Is Enterprise Resource Planning (ERP) Still Relevant in 2022?
Manufacturers have used materials requirements planning software of some sort since the 1960s. Yet the global supply chain today is a very different order of beast. Have aerospace manufacturers outgrown today’s ERP?
It’s a question being asked lately by enterprises, software manufacturers, and cloud service providers — and all with good reason: In the race to stay competitive while meeting vastly changing needs, are the digital tools and ERP services that manufacturers implement to manage their resources and parts networks, failing them? Perhaps they’re too rigid and inflexible. Maybe the people expected to implement them aren’t being properly trained. Maybe their software was built for a world a decade older than their own, as this article posits. (Granted, the most recent of the six ERP cases listed in that 2020 article is 2006.)
There’s a new phrase some are kicking around: the “ERP curse.” It’s the idea that enterprise resource planning software has become monolithic, overly dependent upon middleware, and outmoded in modern enterprises. Countering that hypothesis from newcomers eager to disrupt the market is a curious counter-assertion by established ERP players: If you’re finding ERP to be too rigid and inflexible, they say, you’re using it wrong. What’s more, they add, ERP was designed from the beginning not just to accommodate but to drive business modernization. So if a business isn’t modernizing, perhaps it isn’t adopting today’s best practices, or utilizing the systems that make more digitally transformed organizations more efficient and agile. “Email and fax,” asserts this Forbes article, “don’t cut it.”
So which is it? One side would have you thinking ERP is a stick in the mud, while the other argues it’s the ERP-using businesses themselves that are resisting change. With aerospace continuing to be one of the world’s principal consumers of ERP services, is there a chance both sides of this argument are missing the real story?
Better Best Practices
We spoke with CTND Chief Revenue Officer Robert Aronson, a veteran of Epicor and currently a provider of Epicor ERP services for, among others, aerospace engineers. After several decades of ERP’s undeniable success, we asked Aronson, are these naysayers on opposite poles blind to what engineers and manufacturers truly want from an ERP service or application?
“We take our customers through a process,” Aronson responded. “Many companies like us will ask the customer, ‘What do you want?’ They don’t know what they want. They’ve been doing this, whatever this is, the same way for the last twenty years. So asking that question is kind of useless.”
Epicor ERP, he asserted, is geared to be relevant today — and to continue being relevant tomorrow — when and only when it is paired with industry best practices. CTND introduces these processes to clients first.
“We say, ‘Will this work for you?’” said Aronson. “‘Tell me why it won’t. And defend what you’re doing against what the best practices [are].’ If you follow a best practice, versus whatever you might be doing, then you’re going to experience the benefit of ERP.”
Best practices evolve by nature. That’s the key, Aronson explained: If an organization is willing to adopt best practices, then a proper ERP system should ensure that they evolve along with those best practices. “But [if you’re] just asking, ‘What do you do?’ and automating the bad processes you’ve been doing for the last twenty years, then ERP is not relevant.”
So here’s the surprise: No, ERP truly isn’t relevant, either in 2022 or 1922, if your manufacturing organization is welded to its own, time-tested internal processes — as though they were the intellectual property at the heart of their companies. But if your business is agile enough to be adaptable, especially when global events like a pandemic shake your supply chain to its foundations, then ERP will be as relevant for you in 2122 as it is today.
The 12-month Transformation Plan
Let’s assume an aerospace manufacturer or parts provider has to make adaptations of its own, to become as agile as it needs to be to make ERP truly viable and functional. How long should such a metamorphosis expect to take? Years?
“No,” responded Aronson. “Typically, six to twelve months. We’ve done it less. Sometimes it might take longer because of extenuating circumstances. But we tell people, six to twelve months is the timeframe for us to come in and revamp your business with good industry best practices for aerospace and defense.”
Typically, he explained, a manufacturer of something as simple and commonplace as L-brackets will find itself earning significantly greater margins by selling those L-brackets to the Defense Dept. than to, say, a consumer hardware store. The reason every L-bracket manufacturer in the nation doesn’t beat down the DoD’s doors, is because of the multitude of controls and oversight that come with being a defense contractor. That’s why ERP with best practices is so essential, Aronson told us: It gives a manufacturer the institutional framework it needs to do business at this very high level.
Can CTND come into such a manufacturing firm with a 12-month growth plan, including a reapportionment of its resources, and the promise that it can change that firm’s L-bracket business from one that deals with Acme Hardware to one that deals with the Pentagon? And can CTND accomplish this without really making too much of the ERP part of the package?
“In our process that we take our customer through, ERP doesn’t come in,” Aronson said to our surprise. With the aid of business flow diagrams, he told us, CTND determines how a client conducts its engineering processes, how and when it makes purchases, and when and where each dependent operation plays its role.
“At the end of the day,” he continued, “there is a slight chance that we could reconfigure their current system to address better business processes. But more often than not, they’re running either nothing or some old version that can’t be adapted. So they do need to make an investment in technology.”
The answer to the main question, then — whether ERP is still relevant — may be a bit more nuanced than you may have expected: If you notice the ERP part at all, then it’s not doing the job it’s supposed to be doing. Yes, ERP is relevant. . . if you’re not asking the question in the first place.
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