Industry 4.0 enabled Hybrid Enterprise Resource Planning (ERP) Systems

Origins of ERP systems can be traced back to the 1940s when early calculation machines were used for business purposes. The Enterprise Resource Planning (ERP) system was introduced in the early 1960s. It was a joint effort by J.I. Case, the manufacturer of tractors and other construction machinery, and their IT partner IBM. Following this, Materials Requirement Planning (MRP) software was created, which helped in the planning of raw materials required for manufacturing, purchasing and delivery. The term ERP got popular by the 1990s, which included more operations that helped in the industrial productions. With advancements in technology the term has gained much popularity among both large and small enterprises.

ERP is usually referred to as the software used by organisations to manage all business processes such as customer relationship management (CRM), sales management, product management, inventory and warehouse management and much more, in a single interface. Though most of the time ERP software is associated with large enterprises, the benefits small and medium sized businesses get through this software solutions are significant as well. Nowadays, ERP software which suits Small and Medium Sized (SMEs) are encouraged and developed as these SMEs play an inevitable role in economic growth. In short, ERP software collects, stores, manages and interprets data from business activities. It provides an updated overview of core business processes using a common database. A holistic view of the entire processes of the organisation can be seen, which facilitates error free transactions and production, thereby enhancing an organisation’s efficiency.

Industry 4.0 & ERP systems

We are in a race towards the future realm of Industry 4.0 enabled manufacturing industries. The fourth Industrial Revolution has already made tremendous transformation in various fields. More than 50% of the manufacturers agree that this fourth industrial revolution will have a huge impact on the industry. Lean and Industry 4.0 software solutions are inevitable, while evolving towards a digitised world. ERP being the core function of an industry, when collaborated with Industry 4.0 and lean principles will fully integrate with manufacturing systems. Industry 4.0 enabled ERP systems are more flexible, transparent, and scalable.  For manufacturers, growth in an Industry 4.0 environment will be essentially linked with a business’ ERP system. Businesses will be able to place themselves in a better position to meet the fast-paced and connected requirements of Industry 4.0.

What is cloud ERP?

Today’s environment cannot function without cloud support as everyone is moving towards a fully digitised world. Cloud ERP systems are a smarter choice. It provides you greater flexibility and secure access to real time data access from anywhere. It offers easy scalability and is budget friendly. For a SME, it may be a budgetary concern, however, cloud ERPs are specifically designed to meet the needs of SMEs. Research shows that the enterprises that switch to digitised cloud platforms tend to show high production and return on investment rates. Modern cloud enabled ERP systems have immense capability to achieve business excellence. With a new hybrid, industry 4.0 enabled cloud ERP you are provided with:

• better performance
• higher user productivity
• higher process productivity
• better integration in company
• lower IT costs

Is your ERP system Industry 4.0 compatible? You might be using the ERP system for years and might wonder what is the need for a hybrid ERP system. There might be some reasons for you to think of a change.

1. Your current ERP system might be time consuming, resulting in high maintenance cost and no time for innovation.
2. You cannot trace an improvement in efficiency, in terms of labor and production.
3. Your current ERP system is unable to take advantage of the changing market environment.
4. There are high chances for data security breaches. Customers always value the information they provide and trust people who protect and value the information.
5. Lack of real time information, all customers and vendors look for faster, transparent real – time connectivity.
6. The basic goal of ERP systems to improve output is not met.

If you have said ‘yes’ to anyone of the above mentioned points, or been partially stuck while reading them, it is high time that you change to a hybrid ERP system.

The next step is what to consider when upgrading or replacing your existing system. Once you think of changing your ERP system you will be then confronted with a lot of options and opinions. To trace what is best for you might seem like a tedious task. If planned and thought properly you can arrive at a better conclusion, suitable for your organisation. Consider the following points when choosing the right software for your organisation.

• Define and document your current status – jotting down your current status will help you plan for your future and the ways to improve.
• Check whether the new software implementation will align with your existing infrastructure.
• Budget planning - understand the overall cost for implementation. Check with multiple software providers and analyse the quotations.
• Estimate and measure business benefits that you might achieve once you implement a new system.
• Always keep your options open.
• Nothing wrong in getting expert advise, it can be from a professional advisor, a colleague or family and friends.

Once you have figured out your need, the next step is implementation. For successful implementation, you have to analyse certain aspects, both internal and external. Implementing challenges varies according to different factors involved.

• Selecting a software – select one which meets all your organisational requirements. Investing in an ERP system is the most complex and innovative decision you will ever make, therefore make it wisely. Always be open to choices. Rework and revise your decision before you jump into any conclusions.
• Implementation time – Implementation is a step by step process. In each stage of implementation, get your team to continuously evaluate the newly implemented system for better efficiency.
• Poor data integration – sometimes your old data might not fit into the new interface, but with proper planning you can overcome this as well. You need to have an organised data migration plan with phased testing.
• Technical issues – if you are not adopting a cloud enabled system, chances are high that you might have to invest again for your existing system in terms of revising hardware and servers. If not, it can affect the overall expected improvement of your organisation.
• Adapt to change – For any organisation as a whole, adapting a particular change will be challenging. To ensure successful implementation make sure all the employees are aware of the change and well trained to equip themselves, as resistance to change can put your business at risk.
• Employee retention - Some might think of leaving the organisation as they themselves feel inadequate to work in a more digitised environment. With proper training and motivation you can get hold of the existing employees and enable them.

Once you have implemented your new hybrid ERP system fueled by industry 4.0, you will see a shift in your business processes. Cloud based ERP systems enables SMEs to adapt to the changes and drives them to achieve the goal of becoming ‘Smart Factories’. Don’t be left out in this digital revolution of future factories. Think one step ahead and embrace the future of industries.
Make ‘Maximus ERP’ the partner of choice for your business success. Get advise from our Industry 4.0 and lean experts.