Three steps to achieving ROI on your ERP

Posted on 3 Mar 2015 by The Manufacturer

Where does the ROI of ERP come from? At KCS Datawright, we don’t think it’s a question that’s asked often enough, or indeed, searchingly enough, says general manager Andy Gough

Andy Gough,General Manager, KCS Datawright.
Andy Gough,General Manager, KCS Datawright.

The argument states that you have to have manufacturing ERP. Everybody does.

And this is true. But implementing ERP because ‘everybody does’ will not necessarily deliver much by way of ROI.

Here are three pointers from KCS Datawright to maximise the ROI of your ERP investment.

1. Turning efficiency improvements into value

Compared to having multiple systems, manufacturing ERP is much more efficient.

There’s far less re-keying of information from system to system, far less time spent correcting the inevitable errors, and far less time hunting for data.

But in terms of converting that improved efficiency into an ROI that’s discernible on the bottom line, too many ERP implementations take refuge behind glib statements and wishful thinking.

Are you worried about making the wrong ERP decision?

With pressure on businesses to increase efficiency and streamline processes, procuring the correct ERP system is a decision you cannot afford to get wrong.

Connect ERP blends together a unique combination of case studies, peer-to-peer networking and pre-briefed and scheduled vendor meetings.

Connect ERP will maximise your opportunity to fine tune your short listing process with unrestricted exposure to both peers and the vendor community.

The must attend event if you are looking to install or upgrade your ERP system in the next 12-18 months.

The point is this: After your investment in manufacturing ERP, fewer people will be carrying out tasks such as re-keying. So what are they going to be doing instead?

That said, it’s not necessarily about redundancy and people losing their jobs. Just as valuable – if not more so – is redeployment into tasks that add value, such as customer service roles.

2. Slicker supply chains free up cash

For most companies an investment in ERP means automatic access to improved supply chain processes – more sophisticated forecasting, for instance. Other benefits also include better inventory control and reordering systems, geater visibility into supplier performance and further visibility into procurement spend.

And what’s more, these are knowns from the outset. At KCS Datawright we routinely see major improvements when customers adopt our manufacturing ERP system -shorter lead times, reduced inventory levels, fewer stockouts, and less time spent processing sudden rush orders.

Plan for these improvements. Proactively target them, and consciously strive to turn them into bottom line benefits.

Put another way, if after implementing your manufacturing ERP system, you discover that lead times and inventory levels haven’t come down, thus releasing cash, then it’s time to ask some searching questions.

3. The enabler of a move to barcodes

Finally, an ERP system is a great way of driving factory floor and warehouse productivity improvements, as it provides a seamless transaction backbone, with orders and materials smoothly flowing through the system.

Most obviously, this makes a manufacturing ERP system an ideal way to leverage technologies such as barcodes and RFID tags – not just reducing errors and eliminating mislaid inventory and orders, but also directly impacting factory floor and warehouse productivity.

So if what’s always held you back from a move to barcodes is the absence of an integrated manufacturing ERP system, then it’s time for a re-think.

Putting it all together

So is an investment in ERP a smart move? For the vast majority of manufacturing businesses, yes.

But too few of those businesses are being demanding enough in terms of seeking out and securing the hard cash benefits of their ERP investment.

Our message: don’t join them.