How midmarket manufacturers should approach cloud-based ERP

The benefits of cloud computing to a business – easy accessibility, more robust data security, scalability, rapid deployment, and more – have been clear to many people for at least a decade now. However, some industries are far less mature when it comes to the cloud than others – manufacturing is one of those.

Because many midsized manufacturers started out as factories or workshops, they operate traditionally and have been slower to embrace newer technologies. There’s a thought process that goes, ‘Why on earth would I change when my on-premise solution works perfectly for my needs?’ And some might be even more reluctant to embrace technology and not use an ERP solution at all.

That’s understandable in some ways, but it’s also misguided. The world is changing, and even midsized manufacturers that operate traditionally can benefit from cloud ERP. For those thinking of taking a leap of faith, this is how they should go about it.

ERP and midsized manufacturers

There is a perception that Enterprise Resource Planning (ERP) is a technology most suited to larger organisations. That’s a myth. There is no reason whatsoever why businesses of any size cannot use and benefit from ERP.

That’s especially true of manufacturing companies. Who wouldn’t want greater transparency and insight, improved productivity, better customer service, reduced costs, and more collaboration? But thousands and thousands of smaller manufacturers rely on manual processes or muddle through with spreadsheets.

They likely recognise the need to centralise and streamline business processes but don’t have the resources or expertise to go about it. This is where ERP can make a real difference, and ERP in the cloud is even more so.

Embracing the cloud

The right cloud ERP solution for a midsized manufacturer should facilitate production planning strategies. These strategies are a series of concepts focused on how the supply chain works—do you procure or make-to-stock, do you make-to-order, or even engineer-to-order? Good cloud ERP can combine those different procurement methods, drive the customers, and help them make decisions about their stock management against those strategies.

Stock management is also incredibly important for midmarket manufacturers. When they get this wrong, they can experience shortages that can prevent them from delivering on time or have far too much stock that takes up valuable warehouse space. Furthermore, a surplus of stock also affects cash flow, which is often a challenge for midmarket businesses.

Another problem that cloud ERP helps to address is knowledge-sharing and collaboration. It’s common in smaller manufacturers for individuals to carry critical information on their laptops or, even worse, in their heads. Suppose they go away for a day or two. In that case, the business struggles to operate as no one is certain how the goods should be dispatched, what a particular customer’s preferences might be and details around any bespoke pricing.

In this case, the cloud ERP solution acts as an operational blueprint, detailing precisely everything anyone would need to know to make the business function effectively.

Getting started

Regarding best practices when implementing cloud ERP, there are several elements to consider. The first thing they should ask the vendor is about the cloud quality because there are as many different clouds as there are vendors.

AWS is the market leader, offering all the benefits of AWS innovation, infrastructure knowledge, scalability, and best practices that can be passed on to customers. There are other options too – Azure, GCP, and Oracle all provide high levels of quality and are worthy of consideration.

Potential users should always work through a list of questions with the provider. What’s the quality of the cloud? How will migration work, and how best to handle the legacy systems? How do you transition from your old system to the new system? What data do you want to retrieve, and for what purpose? The latter should always be the data that is absolutely core to the business – employees, means of production, IP (how products are made, who are your suppliers and customers) and all financial data. They should also look beyond the infrastructure provider and look at cloud operations policies: backup policy, DR/BCP policies, security measures, SLAs, and more.

Manufacturers should then use the standard product as much as possible and not look at customising it. With a cloud subscription, you benefit from the value that comes with the vendor making integrative and incremental improvements and adding new features and functionality. If you have a customised version, that’s different. It won’t evolve in the same way, could run into future compatibility issues, and will slow you down in adopting new features.

Finally, change management is one of the most crucial elements to consider. Rolling out any new system is hard. People need to get used to it, and the only way it can work is if the management team shows it believes in the system, leading the way as the first users. If not, the rollout is much easier to fail.

Cloud ERP can be transformative for a midsized manufacturer, future-proofing the organisation not just now but for years ahead. Not taking advantage of cloud ERP could be the biggest misstep the company makes.

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Benoit has spent his entire career working in ERP and joined Forterro in 2011. He has worked in sales and customer success, but has moved into product management and is now driving cloud products at Forterro. He defines the cloud strategy, creates that roadmap, and brings to life how Forterro thinks about unified cloud.

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