White Paper Reveals Inadequate Tools and Systems Hinder Innovation-led Strategies

Mumbai: Product innovation and added value services are the new mantra for competition and growth, says IDC Manufacturing Insights’ latest white paper, In Pursuit of Operational Excellence: Accelerating Business Change Through Next Generation ERP. The paper is sponsored by Infor and it infers that while cost containment remains important in this low growth economy, it is taking a back seat to initiatives which will help manufacturers differentiate their offerings and drive competitiveness.

The global survey reveals that innovation-led business strategies are currently hampered by inadequate business processes and IT systems, which are crucial when it comes to facilitating the working practices and communications necessary to develop new offerings quickly, collaboratively and cost effectively. 60 percent of manufacturers said that their ERP falls short of optimising the decision-making necessary for operational excellence. Top of manufacturers’ wish lists for improved systems are social networking-style features within ERP to facilitate timely, accurate, informed decisions.

Manufacturer’s are trying balancing growth strategies along with cost cutting. The balance is weighted in favour of sustained growth in APAC, Russia, the Middle East, and the Americas, in Western Europe, particularly Germany, Italy, Spain and France. They focusing on cost control, indicating the deepening Eurozone crisis. UK is however bucking the regional trend, with the vast majority of UK manufacturers investing in sustained growth over cost cutting.

The white paper highlights that product is king when it comes to growth, as innovation (63 percent) and added value services to products (58 percent) rank higher than expansion into emerging markets (42 percent), with product innovation significantly higher in the automotive (78 percent) and high-tech electronics (75 percent) industries.

Cost containment strategies across the board have moved out of the plant and into the supply chain. Optimizing production is a cost priority for only 11 percent of manufacturers, indicating that savings have been exhausted, while reducing the number of suppliers (77 percent) and shortening the supply chain (55 percent) rank highest.

The white paper also focuses on the criteria for innovation, and respondents point to faster business processes (85 percent), access to real-time information (60 percent) and improved collaboration (60 percent) as critical in this quest. However, 60 percent of manufacturers said that their systems fail to support the fast, informed decision-making necessary to innovate, with 35 percent heralding mobile and social networking as crucial to transforming the way manufacturers work.

In next three years, the companies said that the speed is a critical component of manufacturers’ growth strategies. Reacting faster to changes demanded by the business, particularly in aerospace (71 percent) and high-tech electronics (78 percent), and streamlining processes to achieve operational excellence (72 percent) top manufacturers’ wish lists. More detailed insight (58 percent) and improved collaboration (42 percent) also dominate short to medium term ERP needs.

“With a large proportion of manufacturing costs having already been stripped in the last three years, manufacturers must now really embrace product and process innovation as a means to compete,” comments Andrew Kinder, director, product marketing, Infor.