ERP systems in manufacturing can suffer from organisational conflicts in implementation and fail to deliver production benefits.
There are no scarier words for a production manager in a manufacturing plant than when the CFO says “I just bought you a new ERP system to help with your production operations”. Also, according to Gartner Research, up to 75 per cent of ERP implementations fail to meet their original objectives of which 17 per cent are outright failures. [‘ERP Implementation: To Avoid Project Failure, Assess the Impact of Change Before Starting Configuration’, Gartner Research report.
The premise of implementing ERP systems is that it will provide a single system which will meet all of the information technology requirements of an organisation provided that the organisation is willing to reengineer its operations to be compatible with the methods used by the ERP system.
Most ERP systems are sold on the basis that, by adopting the methodology embodied in the ERP system, the organisation will dramatically improve its operating efficiency and thus justify the cost of implementing the ERP system.
A fundamental premise of most ERP implementations is that the organisation will change its operations to meet the requirements of the ERP system, which is where the fatal flaw often lies.
While accounting follows standard practices across a wide range of manufacturing organisations, their products, the methods used in production, and the organisational processes they use vary widely from one manufacturing organisation to another, as these form the basis of their competitive differentiation.
As a result most manufacturing ERP implementations are successful in accounting/finance but often fail when it comes to integrating existing manufacturing processes.
www.KnarrTek.com has produced a new white paper report by Peter and Eric Green ‘Organisational Conflicts in Implementing a Manufacturing ERP Systems’ that can be downloaded from their website.