Next-Gen ERP Will Be Developed With SMB Manufacturer in Mind
Traditional enterprise resource planning systems (ERPs) were created with the large manufacturer in mind. However, current numbers from the Manufacturing Institute show that the majority of manufacturers in the U.S. have less than 100 employees.
Smaller manufacturers have attempted to employ ERP systems, but have typically experienced failure because these systems are not suited to the unique needs of the SMB manufacturer.
Independent consultant Christopher Baum describes most ERP systems as having a hub-and-spoke model, with a centralized database that controls numerous operations. But this model does not mirror the way small businesses work.
“Their operations are cooperatives with peers and clients. The driving force is often cash flow, not necessarily production optimization. They do not often dictate standards and often have to accept data structures from suppliers or customers. In other words, there are lots of spokes with no real hubs,” says Christopher Baum.
Fortunately, ERP systems are evolving thanks to developments in data storage and sharing. For example, storage prices have dropped significantly, making it feasible to extend storage capabilities across the workspace. Also, with XML becoming the standard mark-up language, all of this stored data can also be easily shared across multiple networks and individuals.
Another development shaping future ERP is dynamic modeling. In the past, ERP has depended on standard reorder points for stock. But technology has advanced to the point that new ERP systems are being developed that can take into consideration lead times, substitute parts and even alternate suppliers. Baum says that this has led to a unified ERP.
“The convergence of all of these developments and technologies lead to a very different vision of ERP where the participants are unified, not hierarchical. This changes the nature of ERP both within the enterprise and in the firm’s supply chain.”
Another shift that Baum predicts with tomorrow’s ERP is that firms will become both suppliers and buyers. Essentially, firms will both buy raw materials and subcomponents, as well as supply finished goods to other firms. Additionally, most of these transactions will happen with little to no human interaction.
All of these developments will favor the SMB manufacturer. For a more in-depth overview of this trend, see Baum’s original post on the Software Advice blog.
Contributed by Lauren Carlson CRM Analyst at Software Advice. Lauren joined Software Advice in 2010. She writes about various topics related to CRM software, with particular interest in sales force automation, marketing automation, and customer service.
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