Manufacturing - ERP failures

ERP (Enterprise Resource Planning) systems, whilst seen as essential for todays business, comes with a considerable amount of risk. The statistics on success are alarming. Around 60% of all ERP Implementations do not yield the results expected, budgets are overrun by 25% and even those companies claiming success only report 50% of expected benefits. There are many high profile disputes between purchasers of these systems, the suppliers and their implementing partners with a number ending up in costly legal battles or out of court settlements.

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The Failure Blame Game - 50-65% of all ERP implementations do not yield promised results! ERP Implementation costs exceeding budget up to 25% is the norm! Disruption to company operations can cost millions of dollars in losses! Can Australian Business really afford these failures?

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Many companies have either experienced an ERP implementation, are going through an ERP implementation or are considering implementing the technology. With only 30% of implementations achieving the returns expected, and many more abandoning the attempts due to internal and cost issues, it is time we took a realistic look at how we are going about it.

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The ERP industry has generated a huge gravy train for software houses, their implementation partners and consultants which instead of showing great success in implementing the technology have instead been the source of bitter complaints of misleading advice, misrepresentation and inexperience.

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A significant factor in the disappointment with ERP systems is the failure of organisations to take the opportunity to radically change how the business operates with the ERP technology available to them. ERP opens up a world of technology 'processing solutions' that eliminate the need for many manual processes and controls. To take advantage of these solutions we need to consciously re-engineer these manual processes and eliminate 'cost-adding' activities that provide no value. This article, by Raymond D.

What are the options for a failed or non performing ERP project?. This article describes the key options available.

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Whilst ERP is logical and has been embraced across all industry sectors, the many horror stories of failures and millions of dollars squandered on botched implementations would indicate that there are fundamental problems! Problems with the technology or the approach to the technology. In fact, to take this further, there are many organisations who believe that the entire exercise of integration with ERP has been an expensive waste of money and effort.

Lean manufacturing is a comprehensive term referring to methodologies based on maximising value and minimising waste in the manufacturing process. Lean manufacturing has evolved over time based on common sense and documented by Toyota. The principles have been around in fragmented form but in the last few years has been consolidated into a set of thought processes and called lean.

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ERP (Enterprise Resource Planning) systems and their MRP/MRPII (Manufacturing Resource Planning) predecessors have been around for nearly 30 years. Questions and debate still abound as to the effectiveness of these systems and where to go from here.

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