into management problems that exceed the boundaries of their own structure, such as the sharing of standard data, group company disposals, fi nancial reporting and statements, and fi nancial traceability. As the backbone of an “extended enterprise”, information systems must be interconnected to ensure free-fl owing information between customers or clients, suppliers or subcontractors, and subsidiaries or groups, as well as improve database synchronisation. To achieve this aim, processes leverage the solutions’ technical capabilities in terms of supporting add-ons and collaborative systems, including EDI, cloud-enabled real-time connectivity between systems, sharing portals and platforms, trading hubs and other marketplaces. Beyond the functional areas - business oversight and the company’s ecosystem Pu rch asin g Man ufacturing Sales Services Suppliers Subcontractors Customers Clients • Community • Business • Collaborative work • Communication • Standardisation • Security Internet EDI Internet Partners Intranet ContractsContracts Logistics Production R&D Marketing WWW EDI Finance O per atio na l a nd de ci si on al resources Management Human Senior an aly sis s ERP - a strategic growth driver for manufacturing fi rms January 2013 - 10 Application connectivity, power and flexible use: an example of an ERP with an EDM add-on Extend the ERP’s scope to encompass leading-edge functionality, interconnect the ERP with external systems, software and hardware, provide third-party access as part of a collaborative work environment... all of these examples rely on the solution’s technical capabilities, especially support for web technologies, mobility and third-party add- ons. ERPs built upon modern technological platforms leverage service-oriented architectures and standardised protocols to deliver seamless application connectivity with hardware and software, as well as the prospect of pooling developments. As such, ERPs are composite systems, rather than monolithic systems, boasting a flexible set of practical functionality, while losing none of the advantages of a single, shared repository with real-time capability. Embedded technology for seamless uptake and more effective tool use Technology is an integral part of ERPs and conducive to superior efficiency throughout the company. Examples abound, such as decision-support and reporting tools, electronic document management and workflow mechanisms allowing employees to work together in an orderly and transparent fashion via the messaging system. Offering users a personalised area complete with graphical representations of their commonly-used processes and functions shortens the learning curve and promotes higher productivity. Technologies as a driving force for innovation and development • Quotes • Orders • Invoices • Quality reports • Technical documentation • Delivery notes • Invoices • Contracts Accounting & Finance Human resources After-sales Purchasing Sales Production • CV library • Contracts of employment • Social security statements • Pay slips • Financial reports • Accounting records Online tax returns • Callout reports • Orders • Invoices PDF Sage ERP X3 ERP documents Internal and External ERP - a strategic growth driver for manufacturing firms January 2013 - 11 Application connectivity, power and flexible use: an example of an ERP with an EDM add-on Furthermore, the technology encourages company employees to adopt and use the management tools more effectively. For a long time, steep learning curves put the brakes on ERP uptake among users, often meaning that companies had to lay on extra support and training. The main culprits were counterintuitive applications often with no bearing on business users’ needs, and poor knowledge or even distrust of IT technology. 86% New technologies make life easier 81% New technologies improve working conditions “Leveraging its insight into the new challenges facing today’s business world, Sage constantly updates its solutions to ensure that manufacturing firms can respond to the needs of their market, their customers and their employees, while finding new sources of development.” Isabelle Saint-Martin, ERP Market Manager, Sage Mid-Market EXPERT PERSPECTIVE The Internet, social networks, telephones, smartphones and tablets have become a fixture of everyday life and spawned a new set of uses that have crept into the workplace. This phenomenon is accelerating the success of new practices in companies and the introduction of new-generation tools that are just as attractive as they are effective. Drawing on suitable tools and a modernised information sys- tem, ERPs can put manufacturing firms on the road to growth and innovation by implementing new solutions, web-based customer services, mobile workforce devices, new marketing channels... and many other value-added ways of achieving a competitive advantage. Today, the relationship between individual users and new technologies has changed. 86% of people believe that new technologies make their life easier. 81% claim that new technologies improve working conditions (IFOP/Sage, 2012). ERP - a strategic growth driver for manufacturing firms January 2013 - 12 Sage has been recognised as an expert in management solutions for 30 years and is a long-standing partner to corporations, mid-cap companies and SMEs, whether independent or group subsidiaries. As the world’s number three ERP vendor (Source: Forrester, The State of ERP in 2011, May 2011) and the number three management software vendor in Europe (Source: Truffle 100, European Software vendors ranking 2011), Sage ERP X3 helps 204,000 users from 4,000 companies across 60 countries to do business. Manufacturing firms may have a number of characteristics in common, but they all come with a wide variety of profiles, such as their size, their organisational structure, their hardware and their IT maturity. Whatever their profile, manufacturing firms can count on Sage to power their development with a broad array of ERPs, software suites and specialised solutions, as well as a network of customer-oriented partners with expert industry knowledge. Solutions geared towards each company profile • In response to the strong constraints facing their sector, SMIs (Small and Medium-Sized Industries) are looking to leverage an end- to-end solution that dovetails with their need for simplicity due to their low IT maturity and limited manpower. The challenge with these companies is to offer a solution that instantly meets their needs, while boasting a short deployment and learning curve. • With a more mature organisational structure and a more complex set of activities, mid-cap companies and large SMEs are faced with a series of strategic challenges. ERPs are the lifeblood of their information system, and these companies need to tap into all their possibilities to support their growth. • Subject to the same constraints as the previous two categories, national and international groups are on the lookout for flexible end-to-end solutions capable of representing a solid alternative to their group ERP for managing their subsidiaries, controlling their supply chain and sharing repositories. Sage, the partner for manufacturing firms ERP - a strategic growth driver for manufacturing firms January 2013 - 13 Our customer testimonials Manufacturer of power supply and current transformer systems French manufacturing firm specialising in professional electronics TESTIMONIAL - SLAT POWER SUPPLIES TESTIMONIAL - ASICA “ “ “ “ Sage ERP X3 has enabled us to increase production and ultimately double our revenues, while keeping the same number of people in our support functions. We have improved our productivity in product development by 25% by automating tasks. Finally, the high level of functional integration - only accounting and payroll are not included - has created a new driving force within the company with an array of high-performance tools geared towards the challenges of today’s world. André Guinet, Managing Director Sage ERP X3 has been fully integrated into the company and guarantees seamless information streams from one department to another. We have utilised the solution’s automation capabilities to drastically reduce the time spent on everyday administrative tasks. Finally, Sage ERP X3 has whipped our production processes into peak shape and ushered in contracts with new customers who previously would have refused to work with us, because our organisational structure was too homespun. It should not be forgotten that key accounts audit their suppliers. Not only do they put product quality under the microscope, but they also see whether you can meet lead-times... They give you a product quality score and a performance score. Installing Sage ERP X3 is clearly a major asset that works in our favour and reassures our customers. Pascal Prenveille, CIO ERP - a strategic growth driver for manufacturing firms January 2013 - 14 Our customer testimonials Expert in mineral extraction and processing (diatomite and perlite) France’s leading extruder of standard and enhanced thermoplastic plates, sheets and reels TESTIMONIAL - WORLD MINERALS EUROPE TESTIMONIAL - GAILLON GROUP “ “ “ “ We are part of an international group in a specialised business sector. We need to align with the group’s budgeting, reporting and consolidation systems. Before, we were simply unable to do that. With Sage ERP X3, we can fetch and aggregate data from our various sites with just a single click. This obviously saves considerable time and gives management access to the information that it needs to run the company. Estelle Jacq Leteurtrois, IS Functional Manager Employees are making intensive use of the new system, because it provides a wealth of practical information, especially for our logistics activities. Sage ERP X3 has also improved inventory management and shaved a substantial 12% off our stock levels. Another major advantage is that we can now see exactly how much production is costing, which is prone to wildly fluctuating raw material prices. Since we use 45 tons of plastics a day in each of our plants, that information is mission-critical. Furthermore, the information provided by Sage ERP X3 means that we can easily consolidate accounts across our three companies and fill in the reporting templates required by our shareholders. Régis Béroujon, Extrusion Department Head ERP - a strategic growth driver for manufacturing firms January 2013 - 15 Sage ERP X3 in brief Sage ERP X3 is specially designed for small and medium-sized companies, independent SMEs and group subsidiaries. The solution gives manufacturing firms a complete response to all their business needs (sales, production, logistics, services, finance, customer relations, human resources and management). Available in 60 countries and supporting a wide range of languages and legislative systems, Sage ERP X3 can cope with the most complex processes and deployments across multiple and/or international sites. Sage ERP X3 builds on the software’s native possibilities and the skills of its ecosystem to support the specifics of every business with an array of solutions for each sector and industry (car, food & drink, pharmaceuticals and cosmetics, chemicals, plastics, and much more besides). Combining the benefits of an ERP and specialised solutions, Sage ERP X3 is unique with the ability to extend its scope to encompass expert functions to suit the needs of industry (PLM, APS, MES, CMMS, WMS and CRM), as well as built-in technical features (decision-support, workflow, EDM, portals, and so on). Leveraging the SAFE X3 development and integration platform, Sage ERP X3 features native support for web technologies, cloud computing and EDI protocols for mobile terminals. Sage Value-added solutions and skills for industry ERP - a strategic growth driver for manufacturing firms January 2013 - 16 Call us on 0845 485 9800 Sage North Park Newcastle Upon Tyne, NE13 9AA www.sage.co.uk