Does Postmodern ERP Actually Provide Value?
Nick Ostdick - July 20, 2017
Today’s manufacturing and supply chain planners and managers are inundated with concepts and strategies purporting to add value to their overall value chain. Whether it’s integrating intelligent planning systems or working to streamline their manufacturing processes from procurement to production, manufacturing companies must seek value in any number of ways in order to remain competitive and agile in an increasingly global marketplace.
One place where manufacturing companies have been comparatively slow in realizing and leveraging value is enterprise resource planning (ERP), or more specifically, adopting a postmodern ERP mindset. Whether it’s because the lack of visibility surrounding these concepts or a failure to fully embrace them as part of lean manufacturing and supply chain management, postmodern ERP is perhaps one of the most least understood or realized element of manufacturing and supply logistics. Not only does postmodern ERP have the potential to transform a company’s manufacturing and supply logistics, but it’s a key element in cutting the complexity of global supply chain management and leveraging enhanced operational functionality.
But how does this add value? How does postmodern ERP actually function as part of a manufacturing company’s logistics strategy to increase the efficacy and efficiency of their planning and production platforms? The answers may be somewhat surprising, but they may also be a critical driver in how manufacturing companies can strengthen their supply network and differentiate themselves from their competitors.
Understanding postmodern ERP
In order to truly understand postmodern ERP and its value, we must first understand a little history of postmodern ERP and its evolution into its current state. The introduction of computer technology in the late 1960's and 1970's brought a fundamental shift to supply chain management. Activities that were once done manually could now be done by machine, and enthusiasm for automation swept the manufacturing industry. As software solutions became more readily available over the next two decades, supply chain managers increasingly adopted what's now known as the "best of breed approach."
Even casual software users today can probably identify the primary drawback of the "best of breed" method: it fails to account for the need to integrate systems. Businesses that used the best of breed approach found themselves with a hodgepodge of software solutions that did little or nothing to support the overall business strategy.
As a response to these shortcomings, the 1990's saw a technological swing in the opposite direction: the rise of the monolithic ERP, also known as the modern ERP. The modern ERP model used one ERP vendor solution, a "suite of suites" for all business applications. There was little to no use or integration of outside software, and IT held tight control over all software systems and solutions.
But the new phase of ERP isn't a complete return to "best of breed." Instead, it's a hybrid of the modern ERP and the "best of breed" approach, taking the best parts of each. Postmodern ERP has recently emerged as an ideal strategy, blending the specialization available through "best of breed" with the consistency and strategic capacity of modern ERP.
Postmodern ERP is like "best of both." This model uses a core ERP solution, bringing operation efficiency and business standardization. The core ERP is supplemented and complemented by specialized solutions, which are usually accessed either through the cloud or via business process outsourcers that can add value through innovation, differentiation and user-centered design.
What value does postmodern ERP offer?
Now that we have a solid, working understanding of postmodern ERP, we can now investigate the key elements that postmodern ERP actually provides manufacturing companies to foster a more creative, agile, and lean manufacturing and supply chain.
Ability to plan for the full life-cycle: A hybrid approach to ERP allows IT to plan ahead, creating timelines and key milestones grounded in capability needs. Solutions can be regularly evaluated and updated or replaced less disruptively, and as needed.
Improved usability and adoption: Most casual users prefer an app-like interface and cloud-based services, which postmodern ERP can easily offer. This leads to increased user adoption and satisfaction, smoothing daily business processes.
More robust data integration: Because the postmodern ERP brings together a wide variety of connected technologies, data and processes are much more fully integrated in the end-to-end system. This offers incredible new potential for S&OP and S&OE.
Greater overall flexibility and agility: Adopting cloud-based specialist applications allows organizations to leverage upgrades provided by vendors, which often give users more ability to configure changes as they desire.
Potential to extend beyond the enterprise: Postmodern ERP creates a value chain that can interact with systems outside the enterprise. In the era of Industry 4.0, this is a particularly attractive feature because it means the supply chain can essentially interact with suppliers and customers, via specialized applications.
The verdict on postmodern ERP?
As you can see, yes, it’s pretty safe to say postmodern ERP does in fact add value to how companies create, administer, and oversee their manufacturing and supply pipelines. What’s perhaps most beneficial and influential about postmodern ERP is its ability to evolve and mature alongside the manufacturing industry. Postmodern ERP’s capacity for change and growth in alignment with a burgeoning global manufacturing network offers considerable advantages as a supply chain management strategy. Postmodern ERP’s capacity for forging connections between once disparate parts of the planning and production process cannot be understated in an increasingly connected industry.