ERP systems can transform midsize manufacturers by cutting costs, improving efficiency, and boosting profits. Over 80% of companies meet ROI goals after implementing ERP, with 95% reporting faster workflows, better collaboration, and centralized data. Key benefits include:
- Real-time inventory tracking: Avoid overstocking and reduce waste with tools like RFID and cloud tech.
- Demand forecasting: Align production with customer needs to save costs and reduce excess inventory.
- Multi-site inventory management: Streamline operations across locations, saving shipping costs and preventing stock imbalances.
- Regulatory compliance: Automate tracking and reporting to meet industry standards and reduce errors.
For every $1 spent on ERP, companies often see $7 in return. To succeed, set clear goals, plan implementation carefully, and track performance using KPIs like inventory turnover and production times. Whether you roll out ERP all at once or in phases, the key is aligning the system with your business needs and maintaining continuous improvement.
Main ERP Things That Help Get More Money
Main ERP parts let firms save cash, go fast, and get fresh data for smart choices.
Right Now Stock Check
With stock checks happening right now, firms see all about stock right away – where it is, how much, and if it’s moving. Tools like smart sensors, RFID, bar codes, and cloud tech keep stock details right. This clear view lets makers use Just-in-Time (JIT) ways, cutting down on cost and making money flow better.
The numbers tell a big story. The market for stock check tech will reach $7.52 billion by 2034, growing at 13.1% every year. One web shop used these tools to find over 80% of its lost stuff, cutting losses by 60% and saving over $58 million. Also, real-time details catch slow points in supply chains soon, letting changes happen fast to stop late times. These facts help see what will be made better and plan it.
Knowing Demand and Making Plans
ERP tools check data and link with CRM systems to know what clients might want soon. By fitting what’s made with real needs, firms can keep less stuff, cutting trash and costs of keeping stuff.
With right guesswork, making plans parts turn ideas into real plans, counting in time from suppliers, how much can be made, and what’s in stock now. Debbie Baldwin, who leads product management (making) at Acumatica, shows why this matters:
"Demand planning in supply chain management ensures businesses have the right inventory at the right time, balancing customer demand while preventing overstocking."
Managing Inventory and Needs Across Sites
When making goods in more than one place, it’s key to handle stock well. ERP tools help by tracking where items are stored, keeping count of stock, and cutting down on shipping fees. This stops problems like too much stock at one place and not enough at another.
Material Requirements Planning (MRP) goes deeper by figuring out the exact items needed, when they are needed, and where they should go following the production plan. This method stops gaps that could stop production and keeps extra stock from holding up money. For example, WDS Component Parts Ltd. cut down their stock by $200,000 and filled orders at a 97% rate by using better MRP and multi-site tools.
Also, ERP systems for managing warehouses provide a clear view but allow each site to manage itself, helping the whole company do well. On average, for every buck spent on ERP, over $7 comes back. These tools, when used together, build a strong ERP plan that really shows its value.
ERP Changes for Making Stuff
For makers, ERP changes aim to make work smoother and cut costs. The tough part is mixing what the system can do now with new fixes. Wise makers tackle clear problems without making things too messy. The key is to know when to keep things basic and when spending on new stuff is worth it.
Basic Tools vs. New Fixes
Current ERP systems are set up to handle usual making tasks. Changing settings tweaks things, while new fixes add brand new parts or steps. This is big because changes stick to the system’s plan, making them easy to handle, but new fixes need more work and updates often.
Before starting new fixes, makers need to set clear work goals and really look at what the system can do now. Many times, the tools it has are good enough. It’s key to think about the costs of new fixes and the good stuff from using basic tools. Today’s systems even let not-so-techy people make new paths and tools without having to code.
For instance, some makers focus on needed changes like linking special gear or boosting rule reports. One maker for precise stuff made changes for FDA rules and got everything right in six months, cutting costs linked to quality by 30%.
A simple take on changes keeps the ERP easy to use and able to grow. Writing down changes and making sure they fit with long-term goals keeps things running well and backs growth later on. By mixing basic and new tools, makers can smooth their work while staying ready for rule needs.
Rules and Standards in the U.S.
ERP helps a lot with U.S. rules. Making things by the rules means following what groups like the FDA, EPA, and OSHA say, and also sticking to set standards and in-house rules. These systems can run and track rule steps, cutting mistake chances and saving time.
Edward Witchey, top boss of the IT Project Management Office at Merakey, talks up the perks of running things on auto:
"Manual data entry is error-prone, whereas automatic data validation, reporting, and automated compliance checks reduce mistakes and save valuable resource time".
Think about this: every year, North American firms spend $61 billion on keeping up with rules to fight money crimes, and rules from the government cost more than $2.1 trillion. In one example, a mid-sized firm making medical devices got a digital tool to help with paperwork and checks. What happened? They got their ISO 13485 three months early and cut the time spent on rule-related work by 60%.
Different types of work have different rule needs. Makers of medical devices must stick to FDA 21 CFR Part 820, car parts makers follow TS 16949, and many fields use rules like ISO 9001 and Good Manufacturing Practice (GMP). Some makers of electronics have set rules across many places, cutting rule-related issues by 45% and saving money by removing extra steps.
ERP systems do well in parts like quality checks and keeping track of things by tracking processes, deals, and data in real time. This makes the detailed records that regulators want and makes operations run better.
How to Get the Best Out of Your ERP Setup
To get the most from your ERP system, it’s not just about picking the right tool – it’s about careful planning and smart work. A good setup depends on matching your aims, planning the steps well, and making sure data flows without issues. Doing these well can make all the difference between a smooth start and a costly error.
Making Business Goals and Ways to Check Success
Before you pick your software, it’s key to know what success means for your ERP plan. Clear, countable goals help give direction and keep your team aimed at real results.
Set clear, doable goals linked right to how well your business does. For example, rather than just trying to "do better", aim to drop the costs of holding inventory by 15% or lower the time to make products by 20%. These clear targets make it easier to see and cheer on progress.
"The first and the most crucial step for your ERP project is defining your goals and objectives to understand your current position and desired destination. This paves the way for your organization to understand the best way to get there." – Claus Jepsen, Forbes Councils Member
Look deep into how things work in your place to spot tight spots. From buying to when things reach where they need to go, note where hold-ups, mistakes, or slow steps occur. These issues should show what you need to fix first.
Make sure to work out the full cost of owning it from the start. Add everything – setting it up, teaching, keeping it going, and new upgrades – to keep your expected money gains real and not get hit by money shocks.
Give each goal an owner from your team. This duty makes sure things move forward on important stuff like fewer stock run-outs or better on-time shipping. Keep checking these points, changing them as needed with what the data shows.
With clear goals set, you’re ready to pick how to bring this into your work.
Roll Out Bit by Bit vs. All at Once
Choosing to start in parts or do it all at once can really change how well your project does. The best path depends on how complex your work is and how well your team can handle new changes.
Here is a fast look at the main ways to do it:
| Method | Best Suited For | Good Points | Bad Points |
|---|---|---|---|
| Big Bang | Small to medium firms with 1-2 places | Quick outcomes, less money on advice, no two systems needed | Bigger danger, may cause work stops, hard training |
| Phased | Big places with many spots or things | Less danger, better user use, simpler to follow rules | Takes more time, costs more, must work with old systems |
| Hybrid | Mixed size in spots or teams | Can change as needed by area | Needs more plan and work together |
A big change all at once works best if your company is small and simple. If you switch all together, you avoid the mess of old and new systems at the same time, saving time and money.
For big makers with tough needs, a step-by-step start often works better. Start small – maybe with keeping track of items at one place – then grow to other areas and spots. This way, you can fix problems bit by bit and not mess up everything at once. Firms with few IT people often pick a big change all at once, while those who hate disruptions prefer a step-by-step start.
Once you pick your plan, making sure your data move is solid is your next big task.
Best Ways to Move and Join Data
Moving data to your new ERP system is a hard part of the setup. If not done well, it can mess up the whole project. Taking time to do this right keeps your return on money safe and sets your team up to do well.
First, clean and make your data the same. Get rid of old files, doubles, and part done things to avoid extra mess. Making formats the same – like part numbers or customer names – makes moving smoother.
Work close with tech and work teams to map data fields right. For example, a part number in your old system may need to split into other areas for a maker code and a SKU in the new ERP. Not seeing these things can cause big trouble later.
Try your move plan in small parts before going full. Check that key data – like item counts, customer limits, and seller terms – moves right. This step finds mistakes early and makes sure the new system is set to go.
Plan to join with tools you keep, like your CRM, book-keep software, or quality systems. Many makers use special systems that don’t need to change, so making data swap smooth is key.
Lastly, note down every part of the move process. This makes a clear guide for fixing issues and makes later upgrades or grows easier.
The aim is to start with clean, right data that lets your team make smart choices from day one. Saving time on data move might seem good at first, but it often brings big costs later.
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Measuring and Maintaining ERP-Driven ROI
To get the most out of your ERP system, it’s crucial to keep an eye on its performance and make adjustments as needed. For manufacturers, the right approach to tracking and improving ROI can transform a solid ERP investment into an outstanding one.
Tracking ERP Benefits with KPIs
The key to understanding your ERP’s impact lies in tracking the right metrics. Focus on monitoring 5–10 critical KPIs – enough to provide valuable insights without overwhelming your team. Too many metrics can dilute focus, while too few may leave gaps in your analysis.
"The only way to survive and be successful in this market is to have visibility into the KPIs to drive manufacturing, maintain profitability, drive customer satisfaction and quality." – Bill Ferrin, Director of Information Technology, Portacool LLC
When selecting KPIs, prioritize four key areas: financial performance, operational efficiency, user adoption, and process improvement. For manufacturers, this might mean keeping an eye on metrics like inventory turnover, production cycle times, on-time delivery rates, and cost per unit produced. A good ERP system provides real-time data, enabling you to quickly identify and address issues. For instance, if emergency repairs exceed 15% of planned maintenance work orders, it’s a clear sign that your maintenance strategy may need attention.
Tailor KPI reports to match the needs of each stakeholder. A production manager will need different insights than a CFO, so customizing reports ensures everyone gets the information they need to make informed decisions. Use stakeholder feedback to refine your KPIs over time.
ROI Calculation and Review Cycles
Once you’ve established your KPIs, it’s time to systematically calculate and review your ERP ROI. This isn’t a one-time task – it’s an ongoing process that tracks progress and uncovers opportunities for improvement.
Start with the basic ROI formula: (Benefits – Costs) ÷ Costs × 100. When calculating costs, include setup, training, ongoing support, and upgrades. On the benefits side, factor in cost savings, productivity improvements, and revenue growth directly linked to your ERP system.
Schedule regular review cycles – at least annually – to evaluate your ROI. These reviews should include performance checks, security updates, and user feedback sessions. This helps safeguard your investment and keeps your system running at peak efficiency.
It’s also important to measure ROI across different timeframes. Short-term evaluations can highlight immediate savings, while long-term analysis reveals strategic advantages like improved customer relationships or a stronger market position. A well-thought-out maintenance plan that tracks metrics like response times, error rates, and user satisfaction can help spot ROI trends even before they’re reflected in financial data.
Continuous Improvement Methods
ROI reviews are just the beginning. To truly maximize your ERP system’s potential, embrace a mindset of continuous improvement. This isn’t just about fixing problems – it’s about consistently refining processes, reducing waste, and boosting quality.
Start by analyzing your current workflows to find bottlenecks or inefficiencies. Use ERP-generated data to pinpoint areas for improvement and involve employees at all levels to gather actionable feedback.
Take advantage of ERP features like workflow automation and real-time monitoring to support these initiatives. Set clear, measurable goals for each project, and use your ERP system to track progress and make adjustments as needed. This creates a feedback loop that keeps your operations agile and efficient.
Don’t overlook the value of staying connected with your ERP vendor. Regular check-ins can provide insights into new features or best practices that could improve your ROI. Vendors can also help you plan for future upgrades or system expansions.
Conclusion: Achieving ROI with ERP Systems
For midsize manufacturers, ERP systems are more than just a tech upgrade – they’re a game-changer for cutting costs, improving operations, and driving long-term profitability. Industry data consistently shows that most businesses achieve a return on investment (ROI) with ERP systems, with 95% reporting major benefits like shorter process times, better collaboration, and centralized data management.
The financial benefits are hard to ignore. Studies reveal inventory costs can drop significantly, manufacturing lead times can improve by up to 95%, and 66% of companies report greater operational efficiency, while 62% see cost reductions. These numbers make it clear: ROI depends on a well-planned and executed implementation strategy.
But technology alone isn’t enough. The real difference lies in how you implement and optimize your ERP system. Companies that succeed take a structured approach: they set clear goals, involve key players across departments, ensure data accuracy before going live, and invest in thorough employee training. The stats back this up – businesses that bring in software consultants see an 85% success rate, far higher than those that go it alone.
Adapting your ERP system to meet changing business needs is equally important. Take Miller Weldmaster, for example. By integrating BOM applications and BOM Compare software with their ERP system, they eliminated manual data entry for building Bills of Materials and routers. What used to take weeks now happens in a fraction of the time.
ERP systems typically require an investment of 3%–5% of annual revenue, making them a significant but manageable expense. To get the most out of this investment, align the system’s capabilities with your specific goals – whether that’s improving production schedules, optimizing inventory, or streamlining your supply chain.
Continuous improvement is key. Regularly auditing the system, gathering employee feedback, and rolling out strategic updates ensure your ERP evolves with your business. As your operations grow, your ERP should grow too – refining processes, automating tasks, and integrating new technologies to keep you ahead of the competition.
With over 70% of manufacturers considering ERP systems essential for their operations, those who plan carefully, implement strategically, and commit to ongoing optimization will position themselves for lasting growth and profitability.
FAQs
What are the essential steps for implementing an ERP system in a midsize manufacturing business?
Implementing an ERP system in a midsize manufacturing business can be a game-changer, but it requires careful planning and execution. Here’s how to approach it step by step:
- Set clear goals and requirements. Start by identifying what your business needs from the ERP system. Are you looking to improve inventory management? Streamline production workflows? Pinpoint these objectives to guide your decisions.
- Choose an ERP system that fits. Not all ERP platforms are created equal. Look for one that aligns with your operational needs and offers manufacturing-specific features like demand forecasting, supply chain management, and production planning.
- Plan data migration and test thoroughly. Moving data from older systems to the new ERP is a critical step. Make sure the data transfer is accurate and test the system rigorously to catch and resolve issues before going live.
- Invest in training and ongoing support. A system is only as good as its users. Train your team to use the ERP effectively and have support in place to tackle any challenges that come up. This ensures you get the most out of your investment.
When done right, these steps can lead to smoother operations, lower costs, and noticeable gains in profitability for midsize manufacturers.
How can midsize manufacturers keep their ERP systems aligned with changing business needs?
Midsize manufacturers can ensure their ERP systems stay in sync with changing business needs by consistently evaluating system performance and using built-in analytics to pinpoint opportunities for improvement. This approach helps maintain the ERP system’s ability to effectively support operational goals.
Regular updates and customizations designed to fit specific manufacturing processes – like inventory management or streamlining production – further enable the system to handle new challenges as they arise. Promoting a mindset of ongoing improvement and process refinement, with the support of ERP tools, ensures the system evolves in step with the demands of the business.
What are the key KPIs to track the ROI of an ERP system for manufacturers?
To evaluate the ROI of an ERP system in manufacturing, it’s essential to focus on key performance indicators (KPIs) that reveal both operational and financial gains. Here are some important areas to monitor:
- Revenue growth: Look at how the ERP system supports increased sales and boosts profitability.
- Operational efficiency: Pay attention to metrics like production cycle times, on-time delivery rates, and how much of your processes are automated.
- Inventory management: Keep an eye on inventory turnover rates and whether the system helps reduce excess stock or avoid shortages.
- Cost savings: Assess reductions in IT maintenance expenses, scrap rates, and overall production costs.
- Employee productivity: Track how the system improves task completion times and streamlines workflows.
Regularly reviewing these KPIs gives manufacturers a clear view of how effectively their ERP system is delivering measurable results and improving ROI.
