Boosting ERP with third-party applications is easier than ever, writes Malcolm Wheatley.
Based in Preston, family-owned Evans Vanodine produces 23 million litres of cleaning and hygiene chemicals each year, and exports to over 70 countries around the world. But spread across 1600 different product lines, and with pack sizes, styles and label variants all subject to customers’ individual requirements, demand planning is necessarily complex—a complexity further exacerbated by Evans Vanodine’s ‘customer first’ ethos.
“Our customers want product formulations that are unique and specific to them,” explains Anthony Evans, the company’s IT director. “We deliver exactly what they need, which means constantly changing demands on our production and buying operations. In addition, some of our raw materials are sourced from the Far East, and therefore have some long lead times—so if we get our forecast or inventory wrong it can affect our customer service as well as our margins.”
The company has been a user of Infor ERP software for more than 20 years, he explains, and had recently upgraded to Infor ERP System 21 Aurora. But while System 21 Aurora was well-suited to the process industry that Evans operates in, the realisation dawned that a more specialist demand planning and forecasting application was clearly required.
The solution? Having reviewed the market, Evans Vanodine selected Infor’s SCM Demand Planning application—enabling it to reduce both finished goods and raw materials stock by 25%, while boosting customer service and order fulfilment.
“It enables us to manage peaks and troughs in business demand with greater precision,” says Evans. “Simply put, we are able to make the right quantities of the right products, in order to serve our customers and avoid unnecessary inventory or waste. What’s more, we have much better forward visibility of seasonal fluctuations, which means we are able to manage these more effectively.”
And increasingly, other manufacturers are treading the path taken by Evans Vanodine. Their ERP system may not deliver all that they would like it to, in short—but they don’t see the logic in throwing it out and replacing it with another one. Instead, retaining their present system as a tried and trusted transaction backbone, they’re choosing to extend its functionality through integration.
“As long as the ERP system is delivering value, why replace it?,” says Andrew Kinder, director of solutions marketing at Infor. “Delivering sought-for functionality through integration is a very valid strategy for a lot of organisations: the market for ‘rip out and replace’ is small—and the market for adding value by extending ERP systems is much, much larger.”
And thanks to advances in technology and open standards—especially over the last decade—extending ERP systems through integration with third-party packages has never been easier. Technologies such as web services, for example, and the growing use of Service Oriented Architecture by ERP developers, make adding additional applications and functionality far more straightforward than was possible a few years back.
ERP vendor IFS, for instance, has completely redesigned the architecture of its products so as to make them object-oriented and open—and fully conforming to SOA standards.
At Fleckney, Leicestershire based Coba Plastics, for instance, it was IFS’ SOA capabilities that played a major part in the decision to opt for the IFS solution, reports IT director Mark Goodwin. Coba’s IFS-sourced ERP system, he explains, is integrated both to a custom-built RFID application in the warehouse, as well as to a proprietary constraint based scheduling system via a simple, easy to use touch screen panel. “We knew what we wanted to do—and SOA was the means to achieving it,” he explains.
What’s more, a growing number of third-party systems have been designed from the ground up to be integrated with ERP systems—delivered through business models such as Software as a Service (SaaS), for example, or as cloud computing applications such as popular CRM application Salesforce.com.
In short, says John Hammann, SAP’s UK industry principal for manufacturing, “an ERP system is increasingly a platform to build upon. And at SAP, we believe that we are open enough to applications from third parties and our own partners to be integrated seamlessly.”
And the reference to ‘partners’ is telling. Increasingly, the major ERP providers are recognising the limitations of their own expertise in particular industries, and are working with industry specialists to co-develop and co-market solutions aimed at particular niche industry vertical sectors.
At Microsoft, for instance, “we view the ERP system as a development platform in its own right,” says product manager Steve Farr. Partners’ applications should be so closely wired to the core ERP system, he suggests, “that it becomes almost part of the ERP system itself, rather than an external application that is integrated with it.”
That said, integration isn’t the best option in every circumstance.
“Older systems aren’t as good as being integrated with external applications,” warns Simon Charlton, sales director at global IT consulting company Columbus IT. “Technology—and business practice—moves on, quite simply.”
E-mail-based workflow, for example, or RFID and barcoding, may pose more than just a data conversion problem: the ERP system may simply not be able to support such advances.
The good news? Most systems bought in the last ten years are capable of at least limited integration—and possibly a great deal more. Rip out and replace, in short, is no longer the only option.