The Future of ERP and its Impact on Manufacturing

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The advent of ERP has significantly boosted efficiency and simplified back-office process automation in a wide range of manufacturing industries. This spreads across discrete and process production based industries. The biggest beneficiaries of such automation were without a doubt the large enterprises as they were the early adopters of ERP systems. Their SME counterparts were fence sitters, but soon realized the potential ERP offered and followed suit.

This is because efficiency is a common factor to all irrespective of size and geographical spread. While enterprises grew in size, ERP grew in its value proposition. ERP got more verticalized and several built in tools for data drill downs became key ERP elements. Besides, ERP moved from client server to web architected platforms and it made sense to many enterprises to take advantage of the significant cost benefit that is achieved by dropping their slower LAN/WAN/VPN/Lease line based systems and adopt a web based ERP.

Proliferation of web architected ERP was fast and the front runners were once again the large enterprises, although their SME counterparts in various business segments did not lag behind this time. The manufacturing sector quickly began utilizing the tool sets of ERP through MRP, MPS, RTI (Real Time Integration), DCS, SCADA, Manufacturing Execution Systems (MES), Analytics, Plant Manager Dashboards and Consoles.

Present day ERP is replete with extension development kits and portal development kits that enables the ERP user community to develop their own reports and dashboards. This was not the case earlier where users depended on the ERP vendor / partner for such analysis. We are not far away from the day when a user can generate his own scorecards and run the KPIs, experience mobility and experience context awareness based computing. Some of the vendors are already investing towards developing these capabilities.

What does the future hold in store for ERP? Apparently it will be Mobility, Context Aware and Cloud Computing Technology at the fore front. Mobile devices are likely to become the next terminal with anywhere anytime computing available even in the shop floor. What this means at the shop floor level is report production and quality performance so you know where to focus to reduce process time and costs. Result = Enhanced Productivity.

While the acceptance of mobility through android devices, iPads and iPhones is rapid, there is some resistance to the acceptance of full fledged SAAS and cloud based computing solutions. According to a Gartner report, whilst the highest adoption rates of SaaS based applications include sales, customer service, social CRM and marketing automation during the period 2010-12, there is no significantly noticeable trend of manufacturing related applications moving to cloud computing technology. This report further says that the four main reasons why companies don’t choose SaaS are uncertainty if it is the right deployment option (36%), satisfaction with existing on-premise applications (30%), no further requirements (33%) and locked into their current solution with expensive contractual requirements (14%).

Manufacturing enterprises are expected to adopt cloud computing rather slowly as they are sitting on the fence waiting to hear the experience of the early adopters. The reason for this could be that the manufacturing processes are complex and have reached steady state after a lot of work that went into it. However as more enterprises (from different segments) adopt cloud computing to gain from its significantly lower TCOs, the fence sitters would follow suit lest they would not be able to remain competitive. Hence manufacturing would go the cloud way soon.