Is ERP Really Worth It for Your Manufacturing Business? (2024)

You know your existing systems work. They may be complicated and sometimes a little behind but you eventually get what you need out of them. Sometimes though, your array of legacy systems, spreadsheets, and paper-based files do have drawbacks. Errors get through production. You don’t always know where inventory is, and how much you might need. But it’s the way you’re used to working so why change?

You’re not so sure that overhauling your systems and implementing acloud-based ERP would really do the trick. Plus, there’s the potential disruption to your business. It can’t really be as smooth and effective as you’ve heard. And what if, after transforming your entire business with ERP, you find that the pain of the upheaval doesn’t justify the benefits.

Is manufacturing ERP really worth it?

Here are four ways cloud manufacturing ERP delivers value (and be sure to keep reading because there are more than four ways to get value):

1. Manufacturing ERP makes your business more agile.

Modern manufacturing is all about mergers, acquisitions, and right-shoring decisions. Whether you’re planning on growing, or considering some degree of corporate restructuring, you need to be on a business management system that can support it. If you can’t quickly add a new facility to take advantage of market opportunities, your software is an albatross.

But agility is about more than just supporting growth. You also need to make sure you have robust enough reporting and analytics to help you manage change. And you should position your company to take advantage of innovations such as machine learning, robotic intelligence, and wearables—something most legacy systems can’t do.

2. Manufacturing ERP increases your competitiveness.

You wouldn’t be in business if you couldn’t claim some kind of competitive advantage. A manufacturing ERP system can help you protect or even extend that advantage.

Competing on quality? Only a modern ERP system will have built-in quality assurance features. Competing on price? ERP can help you optimize inventory, reduce waste, and lower your cost of delivery.

3. Manufacturing ERP simplifies and streamlines your business.

Why make manufacturing even more complex than it already is? You’re probably sourcing supplies from vendors around the world. You may be running multiple plants in different time zones—or even outsourcing some of your manufacturing operations. But that doesn’t mean your business data should be equally far-flung.

Storing data in multiple siloes hampers your decision-making. Manufacturing ERP is designed to give you one coherent view of your entire business, so that you can make decisions based on the current reality.

4. Manufacturing ERP drives operational efficiency.

Where do your most costly errors occur? Is it in accounting, inventory management, or on the shop floor? Stop and think about the causes of these errors. You’ll probably find that paper-based processes and manual data entry are at least a contributing factor.

Implementing manufacturing ERP can help you do more than just automate error-prone processes. It can also free up your best people from doing mundane tasks, enabling them to add more value to your business.

Now, here’s the rub: a manufacturing ERP system will only be useful if your employees actually use it.

They’ll be much more likely to use it if they can access it through any browser. And nowadays, employees expect to be able to get their jobs done even when they’re on a commuter train, at home with the flu, or waiting in line for movie tickets on Friday night. That’s why you should consider implementing a cloud manufacturing ERP system as the hub of your manufacturing business.

How can you choose exactly the right ERP for your manufacturing business—and then implement it in a way that meets your needs for the next 5-10 years? Find out by downloading the eBook: 7 ERP System Selection and Implementation Tips.

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Is ERP Really Worth It for Your Manufacturing Business? (2024)

FAQs

How is ERP useful in the manufacturing industry? ›

Benefits of ERP for Manufacturing Companies

Minimizing redundancy and automating processes to increase efficiency. Optimizing manufacturing operations for enhanced productivity. Improving supply chain, warehouse, transportation, and inventory management. Mitigating risk and increasing confidence around compliance.

Is an ERP system worth it? ›

Cost Savings

For business owners and leaders, the most convincing reason to buy an ERP system is that it lowers overall costs, often in a big way. The automation we've already discussed can reduce or even wipe out many administrative and operational costs.

Do I really need an ERP? ›

Financial management

Although an ERP system will manage all of your business accounting requirements, it can also help manage a wider range of financial tasks, like budgeting, recording transactions, dealing with expenses, overseeing assets and collections, and measuring cash flow.

How important is ERP in a business? ›

In conclusion, an ERP system is an essential tool for modern businesses. It helps companies to manage their resources more efficiently, make better decisions, and provide better customer service.

What is ERP system for manufacturing? ›

Enterprise resource planning (ERP) is a software system that helps you run your entire business, supporting automation and processes in finance, human resources, manufacturing, supply chain, services, procurement, and more.

What is a disadvantage of an ERP system? ›

Key disadvantages include the high costs of ERP software, its complexity, slow implementation, and data migration. If you want your procurement process to be as efficient as possible, it's best to invest in a P2P solution that provides integration with an ERP system.

Does a small business need an ERP? ›

A common misbelief about ERPs is that they are for large-scale businesses only. ERPs first developed to meet the needs of large scale enterprises — like the name suggests — but ERPs can help businesses, large and small alike, to integrate all of their business processes and data into one place.

Do small businesses need an ERP system? ›

Although these business management systems have been historically considered a “must” for large firms looking to unite and simplify their operations, smaller, growing businesses can greatly benefit from an ERP — especially as more flexible ERP systems with features designed to meet the needs of SMBs enter the market.

What does ERP really cost? ›

A 2022 ERP report showed that the average budget per user for an ERP project is $9,000. When you factor in how many users your system may have (especially for larger businesses), and added costs, you'll find an ERP implementation can cost anything between $150,000 and $750,000 for a mid-sized business.

What size company needs an ERP? ›

Do companies of all sizes use an ERP system? Yes. More than 70% of large groups use an ERP or a similar business management solution. Any company – no matter what the size is – needs an ERP system.

Does ERP have a good future? ›

Cloud ERP adoption has exploded in recent years and it's showing no sign of slowing down. The global market is expected to nearly double, growing from $64.7 billion in 2022 to $130 billion by 2027.

What will happen if the business did not have an ERP system? ›

A company without an enterprise resource planning (ERP) system may face a range of challenges and consequences, including: Inefficient Operations: Manual processes and data silos can lead to inefficiencies, duplication of effort, and errors, ultimately hindering productivity and increasing costs.

Should every business buy an ERP package? ›

ERP packages are a massive investment, but the benefit of having all of your organization's data in one place makes it worth the cost. ERP systems unify many fragmented business management tasks into one centralized system. This makes it easier for employees to access the tools they need for their job from one place.

What is the success rate of ERP? ›

Approximately 50-75% of all ERP (Enterprise Resource Planning) implementations are categorized as failures, according to various studies and reports. Despite the significant investment, only 21% of companies fully realize the anticipated benefits of their ERP systems (Panorama Consulting, 2021).

What is the average life of an ERP system? ›

ERP systems typically have a lifespan of between 5 and 15 years. That timeframe can be influenced by a number of different factors.

How much should you spend on an ERP? ›

You can plan to spend between 1% and 2% of your annual revenue on an ERP project. This includes the implementation services and the first year of software fees. If your business is under $3 million in revenue, you'll be closer to 2%. As your revenue scales up, you'll move into the range of 1% or less.

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