How ERP Data Harmonization Can Drive Positive Outcomes for Manufacturers

Disconnected ERPs Hold Too Many Manufacturers Back.

“We make money in spite of ourselves.”

Most companies we encounter admit to some version of this. They see their own siloed organization and convoluted processes and assume that their company must be uniquely chaotic. The truth is, this feeling is much more common than perceived. It’s common for manufacturers to struggle to achieve consistent operational processes. A common contributor? The absence of a reliable source of truth.

All organizations need a single place where anyone can find accurate, trustworthy data. As companies grow, the complexity of their data and their number of ERPs grows with them (especially with inorganic growth via M&A). Most manufacturers have more than one ERP, and more than 25 percent have four or more. This challenge takes three common forms:

• Different ERP instances within the same vendor (SAP on-prem vs. cloud)
• Different vendors and instances (SAP, NetSuite, Dynamics, Sage)
• Homegrown systems mixed with more off-the-shelf instances

These scenarios aren’t mutually exclusive, and many larger manufacturers suffer from all three across their organizations. As a result, there’s a tremendous amount of pressure on IT organizations to manage these disparate ERPs—instances that won’t talk to each other, instances with no vendor support, and homegrown systems that have largely been ungovernable from the start.

When faced with such a challenge, most manufacturers will find it difficult to simply keep their ERPs functioning—let alone achieve data consistency. But as challenging as it may seem, manufacturing entities can still achieve the data quality, consistency, and completeness they need to scale. Once we understand the common challenges of ERP harmonization, manufacturers can determine the right approach and unlock new capabilities that drive growth and profitability.

Several Key Challenges Prevent Data Harmonization.

If it was easy, every manufacturing business would have done it already. Several common challenges leave organizations accepting status quo, living with manual offline workarounds. The most common are:

• Resources & Timeline. It takes a highly specialized set of skills to maintain and improve even the most common ERPs. When manufacturers require multi-year roadmaps for their data consolidations, retaining this talent proves difficult.
• Customization. Many ERP systems are hard to consolidate due to their complexity. Over 25 percent of organizations heavily customize their ERP, both during the initial implementation and throughout usage. This customization typically dilutes out-of-box reporting and integration capabilities.
• Harmonization. Even a consolidated set of ERP systems may not actually provide useful data. If “delivery date” refers to the originally planned date in one system and the updated/actual in another, there’s still a gap in source-of-truth and supply plans will be impacted accordingly. Small differences like this can add up quickly and will inevitably blur the bigger picture.

All of these are solvable, but they’re important to anticipate and account for when devising a strategy for your company.

Achieve Data Harmonization with your ERPs.

The first step is to align on overarching objectives for your system as they relate to your organization’s goals. While this may seem obvious, it’s also an area where small misalignments can have big consequences down the road. Ask the questions now to avoid surprises later.

Align your data ecosystem to company objectives.

Even as you pursue ERP harmonization, you’re not building a one-size-fits-all solution but something tailored to your needs. Your company’s objectives (mindset) should influence your people planning (skillset), and that in turn should shape what systems you adopt (toolset). Ask the right questions about each facet and you’ll have better work as a result:

• Mindset. What’s the existing data literacy of the organization? Is there cross-functional problem solving leveraging data today? Is there a belief that it’ll help in the future? What’s your companies overarching data strategy?
• Skillset. Does your resource talent align with the above data strategy? Is there a plan to fill any gaps?
• Toolset. What technology is needed to couple your firm’s strategic objectives with the data mindset/skillset?

Establish good data governance.

The overarching mission of data governance is ensuring the right data is in the right place, for the right people and at the right time. You should understand how you’ll keep your systems harmonized—what governance layer will drive sustainable practices. As you establish your data governance process, think about the following data governance principles:

Data maturity is a complex subject. For more information, refer to our guide to the six pillars of data maturity and how a company looks at each level of maturity.

Recommended Architecture

Once your organization has strategic alignment and the governance structure to support data harmonization, you can begin designing your ecosystem. Every company’s processes and associated tech stack will vary, but the most successful systems have a few common characteristics:

Let’s unpack the key parts of this architecture:

• Systems of Record. Your systems of record are the front-line interfaces and transaction-based entry points for most users. ERPs, CRMs, and WMSs are a few examples.
• Source of Truth. This role is filled by a data platform tool, and it’s where data harmonization takes place. Couple data transformation efforts with governance principles and MDM to establish a source of truth.
• Data Consumers. Many end users will need visibility into data from across your organization, customizable to their own needs. Planning & business intelligence tools give flexibility in reporting and analysis capabilities.
• Master Data Management (MDM). As your company launches new products, enters new markets, and acquires new businesses, robust MDM is critical to keeping the source of truth as just that, truth.

Prioritize adoption efforts during systems design. It’ll only be effective if there’s broad upstream and downstream buy-in.

Data Harmonization Enables New Capabilities.

Once you’ve achieved data harmonization, you’ll have multiple levers to pull to drive topline growth and bottom-line efficiencies. A few relevant examples for manufacturers are listed below.

Top Line

Integrated Business Planning

Data harmonization is a prerequisite for true connected planning, whether you call it IBP, S&OP, SIOP… you get the idea. Without it, offline spreadsheets arise for band-aid data mappings. Review meetings are spent questioning the validity of output reports. Scenario plans take days to devise and are often obsolete by the time of completion. A source-of-truth starting point is the key to achieving the potential of connected planning.

Customer 360

A harmonized data environment enables a holistic view of your customer. From order history to customer service interactions, understanding your customers across multiple touchpoints helps identify trends, forecast needs, and make informed decisions that drive customer loyalty. AI-powered identity resolution will help create a customer “golden record” by matching various customer records across multiple ERPs that don’t easily tie together.

Bottom Line

IoT Streaming Data

As the cost of cloud storage and computing decreases, manufacturers are investing heavily in IoT sensors to collect high-volume data from factories, warehouses, and even during customer consumption. Implementing the hardware may be straightforward but making sense of and delivering value from the data has proven more difficult. By aligning IoT data with your ERP systems, manufacturers can achieve real-time insights that drive predictive machine maintenance, better inventory management, and smarter sourcing decisions.

Predictive Risk Management

Using harmonized data to predict machine failures before they occur is essential to staying competitive in domestic and global manufacturing efforts. Real-time sensor data, combined with predictive models, allows you to reduce costly downtime and improve overall equipment efficiency (OEE), directly impacting the bottom line.

The point is: data harmonization isn’t just a technical challenge—it’s a key driver of efficiency and growth. By unlocking the value of your data, manufacturers can reduce costs, improve operational efficiency, and increase profitability.

The Time to Act Is Now

The road to data harmonization may seem daunting, but the rewards are too great to ignore. Manufacturers who take the time to consolidate their data and align it with business goals will see significant improvements in operational efficiency, planning accuracy, and overall profitability. Data harmonization isn’t a nice-to-have—it’s essential for thriving in today’s data-driven world.

Manufacturers in tech hardware, appliances, med tech and beyond have already partnered with Spaulding Ridge to navigate these challenges and unlock the full potential of their data. Ready to start? Reach out today to learn how we can help your business drive growth through data harmonization.