What’s Driving ERP Adoption From The Shop Floor To The Top Floor

What’s Driving ERP Adoption From The Shop Floor To The Top Floor

Bottom Line:  Gaining greater visibility into how costs, margins, pricing, and production efficiency contribute to stronger financial performance is what’s driving greater ERP adoption, providing greater visibility and control from the shop floor to the top floor.

Knowing how solid sales and revenue pipelines are and whether each order can be fulfilled on time is dominating the minds of manufacturing leaders today. One of the most valuable lessons learned over the last nine months of operating during the pandemic was getting visibility into revenue and product forecasts early and often and making sure shop floors could flex to changes in demand fast. These factors and more are driving greater ERP adoption from the shop floor to the top floor.

Real-Time Monitoring Provides Visibility From The Shop Floor To The Top Floor

Real-Time Production and RealTime™ Manufacturing Process Monitoring using a combination of Programmable Logic Controllers, sensors, and IoT-based sensing devices are all part of a manufacturer’s competitive reality in 2021. Getting the most out of smart manufacturing techniques with real-time data helped many manufacturers make it through 2020. ERP systems make it possible to track how smart manufacturing techniques applied on the shop floor contribute to financial results that dominate top floor meetings and discussions.

Of the many manufacturing CFOs I’ve spoken with over the last twelve months, one clear message emerges: they want visibility down to the shop floor level to know what’s going on with margins, costs, orders, and aftermarket revenue. Getting to that level of visibility and control requires an ERP system that relies on a single database that also spans the Manufacturing Execution System (MES), Quality Management System (QMS), Warehouse Management System (WMS), and other modules of an ERP platform.

ERP systems that excel at providing the visibility and control needed from the shop floor to the top floor don’t require 3rd party integrations, provide for a seamless information flow, digitally transform production operations with one system, and most importantly, support multiple manufacturing types with pre-built workflows. In short, the purpose-built design of the DELMIAworks 2020 platform and its support for 21 pre-built manufacturing types has evolved over decades of development to provide shop floor to top floor visibility and control of manufacturing operations and his shown below:

ERP Adoption

Key Lessons Learned From My Conversations With Manufacturing CFOs

CFOs also provided the following insights into why they’re choosing to replace both homegrown and decades-old ERP systems with new systems capable of providing better shop floor to top floor visibility. The following are the key insights from my interviews with them:

  • Finance, Manufacturing Operations, Sales, and Executive Management are the four most influential departments driving ERP adoption in manufacturing today. Manufacturers’ highest priority is safeguarding employees’ health and welfare on the shop floor while providing greater cost, revenue, backlog, shipment status, and cost variance analyses to financial teams, including the CFO.
  • According to a recent survey, manufacturing outpaces its peer industries in adopting Sales Planning, Mobile Device Support, Internet of Things (IoT) sensor technologies, and Real-Time Monitoring. Taken together, all of these technologies requiring a unified ERP system to orchestrate them together to achieve higher production efficiencies and quality. Sales Planning is indispensable in manufacturing, as it provides the needed data for deriving unit forecasts, margins per product, per order, and overall revenue and profit projections. Mobile Device Support became essential in 2020 for achieving business continuity as the pandemic forced manufacturers to operate remotely. Many were able to keep operating their production centers from home using Mobile Device Support, protecting their workers’ health in the process. Business continuity lessons learned during 2020 translate into manufacturers’ urgency to gain greater financial visibility across manufacturing operations, further making Mobile Device Support essential to operations. Internet of Things (IoT)-based sensors are gaining adoption for real-time production and process monitoring. These findings are from Dresner Advisory Services’ recent report, Dresner Advisory Services’ recently published research study, The State of BI, Data, and Analytics in Manufacturing (client access reqd).
  • Improving shop floor visibility and control inside a production center and having greater track and traceability across supply chains increase ERP adoption and use across multiple roles from the shop floor to the top floor. ERP systems deliver the greatest value when Line Managers can access real-time data and troubleshoot problems on the shop floor. Line Managers rely on advanced manufacturing metrics from ERP systems to do their jobs, making Real-Time Monitoring essential for keeping shop floors operating on schedule.

Conclusion

Making the transition to smart manufacturing begins with reliable data that provides manufacturers with new, often-unexpected insights into increasing production efficiency and quality. Assessing risks to production and revenue forecasts using ERP systems is gaining momentum because manufacturers strive for the most accurate sales and margin forecasts they can get, further improving financial visibility.

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This article was written by

Louis is currently serving as Principal, IQMS. Previous positions include Director Product Management at Ingram Cloud, Vice President Marketing at iBASEt, Plex Systems, Senior Analyst at AMR Research (now Gartner), marketing and business development at SaaS start-ups. Mr. Columbus’ academic background includes an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. Louis also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning and market research. Mr. Columbus currently is a member of the faculty at Webster University and has taught California State University, Fullerton: University of California, Irvine & Marymount University.