Entrepreneurship has long been the foundation of a thriving economy. In the entrepreneurial tradition, people have brought visionary ideas to life and innovative new products to market through careful planning, hard work, perseverance, and smart organizational, management and marketing skills. Using this time-honored methodology, many manufacturers have successfully grown larger, and a select few have evolved into global enterprises.

With the growth of globalization and technology advances, however, the traditional world of entrepreneurship has changed. Today's growth-oriented businesses face challenges unheard of a few decades ago. To compete in this fast-moving world economy, manufacturers are under pressure to work longer and harder to streamline operations, reduce costs and waste, and increase efficiency and productivity. To level the competitive landscape with competitors at home and abroad, they have to be leaner, more agile, and capable of making fast, astute financial and operational decisions that will maximize profitability and enable growth.

In addition, many manufacturers have built their businesses as a reliable supply source of components and assemblies required by top tier OEMs in the automotive, aviation, electronics, industrial and consumer goods industries. These suppliers are increasingly feeling pressure from their customers to meet defined price points, provide product customization, ensure just-in-time delivery, or provide documentation for quality control and third-party regulatory requirements. To comply with these mandates, manufacturers often have to reevaluate and reengineer their business processes if they are to remain competitive, as well as profitable.

Technology is Key to Growing a Successful Business

Over the past decade or more, advances in information and communications technology have had a dramatic effect on all of us - ranging from our personal life and entertainment choices to how we manage our business life.

One business technology solution that virtually every leading manufacturer has long had in its competitive toolbox is Enterprise Resource Planning (ERP), a suite of integrated software applications that enable an enterprise to automate many key business processes and synchronize operations, internally and externally, to speed up time-to-market, cash-to-cash cycles, and customer fulfillment. Thanks to continuing technological advances, this "mature" technology, once designed solely for very large manufacturers, is now available in many forms for manufacturers of all sizes.

Typical Business Process "Pain Points"

If you were to ask the CEO, CFO, or VP of Operations of a manufacturing firm what "pain points" the company is experiencing and what processes they would like to improve, chances are the responses would include one or more of the following:

• Gain tighter control of inventory accuracy and costs
• More accurately estimate product costing
• Improve materials procurement and supplier management
• Speed up sales order and purchase order processing
• Streamline product engineering and engineering changes
• Gain greater visibility of financials to optimize cash flow and analyze business performance in real-time, rather than from a historical perspective

In this paper, we will describe how ERP can help companies achieve all of these goals, and much more. And, we will explain why ERP's inherent ability to integrate and streamline information flow across the enterprise is so critical for manufacturers today - not merely to compete, but to thrive and grow in the fiercely competitive 21st Century world of manufacturing.

What an increasing number of progressive growth-oriented manufacturers are discovering is that the latest generation of advanced Enterprise Resource Planning solutions can provide an essential tool for achieving global visibility and agility - and can help optimize operational and financial performance today and into the future.

ERP Value Proposition: Integrated, Real-Time Information Flow

As a manufacturer, you have probably already stepped up efforts to try to improve the aforementioned business processes in order to reduce costs, eliminate waste, and minimize inefficiencies that result from non-value added activities. You may have upgraded your manufacturing equipment for higher speed production, negotiated more favorable pricing contracts with materials suppliers, or implemented tighter quality control measures to foster an environment of continuous improvement.

These are all worthy and effective initiatives that reflect the "lean manufacturing" and "demand-driven supply chain" philosophy prevalent today. However, to paraphrase what one pundit observed during the crest of the cost-cutting frenzy, blindly slashing costs across the board without improving business processes can cut a company right out of business. Too often, in these cases, reducing costs can result in reducing profitability, destroying innovation, and downgrading customer service and satisfaction. This is not a good way to retain customers and grow a business.

Experience teaches us that manufacturing business processes are interdependent, from front end to back end. Every single process - from sales order and purchase order management, to inventory control and procurement, to engineering and manufacturing, to accounting functions, cash flow management and financial reporting - is essential to your business, and all have an impact, for better or worse, on overall business performance.

If you think about it, the common thread running through all of these business processes is information. Inquiries, purchase orders, and RFQs from potential customers to manufacturers define their order requirements and specifications. Information from manufacturers to their suppliers communicates what will be needed, where and when to fulfill production demands. Internal departments, such as engineering, production planning and scheduling, manufacturing, accounting and others, need to exchange information in a timely way to trigger events in the proper sequence and avoid costly mistakes.

For this reason, it is essential to maximize rapid information flow and to foster collaboration across the enterprise by providing real-time data to all who need it to make critical operational and financial decisions, and respond quickly to customer demand. The end goal of timely information flow is, of course, to ensure that customer orders are fulfilled as promised and, ultimately, to maximize profits and grow the business.

Why the Resistance to ERP?

We have all heard and read about some of the negative experiences companies have had with their ERP implementation. Common complaints include:

• High upfront licensing and implementation costs
• The cost of modifications and additions to the hardware infrastructure
• Huge budget overruns due to indecision, inadequate project management, and "scope creep" - which can easily occur when objectives and parameters are not clearly defined
• Lengthy implementations that disrupt business operations
• Ongoing integration and interoperability headaches, even after "go-live"
• The need to expand and support larger, more expensive IT staffs to administer, maintain the infrastructure, and upgrade the software when required

All of these factors can be discouraging for the leadership of a manufacturing business seeking to find a technology-based enterprise business solution to replace manual methods, or to update an outdated system that is no longer adequate for their needs.

As a result, some manufacturers continue to struggle along with outdated legacy ERP or MRP systems that still "kind of work." Many are still relying on manual methods for some business processes, which can create delays or bottlenecks in process workflows - causing orders to be held up because of minor engineering changes, or in waiting for essential materials to be reordered.

Numerous businesses have turned to point technology solutions - such as spreadsheet-based accounting software, product configuration programs, or demand forecasting applications. These non-integrated solutions may serve short-term needs but they are seldom scalable, and they tend to create islands of isolated information in key functional areas of the organization, which certainly does not allow for real-time information flow and collaboration.

In short, many manufacturers still view ERP to be a technology tool designed solely for running very large enterprises. They believe that for them, implementing ERP would require too much time, money and complexity, and would also require too many consultants, too many choices, and far too much technical expertise.

Advanced Manufacturing Solutions

Information technology and network communications have seen enormous advances in the past few years, largely enabled by the Internet. As a result, many innovations have evolved and are spurring a new era of growth. One industry analyst in the manufacturing technology sector recently predicted that the worldwide market for ERP applications, currently at about $18 billion, is expected to grow to $25 billion by 2011.

Today, there are more choices than ever before when it comes to selecting and implementing ERP. As a manufacturing business, you will want to find the right ERP for your business - one that fits your business model, is easy to learn and use, and offers all of the features and functionality needed to automate and manage critical manufacturing processes, without excessive complexity.

You also want to ensure that the ERP system you select will scale effectively as your business grows and offers an open architecture that enables its integration at key touch points with your existing information systems. Finally, you will want to evaluate the solution in some depth to ensure that it has the flexibility to be configured to your needs and business processes as your business grows and changes.

The Emergence of Software-as-a-Service ERP

One of the most promising ERP innovations to hit the marketplace is the packaging of a fully functional, on-demand ERP system accessible to users on a monthly subscription basis in a Software-as-a-Service (SaaS) delivery model. The SaaS delivery model is a proven methodology pioneered by developers of Salesforce Automation (SFA) and Customer Relationship Management (CRM) software solutions.

The success and rapid adoption of SaaS SFA and CRM applications by businesses of all sizes has led to the development of Enterprise Resource Planning systems built on a Web-based SaaS delivery model. This trend is gaining traction, as evidenced by the fact that several leading ERP solution providers have developed or are developing SaaS versions. The SaaS model provides a practical, low risk approach to manufacturers that can give them powerful ERP functionality at an affordable monthly subscription price based on number of users and applications used.

Because SaaS is a hosted solution, the entry barriers of traditional licensed ERP implementations are removed. With SaaS, there are no upfront licensing costs, no IT infrastructure modifications required, no lengthy implementations to contend with, and no need to hire and support additional IT resources to implement and maintain the infrastructure or the software applications. These responsibilities are borne by the software vendor who is accountable to you for the system's ongoing performance and reliability.

In short, the right SaaS ERP, implemented properly, can provide maximum value with minimal investment and low risk - which means manufacturing businesses can focus their employees on their core competencies, and their financial resources on profitability and growth.

Improving Business Processes - From End to End

At this point, you might well ask: "Practically speaking, how can the automation and integration provided by ERP help manufacturing firms streamline and optimize key business processes?" Good question. Consider the following, which represent typical results and benefits reported by manufacturers that have already made the leap and implemented a suite of integrated ERP applications.

• Proactively manages all inventories from dock-to-stock
• Provides full automation of inventories, reducing work and increasing accuracy
• Eliminates the need for costly quarterly or annual physical inventories
• Provides flexibility to do business with suppliers and customers on their terms, while managing inventory on yours

• Automates and simplifies sales quote-to-order business process between Sales and Finance
• Improves time-to-delivery by streamlining collaboration between Sales and Manufacturing
• Increases customer loyalty and retention by enhancing customer services and real-time collaboration

• Automates and simplifies the entire procure-to-payment process by better managing supplier relationships and cash flow
• Reduces inventory levels to better align costs with business while ensuring customer needs are met
• Provides procurement professionals with the tools they need to buy the right parts from the right suppliers at the right price

• Improves lifecycle cost management through fast, accurate and flexible costing
• Enhances the ability to manage cost structures with a focus on quality, while keeping an eye on profit margins
• Provides tools for generating faster, more accurate estimates, quotes and bids, which increases sales and customer service, while maintaining profitability
• The payback from a successful ERP implementation can be significant in terms of reduced operating costs, improved productivity, and higher profit margins - all of which have a positive impact on bottom-line performance.

• Helps reduce time-to-market by streamlining and automating key engineering processes and engineering change orders
• Enables real-time collaboration between Engineering, Sales and Manufacturing, resulting in faster time to delivery
• Improves production floor activities by eliminating waste and errors and optimizing allocation of labor, materials, and equipment

• Automates and streamlines a host of processes, such as work order generation, Bills of Material, production routing, and work-in-process transactions to ensure smooth and coordinated production
• Provides eKanban capabilities to automate the flow of materials and components in Just-in-Time and lean manufacturing environments
• Provides production planners with a powerful toolset for efficient Materials Requirements Planning and Master Production Scheduling.
• Financial Management
• Streamlines and automates financial and accounting processes through closer collaboration with Sales, Manufacturing, Inventory Management, Procurement,
• and Supplier Management
• Accelerates monthly, quarterly, and yearly closing processes
• Increases financial visibility, while reducing tedious, time-consuming data entry, tracking and reporting
• Improves cash flow management and order-to-cash cycles

ERP Payback: Total Visibility, Reduced Costs, Tighter Control

The results cited above demonstrate that the timely and integrated information flow enabled by an Enterprise Resource Planning system can have a profound and long-term effect on a manufacturer's operational and financial performance. It's important to note that the benefits reported here pertain not just to the CEO/owner, CFO, or VP of Operations, but also to the professional managers and workers in each of these functional areas.

With so many new and advanced technology solutions now available, it is hard to fathom why today's businesses would choose to settle for the smaller efficiencies provided by a handful of disparate, non-integrated business process solutions when they could easily gain an abundance of value from a fully integrated ERP solution.

The payback from a successful ERP implementation can be significant in terms of reduced operating costs, improved productivity, and higher profit margins - all of which have a positive impact on bottom-line performance. And, by increasing competitive advantage, ERP can help manufacturers improve customer satisfaction and retention, and open the door to new markets and increased revenue streams - results that improve top-line performance, as well.

Clearly, in the face of today's challenges, the time is right for entrepreneurial manufacturers to take a new look at the state of enterprise manufacturing solutions today - especially if their corporate goals are to compete globally and accelerate growth.

Glovia Services, Inc. is a wholly owned subsidiary of Glovia International, Inc., a subsidiary of Fujitsu Limited (Tokyo Stock Exchange: 6702), one of the world's most experienced and solidly backed providers of extended ERP solutions for businesses of any size-from small and midsized companies to global enterprises. Glovia Services offers GSInnovate web-based manufacturing software from pluggable point solutions to a comprehensive on-demand ERP suite that provides for the unique needs of engineer-to-order, make-to-order, high volume and mixed-mode manufacturing environments through comprehensive, end-to-end functionality for the entire product life-cycle. Headquartered in El Segundo, California, Glovia Services has helped manufacturers to cut costs, improve productivity, and meet customer demands for over 30 years. For more information please visit www.gsinnovate.com, or call 310-563-8700 or 877-474-8896 (toll free).

Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 160,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.3 trillion yen (US$53 billion) for the fiscal year ended March 31, 2008. For more information, please see: www.fujitsu.com.

Glovia Services strives to equip manufacturers with the expert knowledge and best practices gained from our own manufacturing and technology experience. The GSInnovate Industry Insight Series provides manufacturers with the latest resources to effectively manage their business on demand.