European manufacturing sector to be saturated by ERP products and services by 2003

Citation

(2001), "European manufacturing sector to be saturated by ERP products and services by 2003", Assembly Automation, Vol. 21 No. 1. https://doi.org/10.1108/aa.2001.03321aab.010

European manufacturing sector to be saturated by ERP products and services by 2003

European manufacturing sector to be saturated by ERP products and services by 2003

Keyword: Manufacturing

The manufacturing sector is one of the largest and fastest growing markets for hardware, software and IT services. Datamonitor's new report, The Future of IT in European Manufacturing provides a strategic analysis of all areas of European industrial technology, including process control hardware and software and higher level and enterprise-wide systems to 2003.

Key findings to emerge from the report reveal:

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  Manufacturing ERP market to be saturated by integration of SCM functionality will provide opportunities to entrenched ERP suppliers.

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  Post-ERP development centers on improving the supply chain.

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  Manufacturing ERP market to be saturated by integration of SCM functionality will provide opportunities to entrenched ERP suppliers.

Datamonitor forecasts that growth in ERP spending to 2003, will be more modest than in previous years, though it will remain relatively strong against the automation market in general (see Table I). Despite this, Datamonitor predicts that by 2003, the manufacturing sector is likely to be saturated with ERP products and systems. Vendors have been seeking out new markets for their products and have attempted to enter such markets as financial services, retail and the utilities. This is not likely to leave the manufacturing sector with a shortage of vendors, as the manufacturing sector's reliance on the effective management of physical components makes it the most obvious market for ERP solutions and this is not likely to change. It does mean, however, that vendors may look for new kinds of manufacturers to sell their products and services in line with their new strategy. Such markets are likely to include the mid-market firms with around 250 employees.

Table I ERP spend by European manufacturers, 1997-2003

Post-ERP development centers on improving the supply chain

The notion that ERP would be a universal panacea has quickly been dismissed. The major vendors keen to show flexibility and innovation have long-since accepted claims that ERP solutions were too costly, too generic and too time consuming to implement. There remains, however, a subtler problem. Somewhere during the transition from MRP to ERP, the industry has lost sight of the original focus of the integrated manufacturing solution. ERP is no longer a planning solution in anything but name. Several different transactions and functions are completed by the ERP systems, but planning no longer lies at the heart of these.

Certain companies, such as I2 and Manugistics, came to realize that they could produce software that would actually use the information provided by ERP systems and create complex planning schedules from it. This software, christened APS (Advanced Planning and Scheduling) lies at the heart of the new supply chain movement. The supply chain managing market has come to understand that ERP is just the beginning of a process that can ultimately automate all forms of communication and business processes that facilitate the flow of information along the supply chain (see Figure 2).

Figure 2 The links between SCM and ERP

Supply chain management, in many ways like ERP, can be taken to include differing forms of software such as APS, warehouse management/inventory control, EDI, B2B eCommerce and logistics management. According to Datamonitor, there is no doubt that the next development within this market will be the addition of certain SCM features to systems, offered by the entrenched ERP vendors. This can be done by acquisition, such as Peoplesoft's purchase of Red Pepper, or through internal development, such as SAP's APO.

Datamonitor's industrial consultant, Martin Atherton commented, "ERP vendors. while still experiencing healthy business growth, have seen a possible chance to capture the dizzy rates of growth experienced in the early to mid-1990s. The question that is key to the argument, is whether the market can stay distinct from ERP and whether there will be enough space for the independent SCM players".