If you’ve been around for more than a handful of birthdays, you may have noticed that what we used to call ERP is pretty far removed from the solutions sold today. You also may have noticed that suddenly everyone seems to be in the business of selling ERP systems.
Recently I asked one of my LinkedIn groups to answer the question, what is ERP? As I suspected, the answers covered a lot of functional territory. Things that I had never thought of as part of an ERP solution were cited as being critical elements of a complete ERP implementation.
The reason for much of this is found in the actual name. Before ERP, we had MRP; Manufacturing Resource Planning. MRP was all about managing the cost associated with supplies and parts used to make things. Many companies would simply buy part and supply inventory in large quantities to take advantage of discounts based on quantity.
They may have consulted with Sales to determine how much of this or that product would be sold in the coming year. They also may have looked at previous sales and built a projection based on sales trends over one or more previous years. MRP taught us that there was more to this process than simply ball-parking a sales number for the next reporting period.
Controlling inventory costs meant working with suppliers on a more complex level that went beyond the unit cost for supply purchases. Other factors were included such as options to call down or increase purchase quantities without punitive price adjustments were common. Other negotiable elements would include just in time delivery and billing terms that would all the company to free up cash through increased inventory turns.
For many companies the secret to longevity is diversity in markets, products and manufacturing processes. What does this mean in terms of ERP? Companies can only diversify in two ways.
- Investing profits into R&D and bringing new products into the marketplace
- Buying product lines or business through M&A
For ERP this means the company or enterprise is more complex than before. Instead of just making lawnmowers, the enterprise is now manufacturing a full line of landscaping tools and offering both consumer and professional grade products across the line.
This means multiple production facilities that are likely located in different places. Each product requires its own supply chain and the two product lines (pro and consumer) are sold through two different distribution channels.
Before long, the enterprise sees that expansion beyond domestic markets will be necessary to remain competitive. Plants and distribution facilities are acquired or built in assorted international locations.
Clearly companies that have experienced this type of growth are going to need systems that will facilitate efficient management and minimize the complexity common to the multinational multi-product enterprise.
This is where the industry dropped the M in MRP and replaced it with E for Enterprise. Management of the enterprise is a far larger and more complex process than managing resources for manufacturing.
The breadth of ERP far exceeds the scope of MRP. For most companies the functional breadth of their ERP solution has become every bit as important that functional depth within those areas critical to their specific enterprise.
ERP literally covers the entire business operating functional spectrum. More simply put, companies are looking for systems that manage
- Selling – this cover the whole process from marketing, prospecting, engaging, estimating, quoting and ordering products and services. The Cincom Business Suite does this by providing guided selling functionality, an industry leading knowledge based configuration tool and full integration into Microsoft AX and CRM.
- Making – management of the production process in terms of scheduling, planning, engineering and tracking supplies, parts and products before, during and after the manufacturing process. Cincom has been delivering deep functionality in the manufacturing processes of highly engineered complex products for nearly 45 years.
- Servicing – taking care of your customer base is critical to future sales. Knowing your product and how it is performing in the field means extending the life of your relationship with your customer. Cincom delivers full traceability and PLM functionality to keep you, your product and your customer doing good things for many years. Warranty work provides opportunity for services, add-on product sales and upgrades. Cincom makes your warranty program a money maker. We keep customer happy by helping them keep their customers happy.
- Managing – this means enterprise management – human resources, financials, purchasing, IT, quality and the rest of the things enterprises do. Data is delivered to the right person, at the right time, in the correct form to facilitate informed decision making by managers, directors and executives. With Cincom it’s all about connectedness. Each portion of the enterprise, each connected device and every mobile device are pulled into a single integrated system without walls, silos or fiefdoms undermining the operation of the enterprise.
Modern ERP brings all of this entire breadth of functionality to the enterprise. It is coordinated and integrated into the structure of company. Communication between LOB or traditional silos within the organization are enhanced. The net effect is that the enterprise is managed, not herded.
Getting the breadth of functionality is critical. Once that is established, the system for your enterprise should also deliver depth where you need it. If you are retail oriented building Make to Stock products with strong POS inventory requirements your choice will likely be different then if you build several hundred products per year that are highly configurable, highly engineered, and sold via a direct sales force.
Getting the depth right is just as or even more important as getting the functional breadth right. Your ERP solution should fit your enterprise like a custom made suit.
It should promote your ability to do business efficiently. It should make your company easier to do business with. This is the vision of modern ERP.
We look forward to showing you how the Cincom Business Suite can make a big difference with your enterprise. Take a few minutes to review some of our case studies and be sure to check out our free trial offer!
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