The many operational challenges that manufacturers are facing today, including rising raw-material costs, energy price hikes and competition from low-cost imports, has them asking: How can we stay competitive under these conditions? 

To be competitive requires creativity, innovation and strategies for bringing brilliant ideas to the market. Yet a large amount of capital and resources remains tied up in a mission-critical part of the business that many mistakenly consider strategic: enterprise resource planning systems. By optimizing their ERP software and costs of managing it, manufacturers can reallocate IT resources toward strategic projects that accelerate growth and profitability. 

Many enterprises overspend on IT due to vendor pressure to migrate or update their systems to the latest version, which may offer little in the way of return on investment — all while their current ERP system is still functioning well and providing everything the business requires. With the hype of artificial intelligence and cloud-based applications, businesses can be misguided into focusing solely on software vendor-influenced investments and innovation. 

Manufacturers would benefit most from focusing on initiatives and emerging technologies that best serve their interests, not the vendor’s. To increase the budget for innovation, IT leaders can turn to strategies that optimize current ERP systems, and expand support options. 

Take software customizations. Many manufacturers rely on them to create key data and process flows. However, they are typically complex and not supported by the software vendors themselves. This creates strain on the budget to acquire additional resources. 

By extending support strategies beyond working with the vendor, manufacturing IT leaders can free up funds and reallocate them toward strategic initiatives such as AI, supply chain digitization and smart factories.

One of the first strategies IT leaders can implement is to extend their ERP systems’ lifespan past the vendors’ set timeline. Many organizations have learned that there is great value in existing systems, including many features that have yet to be utilized. Software vendors are incentivized to extract more fees from their customers by putting them on a treadmill of seemingly endless upgrades and reimplementation in the cloud. They may dangle a few innovations only available to those who take on the heavy lift of an upgrade, but the required cost and time investment often outweigh the total benefits of such an undertaking. 

To enable greater flexibility and enable enterprises to rapidly innovate around the edges of their core system, they must look beyond the confines of their software vendors. Working with alternative support groups can help eliminate the costly domino effect in organizations’ infrastructures, where one system upgrade requires a host of additional updates, resulting in wasted time and resources. Increasing the lifespan of current systems can help IT leaders maximize the value of their ERP systems without unnecessary upgrades.

As manufacturers are well aware, downtime is one of the largest threats to the health of the supply chain ecosystem. With hurdles like rising material costs, skills gap and labor shortages resulting from ongoing hiring and retention challenges and exacerbated by recent labor strikes, downtime is the last problem leaders in this industry need. That's why proper management of critical backend systems can’t be emphasized enough, as these are vulnerable to the very challenges the supply chain industry faces today. 

There are finite resources in every business. Leveraging people, time and money wisely is a strategy that is evergreen. So is optimizing mission-critical enterprise systems, by turning to alternative IT strategy and support partners. 

Manufacturing leaders must optimize, and transform their businesses, and IT, coupled with a competitive, innovative strategy that sits outside of their ERP systems, is the road to overcoming challenges and achieving success.

Michael Cortesio is vice president of manufacturing industry with Rimini Street.