Users conference highlights future of ERP
VENDORS continue to disappear from the turbulent world of ERP software, but the message to manufacturers is not to fret, but take heart from the consolidation.
While manufacturers with ERP systems may feel uneasy about this unrest, SSA Global’s CEO Mike Greenough says it is exactly what the software market needed after a boom built on post-Y2K excesses.
Speaking at the company’s global client forum held in Florida earlier this year, he said there were so many ineffective software providers out there that it was “a broken industry".
However both Greenough and SSA’s vice president Graeme Cooksley acknowledge manufacturers’ concerns about the recent consolidations.
"They do put disquiet and doubt into the industry," Cooksley admitted to Manufacturers’ Monthly. But he was quick to highlight SSA’s promise to never 'sunset' any acquired ERP product.
Despite such a commitment, Greenough says it is important manufacturers understand the benefits they can get from upgrading their ERP systems.
Greenough describes technology today as a "commodity", with vendors able to quickly replicate new functionality introduced by others.
"Customers now want ERP, financials, supply chain management from the one supplier. They want just one throat to choke if it doesn’t work,” Greenough told Manufacturers’ Monthly.
Cooksley says preference for end-to-end solutions has seen a decline in specialist, best-of-breed providers.
"A specialist CRM provider may have slighter better functions, but customers are willing to trade that off to get a complete, integrated system that they don't have to worry about," he said.
However, narrowing service offerings does not mean there is little about ERP for manufacturers to get excited about.
SSA’s chief technology officer Corey Eaves says that new product development continues to occur, based on manufacturers' needs.
"The basic transaction processing capabilities of an ERP system remain important - accounting, finance, GL/APAR, inventory management. But there are newer areas manufacturers should look at,” he said.
"We've recently introduced 'lean' capabilities that have had dramatic impact for customers, such as vast reductions in warehouse space used."
Going hand-in-hand with lean manufacturing is the push towards demand-driven manufacturing processes.
This marks a shift in emphasis from manufacturing goods, building inventory and pushing goods to the marketplace, towards shorter, faster production cycles driven by customer demand.
"Why build products to put them in the cupboard or warehouse?" Greenough asked.
"Demand-driven supply chains are exactly about preventing that, and ensuring manufacturers become more responsive."
According to Eaves, ERP solutions are addressing this need with a greater emphasis on order and batch visibility, and demand planning, identification, and forecasting solutions.
Product Lifecycle Management (PLM) is another solution said to be now forming a core part of ERP offerings with greater relevance for manufacturers.
Cooksley explains PLM as a solution that allows manufacturers to manage product development right from conceptual stages through to marketing and distributing.
"PLM is becoming important as companies look to have operations around the world," he said.
"You could design a product in Australia, have a pricing and marketing organisation in Singapore, build it in China, and use PLM to manage the process across those virtual entities, and get the product onto any local market."
"It can take significant cost out of design, marketing and the supply chain," Cooksley said.
Like most IT conferences these days, the application of RFID technology in the supply chain was high on the agenda in Florida.
Greenough describes RFID as a natural evolution from bar-coding, and one that will become increasingly vital for manufacturers.
"You can't have a supply chain today that doesn’t have RFID in it," he said.
"With the rise in fuel prices, logistics is becoming more and more important.
"Supply chain management offers huge opportunities in that area, and RFID is a great technology that makes it easier to track products," Greenough said.
With RFID equipment - particularly tags - still expensive, Eaves recognises the financial case for RFID may not currently be sufficient for manufacturers to implement it without a mandate.
But not only are falling equipment costs expected to encourage RFID adoption in the future, but increasing awareness from manufacturers about the benefits of supply chain management is likely to play a role.
According to Cooksley, Australian manufacturers in particular stand to gain much from supply chain solutions like RFID.
"There is a lot of opportunity in Australia to take costs out of the supply chain by being more efficient," he said.
Not only has SCM not been thoroughly explored in Australia, but Cooksley says its importance is growing as the Australian manufacturing industry moves towards a distribution model.
"The Australian market is moving up the value chain," he said.
5-Dec-2005