Manufacturing today requires flexibility and the ability to adapt quickly to change. While standardizing systems across business units provides some value, there are also large costs associated with the maintenance and implementation of these huge systems. As these systems grow in size, so does the cost. They become less flexible, slower to upgrade, and inhibit the ability to compete. Like an aging boxer, time is not their friend.
The addition of two-tier ERP strategies gives manufacturers the flexibility to reach business opportunities that less-flexible systems can’t. Compounding the difficulty in building competitive advantage through an ERP system is the homogeneous nature of global ERP systems. When everyone is operating the same solution, they have the same capabilities, and no competitive advantage is gained. Any move is easily anticipated and defended. The result is a draw. Manufacturers often find that a single, global system can’t address their specific, local, competitive needs and can be too slow to implement. After lost time waiting, the end result is a tremendous amount of compromise for a less-than-optimal system that can’t deliver the competitive advantage they need today.
The following are the best practices of complex manufacturers we’ve identified using two-tier ERP strategies to knock out their competition.
1. Go to the body—make local factories strategic in support of global value chains.
More often than not, competitions are won by executing rather simple actions consistently, over and over. In boxing, that means working the opponent’s body. In manufacturing, that means operating with extreme efficiency at the local level. Two-Tier ERP systems provide the very specific localized data you need to operate in real time that global systems can’t or don’t accommodate. This information is what enables you to innovate at the local process level and adjust your product strategy globally.
2. Eliminate distractions—conquer bad complexity.
A boxer that takes his eyes off of his opponent is asking for a very short fight. Manufacturing is no different. Focusing on too many things or the wrong things leads to inefficiency. Simplifying every phase of the value chain is the key to rooting out unnecessary complexity and becoming more efficient. In a recent study, IDC Manufacturing Insights identified the following as the top three impediments to getting more value from existing ERP systems:
- 23.3 % – Existing ERP systems are too complex to integrate seamlessly with other existing applications.
- 20.1 % – Financial ERP and operational capabilities are weak or nonexistent.
- 18.4 % – Too complicated and expensive to upgrade.
What’s behind these statistics? In many instances, the needs of different departments, divisions and country subsidiaries are outpacing the centralized ERP systems.
Want the other two winning strategies? Read our e-book, “Two-Tier ERP Strategy: ERP with a 1-2 Punch. (Free download, NO REGISTRATION REQUIRED)