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Ken Jacobsen, The TM Group Inc.

Why Do You Need a Modern ERP System?


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Enterprise resource planning has existed for several decades as both a strategy and a type of software to aid businesses with a manufacturing, fabrication or other production component in their operations. Many companies aren't strangers to ERP systems, and some have used them to great effect for many years.

Of course, businesses can't keep using the same ERP software indefinitely. While the lifespan of these platforms can stretch across many years, every one of them will eventually need to be replaced. Organizations that are coming up on the end of the useful life of their current solution - as well as smaller and newer businesses that haven't used such systems before - need to be cognizant of when replacement or a major upgrade is necessary.

Deficiencies in a variety of different operational areas can all indicate a need for a new, more modern ERP system. Here are a few areas where decision-makers should pay close attention:

Time lost to manual processes
Except for the largest, wealthiest and most technologically advanced multinational companies, complete and total automation of business processes isn't a realistic option. However, there are many areas where even the smallest fabrication shops can benefit from eliminating excessive or needless manual work. Such an approach saves time and allows employees to focus on their higher-level duties more so than making sure they've written down the right batch number or have correctly tracked the right amount of resources used in a specific order. ERP doesn't just make this kind of in-the-moment tracking of resources easier and more standardized, it also helps to ensure the data collected remains consistent and accurate. This is true no matter when or where employees need to access than information later on.

Activities on the shop floor aren't the only business operations that can benefit from a lessening of manual, repetitive work. With the ability of modern ERP software to function across nearly all areas of a company, many other departments will benefit as well. Employees in various accounting and administrative roles can draw on this same data to realize better insight and more accurate projections.

Software compatibility issues
An ERP system that's correctly implemented and maintained provides a long useful life for the company that has it in place. However, every system eventually needs to be replaced no matter how effective it is. Support for the software and the changing nature of hardware means maintaining such a platform is difficult in the extreme long term.

Before these truly terminal problems are encountered with older systems, there are plenty of issues that spring up. It becomes difficult and then functionally impossible to integrate a new line of business or new machinery on the shop floor. New servers and workstations have to have some degree of backward engineering to make the older system functional. In many respects, an old ERP system becomes more trouble than it's worth. Just as manual processes eat into the effectiveness of such software, so do the compatibility problems that slowly but surely arise over time.

Most businesses don't want to move on from their current systems too early, and that's a prudent course of action. However, once the issues above start becoming more common, production and profitability will both start to suffer. Developing a plan of action and budgeting for a new ERP system while the old one is still working at a reasonable level is an effective approach to this issue. Additionally, businesses can seek out the help of an experienced ERP partner to aid in planning the transition and get a strategy in place before problems start to arise.

by The TM Group

One Response to “Why Do You Need a Modern ERP System?”

  1. Great post Ken, I particularly agree that business automation is one of the most important benefits a company can expect from an ERP system.

    I would add that it enables managers and CEOs to leverage the power of accurate data to make more informed decisions. Actually, the MIT recently found that organizations driven most by data-based decision making had 4% higher productivity rates and 6% higher profits.

    I just wrote a post about it and I think it would be a great addition to this article: http://www.abiscorp.com/index.php/3-absolutely-stunning-reasons-an-erp-is-what-you-need/

    Feel free to give me your feedback!

    Simon,