Making IT investment decisions is never easy. For manufacturing executives, decisions are complicated by numerous risk factors including market volatility, customer product and service requirements, supplier capabilities and technology developments. How can a manufacturer with limited financial reserves develop an investment strategy that will make a significant profit impact? Begin by considering the following guidelines for success.
1. Set realistic expectations. Every company should consider its own history of success in implementing change programs when setting a strategy. CIOs have learned hard lessons about the role that organizational culture can play in determining what is achievable. This has led to a growing demand for solutions that eliminate the need for customization while providing tools that allow users to personalize workbenches, interfaces and reporting tools. A recent Tech Validate survey asked 164 manufacturers to identify the top objectives driving their IT investments. Improving operational visibility and control was the top answer (78 percent). Reducing lead times (58 percent) and improving product quality (46 percent) were other top answers. These are good examples of attainable goals that modern software solutions can help achieve.
2. Target the true source of pain. Aligning investments with the gaps they are intended to address is always important. Software can help track, measure, train, reinforce, guide and manage employee performance. Complexity drives the need for greater automation. When Tech Validate asked manufacturers to identify their major pains, the top answer (66 percent) was customer expectations for speed, value and personalization. Clearly these are interrelated and only through detailed analysis can you appreciate the influence technology investments can have on each.
3. Learn from others. How do you know what is realistic? Benchmarking, case studies, and surveys highlighting successful manufacturing practices are often overlooked when planning investments. The experiences of others in your market segment can prove extremely valuable in helping a selection committee separate core and non-core requirements. Things change quickly, so place greater weight on more recent findings or results.
4. Focus on fundamentals, first. In this era of exciting innovations and advanced technologies, it is easy to forget that most companies do not take advantage of information that is already available in the enterprise. Make sure your ERP simplifies your business and where necessary, addresses industry specific requirements. It doesn’t make sense to accelerate your ability to input orders if your lead times are excessive or quality suffers with incremental increases in production.
5. Don’t delay upgrades. No IT solution can be deployed and forgotten. Upgrades are essential to getting the most from your investments. Past customizations deter companies from considering upgrades as a means of addressing new requirements. According to Aberdeen Group, leading manufacturers are 59 percent more likely to be implemented on their ERP’s latest version and 40 percent are only one version behind. The Aberdeen Group study also stated that 57 percent of manufacturing leaders chose to upgrade their ERP solution in order to take advantage of new functionality. As software solutions evolve, it is likely that requirements that caused you to customize your solutions have been addressed or can be addressed without customization. Of course, this may require adjustments to current methods to take advantage of pre-configured processing capabilities.
6. Consider cloud. One benefit of cloud deployment is the ability to immediately benefit from new software releases. This “always modern” approach is a key reason why cloud deployment is gaining acceptance. Aberdeen also says cloud manufacturers who switched to cloud deployment are 3.3 times as likely to share and integrate data with the extended enterprise and those with cloud ERP saw an 18 percent increase in complete and on-time delivery.
7. Put customers first. In today’s information rich world, customers can easily turn to another supplier and turn to social media to voice their disappointment over quality or service issues. Building customer loyalty is more difficult than ever. The ability to support highly customized products is one way to increase loyalty. Fortunately, customer friendly solutions are making this more manageable. Online portals supported by configuration, pricing and quoting tools can streamline the customer experience while reducing the cost of complexity.
8. Stay informed. The IT strategy should evolve based on unforeseen business opportunities, competitive responses and technology related advancements. Remain flexible. Make time each month to identify and evaluate potential opportunities for improvement and rely on your vendors to help guide efforts to take advantage of new capabilities.
Larry Korak is Industry & Solution Strategy Director for Manufacturing at Infor.