Modern ERP requires a culture change throughout the organization
The goal of a modern ERP system is to bring your people together with a common goal. This requires a major cultural shift in thinking across the company. This requires a data-driven mindset across the business. While many of these changes are usually driven by management, requesting change agents from all levels of the company can give employees a sense of ownership of the changes they are about to make.
Modern ERP systems have been around for more than 100 years when they started as economic order quantity (EOQ)—a decision-making tool for optimizing inventory costs. Over time, additional functionality was added, such as finance and CRM, and each component was integrated into a single unit. though difficult to use, the system.
A simplified definition of ERP is a system or solution that a business uses to manage day-to-day business activities, such as procurement, project management, operations, and sales. ERP systems can also introduce automation that replaces manual tasks. The purpose of an ERP system is to increase business productivity and agility.
Benefits of a modern ERP system
Implementing or upgrading to a modern ERP can cause significant business disruption, causing an organization to lose focus, or even “break” business processes that the company looked upon as core to their success. As scary as this may seem, the productivity gains and business improvements that your business will miss out on far outweigh the costs and risks.
Modernization has a strategic impact on your business. Without access to a modern ERP system, it can be difficult or even impossible to support new business models and benefit from the improvements in KPIs that come with a successful ERP implementation.
Some of the major benefits of a modern ERP system include:
1. Ease of use—
You can’t achieve a return on investment (ROI) if your employees can’t use your ERP system. Updated systems are more user-friendly, encouraging employees to seek out data and integrate it into the decision-making process.
2. More informed business decisions—
Enterprise analytics enables businesses to connect data across business silos and drill down on overall results and KPIs to functional contributors. With modern ERP systems, businesses can grow the “analytics mindset” within the organization to increase data-driven decision-making and increase operational effectiveness. By aligning enterprise KPIs with department objectives, teams and individuals have a clearer picture of how their priorities impact overall business performance.
3. The ability to attract and retain talent-
A major challenge for manufacturers and distributors today is the retirement of employees with years of “tribal” knowledge and expertise combined with a new generation of workers that are less inclined to embark on manufacturing and distribution careers. Without these resources, your company can’t exist. The new generation of digital natives demands technology that is user-friendly and supports how they like to work. This means software that mirrors the look and feel of applications they use in their day-to-day lives and supports immediate access to data and collaboration. For many manufacturers and distributors, modern ERP systems have been a key differentiator when targeting this generation of workers.
4. Breaking down business silos to increase collaboration—
By extending ERP capabilities beyond operations with a modern platform, businesses can increase collaboration across functional areas for improved workflows and increased productivity. As teams leverage improved communications and cross-functional data, they can reduce cycle times and increase accuracy. Native social tools within ERP systems allow teams to share rich information across regions and time zones using devices that support work wherever and whenever needed.
5. Improvement of key performance metrics—
Organizations on the latest ERP versions see more significant benefits in metrics such as complete and on-time delivery, inventory turns, internal schedule compliance, and reductions in operational costs. These performance improvements have a direct impact on the bottom line, which may even pay for the ERP system.
6. Utilize emerging technology—
Analytics, mobility, cloud, partner networks, and the internet of things (IoT) is becoming table stakes in the modern manufacturing and distribution environments. For example, using IoT and analytics together (such as applying analytics to inexpensive sensors on machinery) can help to support predictive maintenance and enable bigger profits in new service models. Outdated ERP systems can’t support this innovation.
Embrace a data-driven mindset
Saying that ERP systems help organizations manage day-to-day business activities is not only an oversimplification, but it doesn’t address the breadth and reach of modern ERP systems. Not only do modern ERP systems touch and connect virtually every operational corner of a business, but they also help foster a data-driven mindset across the business. In doing so, they empower key stakeholders to leverage this information for critical decision-making that can grow the business and increase the bottom line.