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Benefits of ERP |
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Although an ERP investment is a time- and dollar-consuming process, the rewards can be great, experts agree. Since only about half of smaller manufacturers use an ERP solution, adoption will deliver a competitive edge. However, many said they were only "somewhat satisfied" or "not satisfied at all," according to study sponsored by Epicor.
"The primary benefits that manufacturers can expect to see derive primarily from automating what are now manual and error-prone processes, and by connecting distributed individuals and departments to enable greater real-time visibility and collaboration," said Kyle Pickus, marketing programs specialist at Irvine, Calif.-based Epicor. "[Benefits include a] reduction in the cost of operations and waste, better management of customer communications and relationships, clearer visibility into financial and operational processes to improve planning and decision-making."
AcroTech Plastics Group, for one, saw significant results from its adoption of IQMS EnterpriseIQ ERP solution, especially from its Real-Time, Time and Attendance, EDI, Online Scheduling and customer relationship module (CRM) modules, said Bob Bester, director of IT. "We're finding increased efficiencies all the time. Since our orders are more accurate, we've used the end as a starting point to streamline the entire production process even more," he said. "We've saved a lot of money and time with increased accuracy in our inventory management, in terms of actual vs. virtual."
Manufacturers with revenue of less than $50 million have an average of 38 ERP users, according to a study by Aberdeen Research. On average, the software costs $138,806, the August 2006 report found; services cost $98,635. As a result, the total overall cost per user was $7,853, according to the study, which can be found on vendor Infor's site. Those manufacturers that generate revenue of between $50 million and $100 million spent an average of $8,827 per user, based on an average software cost of $363,425 and an average service cost of $339,321, the Boston-based research firm determined. Pay-back can be relatively fast. All small-company respondents reported that they completed their implementation within two years, and 86 percent within one year, according to Aberdeen Research's "Benchmarking ERP in SMBs" study, released earlier this year and available on Made2Manage Systems' Website. Only 47 percent of manufacturers with more than $1 billion in revenue achieved a system golive within the first year, the report indicated.
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