Wednesday, March 30, 2011

NetSuite has arrived on the scene of ERP in Manufacturing

When I first “met” NetSuite about 5 years ago I have to admit I didn’t really consider it an ERP vendor. Of course that was back when I had a more narrow view of ERP and thought that if a vendor didn’t have MRP then it didn’t have ERP. I’ve since gotten over that and for several years now I have defined ERP as an integrated suite of modules that provide the transactional system of record for a business. Not every type of business needs MRP to form that basis. Of course most ERP solutions offer much more than that, so this is really my base line definition.
Back in 2006 I viewed CRM and eCommerce as NetSuite’s strengths even though it did provide a suite that extended beyond these modules.  But since then it has officially entered the realm of ERP in my book. Its Home page on its website (www.netsuite.com) labels it as “The #1 Cloud ERP / Financials Software Suite” and further describes its solution as “full-featured financials / accounting, CRM, inventory, and ecommerce software—all in a single system.” So in a way, it is still down-playing the ERP moniker in favour of “suite” and its historically strong suit: CRM and eCommerce, packaged with financials.
Also back in 2006, NetSuite did not target manufacturers. Without a true Bill of Material and MRP all it could address was some level of assembly or very light manufacturing. That has now changed, although not all as a result of organic development. Some of the manufacturing functionality NetSuite offers now comes from a partner, Rootstock. Rootstock Software is a certified NetSuite Solution Provider specializing in the manufacturing industry with heavy focus on the NetSuite Manufacturing Edition solution. While its website claims, “NetSuite Manufacturing Edition is the only cloud-based integrated business suite for manufacturing”, I think they are missing a few other players, with Plex Systems being at the top of that list. Plex has been offering a complete SaaS ERP solution for manufacturing for more than 10 years. Other more traditional ERP players (Epicor, Infor, QAD, SAP) also have cloud based offerings for manufacturers and even more have arrived on the scene with hosted cloud models.
But what I find very interesting is that some of NetSuite’s key customer successes were achieved without the use of Rootstock functionality.  I just listened in to a webcast sponsored by NetSuite and featuring 2 manufacturers using NetSuite and both purchases pre-date the partnership with Rootstock.
Schaeffer Oil prides itself on being “the oldest oil company you never heard of.” With 30,000 customers, it processes 90,000 orders a year using NetSuite and has achieved the following results:
·         Reduced its IT spend by $100,000 in the first 6 months
·         Reduced cycle time of order processing from 3 days to 1.5
·         Reduced backorders by 25%
·         Processed 25% more orders with 15% less staff
·         Improved communication and visibility
GLI Pool Products is a manufacturer and distributor of custom and specialty products for the swimming pool industry. It was founded in 2006 with the purchase of assets from a much larger Canadian company and in doing so inherited an ERP solution, but none of the influence over its continued development.  Ultimately they replaced that inherited solution with NetSuite. GLI has bucked the downward trend in construction related businesses and attribute much of their success to the use of NetSuite. They achieved lower material and operational costs while improving flexibility – a key consideration as they no longer wanted to live in “used-ta-land.” They could no longer be productive and profitable doing things the way they used to do things.
So while the addition of Rootstock functionality really just took effect in mid-2010, NetSuite has been quietly amassing quite a collection of manufacturers in its installed base for quite some time. This is particularly notable since NetSuite is not known for its “quiet” marketing tactics. With the addition of a couple of relatively new names to the NetSuite roster (Roman Bukary and Ranga Bodla) charged with promoting NetSuite in Manufacturing and Distribution, perhaps this will change.

14 comments:

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