Over the past few years, the economic situation has been unpredictable for companies right across the supply chain. Keeping customers happy and costs under control have been the two priorities for business, and any additional investment has been relegated to the back of the queue.
Today, the economic circumstances are changing. In September, the OECD economic agency increased sharply its growth forecast for the UK economy for 2013 to 1.5 per cent from an earlier estimate of 0.8 per cent. This potential increase in growth is welcome, but it also presents a dilemma for supply chains – should they take advantage of this potential growth by investing in new technology and getting up to date, or should they instead hold on to their cash until the forecasts are more stable.
Both options here have their own benefits. For example, moving to the latest versions of key applications like enterprise resource planning (ERP) can provide significant performance improvements and greater efficiencies over previous editions. Getting these new ERP applications updated and in place now can also provide an advantage over companies that don’t invest.
The biggest potential return is around greater efficiency of planning - platforms like SAP HANA can provide real-time insight into sales and stock performance for retailers, for example. This degree of insight then leads to improvements in business performance, providing a direct return on investment now and for the foreseeable future.
On the other hand, hanging on to your cash and not upgrading or investing in new applications is a viable option too. This can be a smart approach, not only if you can’t justify a long return on investment period but also if you are finding it difficult to find to the necessary skills and resources to carry out an upgrade. But the longer you leave it, the harder it will become to find specialist skills and support in future.
To make the right decision around investment options like ERP upgrades, a good first step is to carry out an audit of where you are now and how long it is practical to remain on that version. After this, you can evaluate the potential impact that an upgrade can have on business processes. This would include the productivity improvements and potential return on investment.
Skills and support should be a key part of the evaluation process, Implementing ERP packages can require specialist knowledge, particularly if you are working in particular vertical markets, so making sure this is available is essential if you do decide to make the investment now.
To make the best decision for the future of your company, it’s important to balance the opportunity and the costs involved. By looking at the potential for return on investment and the availability of skills, you can see whether investment now can provide bigger opportunities and competitive advantage for the future.
☛ Satnam Brar is managing director at Maximus