Pressure to improve customer service and response times is the top business driver of enterprise resource planning (ERP) strategy for 44% of best-in-class companies, according to Aberdeen Group's recent survey of mid-sized companies.
However, expectations of growth dominated 48% of the companies not classified by the survey as 'best-in-class' (48%). These two pressures actually work in concert, Aberdeen suggests, and the best-in-class firms appear to have realised this and tend to view customer service as a competitive differentiator.
In its '2007 ERP in the Mid-Market Benchmark Report', Aberdeen concluded that implementation of ERP by best-in-class firms had produced significant performance improvements, including:
- A 21% reduction in inventory levels;
- A 17% reduction in manufacturing operational costs;
- A 16% reduction in administrative costs.
The survey also found that best-in-class firms take an average of 3.6 days to close a month - less than half the time it takes "laggard" companies. Interestingly, the best-in-class companies also tend to achieve superior performance in terms of those metrics that are critical to customer service, including:
- 95% manufacturing schedule compliance;
- 96% on-time and complete shipments;
- 97% inventory accuracy.
Standardised ERP needed
"While both profitable growth and customer service are dominant factors impacting ERP strategies, as mid-size companies grow, they must learn to operate in a distributed environment and often experience a proliferation of ERP systems. This may be unavoidable if growth is through acquisition, but can be controlled when growth is organic," said Cindy Jutras, vice president and group director of ERP Research for Aberdeen Group.
Jutras concluded: "Even when confronted with disparate ERP implementations, companies are well-advised to adhere to standardised ERP implementations. Where multiple ERPs have been acquired, they will ultimately be faced with a decision of whether or not to rationalise them. Consolidation efforts have an enormous potential for saving time and money, but there is a price to pay in terms of software and services costs - as well as business disruption. Ultimately those projects which have the dual purpose of reducing costs and standardising business processes will tend to achieve the most success."
The full report has been made available for free download from Aberdeen Group's web site - click here (free registration required).