Independent Study Compares Benefits of ERP Solutions in the Manufacturing and Distribution Industry

DENVER--(BUSINESS WIRE)--Manufacturing and distribution organizations have unique opportunities to improve their operations via ERP software solutions, according to a study issued today by Panorama Consulting Group, an independent ERP consulting firm in Denver. Industries included in the study include consumer products, telecommunications, energy, engineering, construction, transportation, food & beverage, retail, and metal-working organizations.

“The average implementation duration for manufacturing and distribution companies is 19 months, compared to 20 months in other industries. These companies take an average of 4 months to conduct their evaluation and selection process, and an average of 15 months to complete the processes of fully implementing their ERP solutions”

The report reveals that SAP has the leading ERP software market share in the manufacturing and distribution industry, followed by Oracle and Microsoft. The study also shows that Tier II vendors have a 27% share in the manufacturing and distribution ERP market, which is more than the 23% market share these vendors have in other industries.

“The study reveals that large Tier I ERP solutions are not the only viable options for manufacturers and distributors,” says Eric Kimberling, President and Founder of Panorama Consulting Group. “There are plenty of Tier II and industry-focused software vendors that can meet the complex requirements of manufacturing and distribution companies, especially those in the small- to mid-size space.”

The study also includes manufacturing and distribution ERP implementation results. “The average implementation duration for manufacturing and distribution companies is 19 months, compared to 20 months in other industries. These companies take an average of 4 months to conduct their evaluation and selection process, and an average of 15 months to complete the processes of fully implementing their ERP solutions,” says Kimberling. The study also shows that manufacturers and distributors experience an average total cost of ownership of $8.2 million, or 8.6% of annual revenue. Companies spend almost 23% of their total implementation budget on business implementation costs, including third-party consulting fees.

“In today’s evolving business environment, manufacturers and distributors have a great deal of opportunity to leverage ERP to enhance revenue, productivity, and overall effectiveness. ERP solutions can help companies increase operational efficiency, coordinate global supply chains, and modernize their warehouse and logistics functions,” says Kimberling. This study also includes insight into implementation variables and common pitfalls of ERP selection and implementation.

Companies such as Panorama Consulting Group offer independent ERP software selection and implementation expertise, as well as tools that help manufacturers and distributors reduce their total cost of ownership and optimize measurable business results.

To offer further analysis of the study results, Kimberling will present the free webcast, “Tips to Leverage ERP to Improve Your Manufacturing and Distribution Operations” on July 16 at 10:00 am MST. Register for the seminar at http://www.panorama-consulting.com/manufacturingdistributionerpreport.html.

Panorama Consulting Group 2008 ERP Report

The 2008 ERP Report was conducted by Panorama Consulting Group via online polling and was supplemented with a sample survey of respondents. Information was collected from December 2005 to November 2008. The 670 participants represent global organizations that have implemented ERP within the last three years. The full report can be accessed at: http://www.panorama-consulting.com/manufacturingdistributionerpreport.html.

Panorama Consulting Group

Founded in 2005, Panorama Consulting Group is a consulting firm specializing in the enterprise resource planning (ERP) market for companies globally. Independent of affiliation, Panorama helps firms evaluate and select ERP software, manages the implementation of the software, and facilitates all related organizational changes to assure that each of its clients realize the full business benefits of their ERP implementation. More information can be found on their website, http://www.panorama-consulting.com.

2008 ERP Report Part Four – Topline Results

The report was conducted by Panorama Consulting Group via online polling and was supplemented with qualitative data gathered from focus group interviews with a sample of survey respondents. Information was collected from December 2005 – November 2008. The 670 participants represent global manufacturing and distribution organizations that have implemented ERP within the last three years.

Participants were asked to provide quantitative and qualitative responses to questions about their experiences implementing ERP software in their organizations.

The majority of manufacturing and distribution companies adopted Tier I software solutions, but companies in this industry are more likely to consider Tier II options than counterparts in other industries.

Q: Which ERP vendor did you select?

Manufacturing & Distribution		Other Industries
SAP: 35 percent		SAP: 35 percent
Oracle: 24 percent		Oracle: 28 percent
Microsoft: 14 percent		Microsoft: 14 percent
Tier II: 27 percent		Tier II: 23 percent

Manufacturing and Distribution organizations spend an average of $8.2M, or 8.6% of annual revenue, implementing their ERP solutions.

Q: How much did you spend to fully implement your ERP solution?

Manufacturing and Distribution		Other Industries
Total cost: $8,206,648		$8,470,707
Total cost as a percentage of annual revenue: 8.6 percent		10.5 percent

Nearly 97% of manufacturing and distribution companies spend more than planned implementing their ERP solutions.

Q: Where did you come in on your budget at the end of your ERP project?

Under Budget by 5-15%: 3.2 percent
On Budget/ Within 5%: 22.6 percent
Over Budget by 5-15%: 33.3 percent
Over Budget by 15-50%: 24.7 percent
Over Budget by 50-100%: 9.7 percent
Over Budget by 100%: 6.5 percent

Companies in the industry spend 23% of their total implementation budgets on business implementation costs, including 3^rd party consultants.

Q: What percentage of the total cost did you allocate to the different aspects of your ERP implementation?

Technical: 68.2 percent
Business: 22.8 percent
Additional: 9.0 percent

Finance, sales and distribution, and materials management are the three most common ERP modules implemented by manufacturing and distribution companies.

Q: Which ERP modules did you implement in your organization?

Financials: 97.0 percent
Sales & distribution / order processing: 76.1 percent
Materials management: 74.6 percent
Manufacturing / MPS: 58.2 percent
HR / Payroll: 56.7 percent
Advanced planning / supply chain: 52.2 percent
Warehouse management: 52.2 percent

Only 18% of companies in the manufacturing and distribution industry implemented standard “plain vanilla” ERP software.

Q: What was your level of customization?

Manufacturing and Distribution		Other Industries
Vanilla, Limited Customization: 18.3 percent		15.2 percent
Most Vanilla, Some Customization: 47.2 percent		45.0 percent
Heavily Customized: 34.5 percent		39.7 percent