Across the globe, CEOs are very optimistic about the momentum of the global economy. This is driving investment in jobs and manufacturing. To support anticipated growth, manufacturers are re-evaluating how they run their operations and seeking to streamline their business processes.
This is where cloud MRP systems help find the next opportunities for improving efficiency and opening up opportunities for growth.
Of particular interest to both CEOs and operational leaders, is to reassess legacy MRP systems. Many of these systems have become outdated as they failed to leverage today’s internet-based technologies.
The Overwhelming Theme of the Current Century
One of the most popular themes of the century is the migration of business processes to the cloud… and the trend with MRP systems is no different. Cloud MRP is the modern-day choice.
In a recent Bloomberg interview, SAP CEO Bill McDermott stressed that companies are strategically looking “to interface with customers on any channel and any device.” Legacy MRP systems do not possess this flexibility. Cloud MRP does.
What makes cloud-based software so much more desirable than traditional systems is that they reside on the internet. Companies that program internet applications have long-since mastered the ability to display their program applications across multiple browsers, multiple browsers versions, various tablet models and even mobile phones. This mastery is what gives users of these programs the ultimate freedom to view their information through a multitude of channels and through any device… a need that McDermott clearly stated.
It Comes as No Surprise
It therefore should come as no surprise to anyone that companies are saying goodbye to MRP systems that don’t run on the internet and saying hello to cloud MRP systems. However, flexibility is not the only driving justification for these migrations.
With cloud-based MRP, there is no project manager required to install the application. That’s because there’s nothing to install and nothing to download. Getting started with a cloud MRP solution is very quick when compared to legacy systems.
An additional advantage is that cloud-based systems are always up-to-date. A growing concern for all software vendors is the ever-changing regulations of each country’s accounting regulations and data privacy regulations. In the same Bloomberg interview, McDermott points out that companies need to protect the privacy of their consumers. An extension of that is the need to also protect the privacy of your employee data and supplier data.
Keeping Up with Changing Regulations
As an example, there is a new regulation in the EU, requiring companies to be compliant with the General Data Protection Regulation (GDPR) by May 25, 2018. For companies using a cloud-based MRP system, gaining compliance is a lot easier than with traditional systems. Your MRP provider updates the cloud application and all of their cloud MRP clients become compliant at the same time. With some traditional systems, you may have to wait in a long line of clients for a software representative to show up at your location to upgrade your program or you may have to endure a very long program download to perform your own update.
When you think of the sheer number of regulations that change every year, the more countries you serve, the more complicated it gets. It can begin to overwhelm both your legal resources and your internal IT resources.
Keeping Up with Growth
CEOs are optimistic for the outlook of 2018 which means that manufacturers are anticipating growth. The Latest Report on Business® from the Institute of Supply Management which covers the state of manufacturing in the U.S., shows the Purchasing Managers’ Index (PMI) in January 2018 at 59.1%. A reading above 50.0% indicates expansion in the manufacturing sector.
2018 will be the year that some manufacturers outgrow their single-location production plants and take on the complexity of managing multiple facilities. With cloud MRP, these companies can have real-time visibility into production planning, inventory control, procurement and CRM for all locations.
Employees within these functions can have “virtually anywhere” access to purchase order activities, delivery tracking, and up-to-date financials. Those who have strategic suppliers under a vendor managed inventory (VMI) program can provide these partners with online access to the real-time status of the inventory they provide.
Integrations that Serve Smaller Manufacturers
For smaller companies who often track their financials with popular accounting programs like QuickBooks, some cloud MRP systems allow integration with other cloud-based applications. For smaller companies, this means gaining the advantages of cloud MRP without mandating a complete replacement of their financial systems.
Software vendors have learned that they must migrate their applications to the cloud in order to be competitive. Many vendors that started on the cloud within the past few years have stolen substantial market share from traditional vendors. These traditional vendors are now struggling to catch up.
The overwhelming trend to move to the cloud has changed the way companies manage production, manage their employees, and manage their spend. With CEOs feeling optimistic and willing to make investments in the future of manufacturing, and with the PMI index indicating continued growth in U.S. manufacturing, the choice to move to cloud MRP in the coming year is something growing manufacturers are seriously considering.