How can ERP create fertile ground for sustainable business growth?

For consumer goods companies, enterprise resource planning (ERP) transformation represents a wealth of opportunities to grow sustainably and drive better revenues.

In brief:

• The pandemic, inflation and geopolitical scenarios have changed consumer sentiments, forcing a shift in the consumer goods value chains and impacting their ERP agenda.
• Reassessing, simplifying and streamlining the ERP landscape is essential for organizations to keep up with changing business needs and challenges.

Is ERP mostly a technical implementation? Or does it have more to do with the business vision and needs? The right answer is both — but with an addition. A successful ERP implementation or transformation today is not just a software upgrade targeted toward a specific business outcome. It is a major value driver and enabler that could improve your bottom line and boost your competitive edge.

A fully integrated ERP system permits the seamless flow of information across different business functions, streamlining processes and operations in its wake. This is exactly why ERP systems need to be reevaluated for proper fitment with the business case and transformed if they no longer drive the value they are intended to.

As a layer that touches every aspect of the organization, transforming a legacy ERP model, consolidating your current ERP landscape or implementing a new one takes careful planning and serious consideration. How do you manage your company through this multi-year, multi-million investment in a manner that does not compromise your business during the project, but improves the business after implementation?

This article explores the concept of ERP transformation along four major levers, with a focus on the consumer goods industry:

1. ERP transformation in consumer goods companies: how is it different?
2. When should you consider an ERP transformation?
3. Harmonizing and unifying the ERP solution — what is it and how does it help?
4. How can EY teams help?

ERP transformation in consumer goods companies: how is it different?

A good ERP implementation is crucial for companies that operate across a complex supply chain, connecting numerous stakeholders. One such industry that demonstrates this need is the consumer goods and food manufacturing industry. Within this sector, varying shelf life between different product groups, high regulatory requirements and changing consumer preferences all create challenges that require an effective ERP solution.

To achieve an optimized ERP implementation for food manufacturing companies, the ERP provider needs access to industry-specific information on the food value chain, which includes everything from raw material procurement to swift and dependable delivery to customers, and ensuring product availability for consumers.

Furthermore, sustainability is now a crucial aspect of the agenda for companies that rely on sustainable raw material supply and contribute to people's wellbeing. For food manufacturing companies, this means having an ERP implementation that supports a working model that reduces environmental waste, promotes a bioeconomy and enables healthier food choices.

When should you consider an ERP transformation?

ERP is always a long-term investment. So, any changes to ERP providers or technology must be carefully thought through. But it is inevitable that the system be reevaluated if needed. Building on top of the skeleton of the old design will become, at some point, difficult to manage and maintain.

Here are some indications that show that your ERP system is due for a makeover:

• Inefficiencies have crept into your current ERP implementation. As ERP extends across the value chain, it is important to align any cracks that have crept into the existing implementation. This could be an indication that it is time to consolidate and streamline processes and solutions to holistically integrate your ERP landscape.
• The existing solution does not align with the business vision. Business needs are dynamic, as proven in the aftermath of the pandemic. The way you run your business can change, along with your business models and vision — influenced by market trends of customer needs. Always make sure to align your ERP solution with where your business is heading.
• The ERP implementation requires a technological upgrade. The pace of digital transformation picked up in recent years, and this speed is only going to increase. So, ensure that you are gleaning the best features from the latest technology to make sure your ERP system continues to be a well-oiled machine that functions as expected and drives value.
• Security is not strong enough. If you are leaning on a legacy ERP system that was implemented many years ago, it might be run on-premises, in your own data center. This cannot guarantee the same safety that is offered by cloud solutions today, presenting a burning need for organizations to revisit their ERP solution.

Harmonizing and unifying an ERP solution — how does it help?

For many organizations, one of the biggest triggers for ERP transformation is the need to address inefficiencies within the existing system. Inefficiencies creep in faster and are difficult to characterize when organizations have multiple disparate ERP solutions in place, which fall out of sync with each other eventually.

Add a new IT system or an upgrade into the mix, and the disparate landscape appears even murkier. Fragmented ERP solutions, no matter how well they serve the business area they support, will not be able to drive sustainable value eventually.

An understanding of the wider value chain, the latest industry insights and global technology solutions positions EY teams as a broad ERP transformation partner. This involves understanding how people's ways of working and the processes will change, and how the implementation will enable business value that does not come solely from technology. EY professionals also come with experience in program management, and the ability to better coordinate all the players that are working in the ERP landscape for a client.