In
today’s competitive and fast-moving marketplace, companies need technology that
not only allows them to position their organization for growth but more
importantly, helps them quickly adapt to and remain profitable in the face of constant
change and disruption.
Like many industries, my industry, the automotive industry, is in a seemingly constant state of evolution, with manufacturers driving innovation while simultaneously ensuring compliance, accurate demand planning, supply chain elasticity, revenue growth, customer satisfaction, and more. This year, the complexity of meeting these demands have increased due to the COVID-19 pandemic, with the industry facing factory shutdowns and restarts, supply chain insecurity, workforce constraints, safety requirements, and much, much more.
A
quality Enterprise
Resource Planning (ERP) solution can help
businesses handle this complexity and meet the demands I’ve listed above, and
many manufacturers rely on them. But the reality is that implementing
an ERP is often a huge and time-consuming process
that must be planned months if not years in advance. Furthermore, ERP is not
cheap and the costs associated with shelving one system and then choosing and
installing a new one can be enormous. Selecting
the right ERP can be daunting and one of the
most significant decisions a company must make is deciding whether to implement
a generic or an industry-specific ERP solution.
There
are plenty of generic ERP solutions to choose from. These non-industry,
non-vertical-specific solutions are supposed to be ready to go, out-of-the-box.
They typically include a wide range of functionality. But while they may
include the functionality needed by a company in any number of industries, they
can also include functionality that a company in a specific industry probably
won’t need. For example, functionality built for retail and
banking have no place in manufacturing and can slow down and complicate
successful implementations. That might be fine, or it might
not be depending on the price of the software and your implementation
timetable. But why pay for functionality that you don’t need? Additionally,
generic ERP solutions are often difficult to adapt to last-mile needs, because
they are complicated and often expensive to customize.
I
work in the automotive industry and it provides a great argument in favor of
choosing an industry-specific
ERP. Automotive manufacturers
face growing customer demand for alternatives to the internal combustion
engine. That means producing electric vehicles, autonomous vehicles, and the
parts and systems to make those things a reality. While attempting to meet this
growing demand, however, quality and customer satisfaction must remain job #1.
Recalls and quality-related issues can negatively impact an original equipment
manufacturer’s (OEM) brand or damage a supplier’s relationship with its
customers. As a result, the supply chain and automotive plants must transform
their organization to meet new business realities while maintaining
profitability, providing high-quality products, and delivering on-time, all in
the face of a once-in-a-lifetime pandemic.
Each
industry faces challenges specific to that industry and any ERP selection
process should begin with an assessment of exactly what functionality the
company needs. Here are my top reasons that manufacturers should choose an
industry-specific ERP. Since my expertise is in the automotive industry, I will
use that industry as an example.
Reduced Costs and Faster
Implementation: Because generic ERP solutions are not built
to meet the demands of a specific industry, they often have to be customized or
supplemented with integrations and add-ons. These modifications can take a long
time, cost a lot of money, and make an ERP solution rigid, which we call
version lock. In addition, customizations have to be rewritten each time a
manufacturer upgrades its ERP system. An example from the automotive industry
would be customer and supplier demand variance reports that show you how demand
has changed over any period in time. If your ERP solution doesn’t provide these,
it will reduce your ability to compete.
And because it doesn’t usually
need to be customized, an industry-specific ERP solution takes less time to
implement. It’s already got the needed functionality built-in and the vendor
has the expertise to set it up quickly. Implementing a generic ERP solution can
take a long time due to a lack of a fully documented system of processes,
procedures, and a core model implementation template that is already developed
to address the needs and best practices of the industry.
Customer Requirements and Industry Best Practices: There is a tremendous benefit gained by selecting an ERP provider that has domain knowledge in your industry and with your customers. Choose an ERP partner that actively leads and participates in industry organizations, like the automotive industry groups AIAG (Automotive Industry Action Group) and Odette International, and builds functionality into its solutions based on the industry-knowledge gained. In the case of the automotive industry, this functionality can include best practices-based process maps, training courses, and regulatory compliance features. Additionally, OEMs and other customers have specific requirements and approvals that you must meet to do business with them, such as EDI and barcoding. Generic ERP solutions most likely include none of that.
Support
for Industry-specific Regulatory and
Industry Requirements: Functionality supporting
industry-specific compliance, for example, with IATF 16949 (quality) and MMOG/LE
(supply chain) in the automotive industry, can be included and updated as regulations
evolve. The ability to quickly meet shifting
internationalization regulatory requirements and adapt to structural changes in
the industry is essential to automotive suppliers’ long-term success.
Automotive manufacturers should choose a solution that supports global
compliance in the areas of quality, delivery, and financial accounting
practices.
Adaptability Through an
Industry-specific ERP Platform: With the right
platform, you can achieve greater levels of fit today while supporting the
changes of tomorrow. You can extend and create new applications that are
dependable and scalable without creating version lock-in. When upgrading is
fast and easy, you can stay current and reduce the gap between your ERP and
changing business requirements. You can also simplify the adoption of new
capabilities and advanced technologies,
pursue continuous improvement, and adapt to future disruptions and changes as
they occur in your business.
Choosing
an ERP solution can be a long and arduous journey. I believe that most
manufacturers should consider choosing an ERP that is both
manufacturing-focused and that has a proven track record in their respective
industries. The best choice for
speed-to-value will include industry best
practices and easy onboarding of proven processes and capability. This choice
not only drives faster implementations but also ensures greater fit
out-of-the-box.
The post The Advantages of Industry-Specific ERP appeared first on ERP News.