Manufacturing ERP Market: Industry Potential, Trends and forecast 2018 - 2024

Manufacturing ERP market segmentation based on deployment model is bifurcated into the cloud and on-premise software. Cloud systems offered on a subscription basis to enterprises increase the on-going operating expenditures as opposed to on-premise software that require high initial investments. These are highly lucrative solutions to SMBs with limited financial resources and contribute massively toward the high growth of the manufacturing ERP market segment. Cloud software also reduces the perpetual need to upgrade the software to meet the changes occurring in an organization or the industry. On-premise segment holds the largest share in the manufacturing ERP market and is largely utilized by large companies as it allows organizations to have a complete control over the implementation process and offers higher customization.

Manufacturing ERP Market size is anticipated to exhibit substantial growth during the forecast timespan as it aids manufacturers to efficiently manage their processes. Legacy IT systems are time-consuming and complex causing high overhead costs and delays. The use of multiple software systems in an organization as opposed to a singular organization-wide ERP system to manage the entire process can have long-term negative impacts on an enterprise’s resources.

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The growth of manufacturing activities and the broad scale of operations that an organization operating in the manufacturing sector is required to maintain has led to the technological development by players in the manufacturing ERP market. An ideal system can aid the company in decision making, eliminate risk, reduce wastage, and lead to overall growth. Awareness about these benefits is a major factor promoting the manufacturing ERP market.

Demand for custom-designed software is anticipated to be high due to the varying requirements and end products that the company is manufacturing. For instance, firms in custom manufacturing require additional features and modules for greater flexibility with their supply chain management and production planning applications.

The increasing number of regulations and compliance issues have grown in prominence over the years and meeting these regulations requires a high amount of time and resources. For instance, chemical companies are required to follow OSHA Hazard Communication Standards and SARA Title III. Food and beverages companies are mandated to abide by the HACCP and Bio-Terrorism Act. Manufacturing ERP software can streamline data processing, storage, and reporting by providing better processes and data transparency.

High costs associated with the operation and the maintenance of this software are hindering the growth of the manufacturing ERP market. The software requires a highly skilled workforce with intensive and specialized knowledge pertaining to the software causing the overall costs linked to its overall maintenance to be high. Furthermore, the per personnel usage cost of ERP software is very high in manufacturing companies, due to the large employee base. Increased customer focus on open source ERP solutions is further anticipated to be prohibitive to the growth of the manufacturing ERP market.

The software system comprises a source code that is made publicly available to the subscribed parties. The low-cost annual subscriptions permit any of the registered members to perform changes to the source code as per their requirements. For instance, xTuple Manufacturing Edition is an open source software that contains various modules addressing different operations in the manufacturing process such as product, inventory, sales, after-sales, CRM, and schedule module management at a minimal monthly cost of USD 130 per user.

Penetration of big data analytics is expected to generate an organizational demand for the manufacturing ERP market. The shift toward a customer-centric business has led to rising applications of big data analytics, which can aid in supply planning, output forecasting, and manufacturing process defect tracking and ERP software can allow organizations to gain higher flexibility and increase the visibility of critical data. This software can also let companies exchange data across business lines when users create it, allowing different parties to take advantage of that information.

Growing adoption of IoT and automation in the manufacturing sector can create new avenues for the growth of the manufacturing ERP market. Data obtained from IoT devices is unstructured and extensive. To accommodate the penetration of IoT technology, players operating in the manufacturing ERP market are developing their software to cater to client demands.

Segmentation of the manufacturing ERP market by secondary vertical includes metallurgy, automotive, consumer electronics, electrical devices, energy, pharmaceuticals, chemicals, food and beverage, retail and garment, and others. The automotive segment is anticipated to dominate the manufacturing ERP market during the forecast period owing to the increase in customer demands, stringent compliance requirements, and evolving industry standards. Manufacturing ERP software also allows the integration of various value chain activities, inventory management, and tracking of vehicles in terms of recall and reimbursements.

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The food and beverage industry is anticipated to exhibit rapid growth of the manufacturing ERP market owing to a number of food safety regulations and compliances imposed on these products. Intense competition from organizations operating in this industry is causing companies to need specialized processes for seasonal demand monitoring, order management, customer trend, and relationship management.

North America manufacturing ERP market is expected to dominate in terms of revenue generation due to the increasing adoption of cloud solutions and high focus on the accumulation of customer data to aid in the decision-making process. The manufacturing ERP market in Asia Pacific is anticipated to have a high growth owing to the increasing number of entrants into automotive, pharmaceutical, garment, and consumer electronics manufacturing markets.

Vendors operating in the global manufacturing ERP market include SAP SE, IQMS, Ramco Systems, NetSuite, Inc., Epicor Software Corporation, and Oracle. To sustain continuous growth in the marketplace, companies must undertake business strategies such as software development, expansion of solution offerings, acquisitions, mergers, and partnerships.

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