I recently met a truly, visionary venture capitalist (VC), who convinced me that companies not already on the cloud are at risk of failure. At first I was caught off-guard, but as this man talked about the future needs for business agility and responsiveness, I realized that he was right. The cloud is an affordable way to understand your business and, with the right system software, your flexibility will be greatly increased.
As many of you know, I work with a lot of manufacturing firms. Many of them have older, network-based systems, not ERP systems in the cloud. And coming from a finance and operations perspective, not many of those companies are ready to embrace any kind of major change — even if they are anxious about the future.
So I had someone do a little research to help me understand this gap of “needing” to be on the cloud and the anxiety of the costs associated with that change. I learned that the stress is not about being in the cloud – or being digital. It is really about changing to an ERP system, which historically has not been effective for these manufacturing firms.
In the research, there were many opinions on manufacturing trends, coming from manufacturers, consultants, trade publications, and industry experts. They all agreed that the digitization of data and its accessibility through software is a must-have. For example, in a 2018 trend forecast, PwC’s research showed that “72 percent of manufacturing companies surveyed … are dramatically increasing their level of digitization and expect to be able to be ranked as digitally advanced by 2020, compared with just 33 percent today.”
From my own experience in the Small to Medium sized Businesses (SMBs) sector, these companies are definitely following these trends. They are digitizing their information, but they are doing it for smaller, department-based data sets. Every company has multiple spreadsheets, databases, department-specific cloud solutions, and so forth. And we know that they are more and more comfortable using networked drives, cloud content management systems, or cloud-based solutions.
That’s the good news for my VC friend: SMBs have digitized data on shared networks. What they’re missing is the ability to have efficiently rolled-up reports, and the ability to readily drill down and learn from those report details. This is what could lead to their demise. Their monthly consolidation takes an immense about of time, integrating data from multiple sources with varied formats. Then they need more time to reconcile anything that doesn’t make sense.
That makes monthly closes far too long and drawn out. It also allows less time for the most important part of manufacturing -- the analysis of the efficiencies and the inefficiencies.
The solution for the SMBs is an ERP (Enterprise Resource Planning) system. However, they don’t even know what this is. In our own research over the summer, my company surveyed 300 business and operational executives, not one of them responded positively to an ERP system.
That’s what I learned. We need to educate our colleagues on the value of an ERP system and let them know that there are solutions that:
• are designed for their specific industry needs
• have decades of successful experience as ERP solutions
• have options for networked or cloud implementations
• can provide the type of personal support they need
• are affordable with minimum costs for customization
Ask your colleagues, industry experts, and trade organizations about ERPs. Check out articles and social media postings about the future of manufacturing SMBs. You might be surprised at what is out there and how it might help you be more efficient and responsive to your customers. Slowly and consistently learn and use that knowledge to improve your business. That will put a whole new meaning and excitement behind your business being “sustainable”.