Thursday, February 24, 2011

IFS study reveals ERP fails to keep pace with mixed-mode manufacturing

Manufacturing is getting more complex, a study from enterprise software vendor IFS North America reveals. In the meantime, enterprise software like enterprise resources planning (ERP) is not adequately addressing that complexity, leaving manufacturers with disjointed and inadequate technology and reducing enterprise agility. 

More than 80 percent of respondents to a study of executives of mid- to large-sized manufacturing companies said their businesses are running multiple business models or manufacturing modes, but only 15 percent indicated their enterprise software adequately handles all of the different modes they are engaged in.

Of the 83 percent of respondents running multiple manufacturing modes, 76 percent are making products to order, 55 percent are making products to stock, and 34 percent are assembling to order. Respondents said that enterprise software like ERP was able to handle relatively simple modes like make to stock better than more complex, engineering-intensive modes like engineer-to-order. The study was based on a survey conducted in December of 2010 among more than 200 executives at manufacturing companies with more than $100 million in revenue.

Study data suggests that the ability to handle different modes is of critical importance given that manufacturers are adding modes of operation on a regular basis, as evidenced by the fact that 74 percent of respondents said they had added modes in the last five years. More than half – 54 percent – had added modes at least twice in that time, and 28 percent had added modes three or more times. Respondents said that acquisitions, new products, customer demand and market forces were all factors driving them to expand their capabilities into new manufacturing modes.

“The fact that a manufacturer’s business model is no longer static – and instead changes on a fairly regular basis – has undeniable impact on what companies expect from a company like IFS,” IFS North America President and CEO Cindy Jaudon said. “Constant change of this magnitude can be extremely disruptive to a company. We anticipated this market change many years ago and continue to develop IFS Applications to be the market leader in serving companies that operate in complex and mixed-mode environments. This built-in agility allows the application to be quickly reconfigured and expanded to accommodate the changing needs of the market.”

The study, which examines not only the increasing trend towards mixed-mode manufacturing but the green supply chain issue, will become publically available in February at http://download.ifsworld.com - Industry Reports & Studies category. For an advance copy, contact IFS North America at 1-888-437-4968.

About IFS

IFS is a public company (OMX STO: IFS) founded in 1983 that develops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS focuses on industries where any of four core processes are strategic: service & asset management, manufacturing, supply chain and projects. The company has 2,000 customers and is present in more than 50 countries with 2,700 employees in total.

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Kristy Mills

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