How to estimate your textile ERP ROI?

Investing in an Enterprise Resource Planning (ERP) system is a crucial decision for any textile manufacturing business. As this sector involves complex processes like production planning, inventory management, quality control, etc., an ERP solution can greatly increase their productivity, reduce costs, save time, and automate processes.

With the Enterprise Resource Planning software market for the textile industry growing at a CAGR of 11.3%, textile businesses should evaluate the potential ROI of an ERP implementation before investing.

Estimating the ROI of your ERP implementation in the textile industry involves a careful analysis of costs, benefits, and intangible factors. In this blog, we will guide you through the process of evaluating your ERP ROI, ensuring that you make an informed decision that aligns with your organization's goals.

How to Calculate Return on Investment (ROI) from Textile ERP?

The process of ROI calculation of your textile ERP implementation is simple and primarily involves two things:

• Your investments (the total cost associated with software ownership, operation, and implementation)
• The ERP’s potential returns

Using the following ROI formula, you can get an estimate of the possible returns from your ERP investment:

However, that is not all. There are several other factors that need to be considered to ensure that the derived results are useful and valid.

Reasonable Forecast Period:

Considering a reasonable forecast period is crucial when calculating ERP ROI. Generally, a forecast period of 3-5 years is considered ideal. This period allows enough time to implement the ERP system, train employees, and start seeing tangible benefits in the form of increased efficiency and reduced costs.

• Taking into account a longer period may result in decreased accuracy of predictions due to changing business needs, fluctuations in raw material availability, costs, and technology.
• On the other hand, a successful ERP implementation leads to better inventory management, improved production planning, etc., but these benefits are gradual. Hence, a shorter forecast period may not capture the full benefits and result in inaccurate results.

Choice of Deployment Model:

Factoring in the deployment model to calculate return on investment of your textile ERP is crucial as different models have different cost structures. For example, cloud ERP systems may cost you almost 30% less than on-premises ERPs.

• Cloud-based ERP systems are viable options for fabric manufacturers looking to scale quickly or for those who lack the technical infrastructure and expertise to support on-premises deployments. Cloud ERP systems typically have lower upfront costs and shorter implementation times, and they incur operating expenses (OpEx) that are spread over time, making them cost-effective in the long run. As a result, it is estimated that almost 53% of businesses using ERP opt for cloud-based deployment.
• On the other hand, for larger textile corporations with IT infrastructure and more complex and specific needs, on-premises ERP solutions might be the preferred choice. On-premises ERPs offer more control and data security, which might appeal to certain businesses. However, they come with higher initial costs and longer implementation timelines. Additionally, they require ongoing post-installation maintenance, resulting in capital expenses (CapEx).

Consider Tangible & Intangible Benefits:

Not all benefits derived from an ERP implementation in a textile business can be quantified. Some are intangible and significantly contribute to an ERP's long-term benefits.

• Tangible benefits (hard ROI) are quantifiable and directly measurable outcomes that lead to cost savings or increased revenue.
• Intangible benefits (soft ROI), on the other hand, are challenging to quantify but equally important.

Be Realistic:

The textile industry is complex and dynamic. Therefore, when estimating textile ERP ROI, it's essential to be realistic about the potential benefits and costs. Take into account past experiences, industry benchmarks, and feedback from ERP vendors or other companies that have implemented similar systems.

• The benefits received from a textile ERP are gradual and takes some time. Hence, having over-optimistic projections can lead to disappointments if the expected returns are not achieved.
• Conversely, lower projections can lead to underuse of the ERP and may result in continued inefficiencies in the textile manufacturing process, lost opportunities, and time.

Pre and post installation usage:

Any standard ERP implementation process involves two stages, both significantly contributing to an ERP’s return on investment. Consider both before estimating your textile ERP ROI to ensure you derive accurate results.

• The costs associated with the pre-installation stage are related to planning the implementation, setting up the required hardware or software, migrating data from any existing system, etc. Vendor support plays a crucial role in all this as they provide the expertise and customization needed to fit the specific needs of your textile business.
• Once the ERP system is live, the post-installation phase begins, and this involves costs related to user training, system maintenance, upgrades, and additional customization. Given the complexities involved in the textile business, proper training and system maintenance is essential to ensure ease of use and optimum utilization of the ERP.

Role of ROI Calculators in Calculating Textile ERP ROI

ROI calculators simplify complex financial calculations by considering multiple scenarios. These user-friendly calculators provide a structured framework for inputting data, automatically performing calculations, and comparing potential outcomes. By assessing various scenarios, decision-makers can identify the most viable ERP approach based on risk levels and business strategies.

Estimating textile ERP ROI is a complex process that requires careful consideration of various factors. By selecting a reasonable forecast period, choosing the appropriate deployment model, and accounting for both tangible and intangible benefits, you can create a more comprehensive and accurate ROI analysis.

Being realistic in your projections and evaluating pre- and post-installation usage will help ensure that the derived results are meaningful and valuable for making informed business decisions. Remember that ROI calculation of a textile ERP system is not just about immediate financial gains. It’s also about enhancing organizational efficiency and competitiveness in the long run.

7 Best Practices to Ensure Successful Textile ERP Implementation

An effective Enterprise Resource Planning (ERP) system is crucial for the textile industry, streamlining operations and enhancing overall efficiency. However, ERP implementation can be a complex process, and without proper planning, it may lead to failure and costly setbacks. Some recently recorded data shows almost 50-70% of ERP implementation strategies fail.

To ensure a successful textile ERP implementation, businesses must adhere to best practices that have proven to yield favorable outcomes. In this blog, we will explore the seven key steps that can pave the way for a seamless and productive ERP implementation in the textile industry.

Why does an ERP implementation strategy fail?

Some of the common reasons why a textile ERP implementation strategy may fail include:

Inadequate Vendor Support

Though most ERP vendors provide round-the-clock service 99.9% of times, if your chosen ERP vendor fails to provide the required assistance or support during critical phases of the implementation, it can lead to misconfigurations and unresolved issues. The absence of prompt vendor responses hampers the system's overall performance and results in frustrated users.

Poor Planning and Alignment

As high as 57% of ERP implementation projects take longer than expected, this happens mostly because the ERP project lacks a well-defined strategy and roadmap. This may result in increased expenditure. In addition, failure to align the ERP functionalities with the company's requirements can lead to functionality gaps, where the system may not adequately address critical processes or fail to support essential business operations.

Data Integration Issues

Data migration is a complex aspect of ERP implementation, and any inaccuracies can have severe consequences. Surprisingly, data integration issues stand as one of the top 3 issues that lead to ERP implementation failure. Incorrectly migrated data can lead to inconsistencies and errors in crucial business information. For instance, incorrect inventory data may lead to stock discrepancies, affecting production schedules, and customer orders.

Insufficient User Training

It is found that out of all the companies that suffer an ERP implementation failure, 95% of them don’t give importance to user training. Inadequate employee training can lead to resistance to change and hamper user adoption. Employees may struggle to navigate the ERP interface which can result in reduced productivity and increased errors in the long run.

Inadequate Framework

40% of companies using ERPs already suffer operational disruption and this is mainly because of a lack of clear framework. Without a framework, there may be confusion about roles, responsibilities, and timelines. This lack of direction can lead to disorganized efforts and hinder progress. Ultimately it can result in the complete failure of the ERP implementation.

Lack of Commitment

The commitment of top management and key stakeholders is vital to the success of ERP implementation. If they do not actively participate in the project or provide the necessary resources and support, it may lead to resistance and a lack of motivation to embrace the new system.

7 ERP Implementation Best Practices

Choose the Right ERP Vendor

Selecting the appropriate textile ERP vendor is the foundation of a successful implementation. They will help you with the installation, customizations, employee training, etc. Therefore, choosing an appropriate vendor is the first step you can take toward a successful ERP implementation.

• Evaluate vendors based on their experience in the textile industry, track record, and customer reviews.
• The chosen ERP vendor should offer robust support services, both during and after the implementation process.
• Vendors that provide regular updates and improvements to their ERP software should be preferred.

Choose the Implementation Team Wisely

The success of the ERP implementation depends heavily on the expertise and dedication of the implementation team.

• Assemble a diverse group of individuals from different departments who possess relevant skills and experience.
• A cross-functional team can bring a comprehensive understanding of various business processes, ensuring that all aspects of the organization are considered during the implementation.
• Assign a capable project manager to lead the team and oversee the implementation process. The project manager should have strong communication and organizational skills to coordinate efforts and keep the project on track.

Set your Business Priorities

Before embarking on the ERP implementation journey, businesses must clearly define their priorities and objectives.

• Conduct a thorough analysis of the existing processes, identifying pain points and areas that require improvement.
• Align the chosen ERP system's capabilities with your business goals to ensure that the implementation directly addresses your organization's unique challenges.

Data Migration

Data migration is a complex process that involves transferring data from the old system to the new ERP.

• To ensure a seamless transition, perform a comprehensive data audit to identify potential issues, data redundancies, and inconsistencies. Clean and validate the data to eliminate errors and ensure accuracy.
• Establish robust data mapping between the old and new systems to ensure that data is correctly transferred and remains coherent throughout the migration process.
• Data integrity is crucial to avoid disruptions in operations and maintain the continuity of business processes.

Employee Training

Employees are the end-users of the ERP system, and their successful adoption is fundamental to the implementation's success.

• Provide comprehensive training sessions for employees, tailored to their respective roles, and responsibilities within the organization.
• Hands-on training, simulations, and workshops can help employees become familiar with the ERP interface and functionalities.
• Continuous support and access to resources, such as user manuals and FAQs, are essential to address any post-implementation challenges and reinforce training.

Have a Proper Framework

Developing a well-structured implementation framework is essential to guide the ERP project from initiation to completion.

• Clearly define milestones, timelines, and responsibilities for each phase of the implementation process.
• Regularly monitor progress against the set milestones and promptly address any issues that arise.
• Encourage open communication within the implementation team to foster collaboration and adaptability.

Be Fully Committed

Commitment from top management and stakeholders is a cornerstone of successful ERP implementation.

• Leaders must actively engage in the process, demonstrating their support and enthusiasm for the project.
• By allocating necessary resources, time, and budget, management can create a culture of commitment to change within the organization.

ERP system implementation can be a transformative journey for the textile industry. By adhering to the seven best practices outlined above, textile manufacturers can minimize risks, avoid common pitfalls, and ensure a successful ERP implementation.

Investing time, effort, and resources into the planning and execution of ERP implementation will lead to increased operational efficiency, improved decision-making, and enhanced competitiveness in the textile market.

Top 5 Software for Textile Manufacturers

The global textile market is projected to grow at a CAGR of 7.6% from 2023 to 2030. As this fast-paced industry continues to expand, technology has emerged as a powerful catalyst, driving innovation and efficiency. Amidst the multi-layered operations, software for textile has become the thread that binds together every aspect of this complex and dynamic industry.

From streamlining production processes to enhancing quality control, the right textile industry software can redefine the landscape for manufacturers, paving the way for transformative leaps forward. In this blog, we will shed light on the top 5 game-changing textile manufacturing software that are revolutionizing the way the industry operates.

Software for Textile: Streamlining Processes and Boosting Efficiency

1. iTexClouds
2. Fiix CMMS Software
3. Textronics Design Dobby
4. Microsoft Excel
5. FastReactFabric

iTexClouds – A Cloud-Based ERP in Textile Industry

iTexClouds is a comprehensive Enterprise Resource Planning (ERP) software specifically designed by industry experts for fabric manufacturers. This textile industry software equips users with 12 modules that can cater to all aspects of the textile manufacturing process. Right from receiving an order to planning the production to exports, this textile industry-specific ERP can help with everything.

The visual loom planning module simplifies the production planning by allowing manufacturers to view all their looms on a single screen. With the barcoding feature, fabric manufacturers can monitor and track inventory and finished goods at all stages of the production process.

In addition, the ERP also allows seamless 3^rd party integration to facilitate data exchange between different applications and allow users to take data-driven decisions. What’s best? It can be easily implemented within 1 week to 3 months, depending on the scale of manufacturing.

Benefits of iTexClouds ERP for textile manufacturers:

• 2-3% reduction in inventory carrying costs
• 2-3% reduction in inventory levels
• 3-5% increase in profit margin
• 25-30% increase in employee productivity
• 50-70% increase in customer satisfaction and retention

Fiix CMMS Software

The Computerized Maintenance Management Software for textile industry by Fiix allows textile manufacturers to manage all their maintenance, including thousands of assets, work orders and parts, in one place, with just a few clicks.

Powered by AI, this textile industry software helps maintain uptime and productivity, mobile work order management, and predictive maintenance. It also provides real-time reporting and analytics and helps take care of audits, compliance, and safety.

The mobile app allows offline access to asset records anytime, anywhere. Textile manufacturers get complete visibility of all open and upcoming work orders across various sites.

The software allows automatic maintenance scheduling upon anomaly detection and the drag and drop feature allows easy creation of a data hub to facilitate data-driven decisions. To top it all, there is a single dashboard that allows tracking all compliance tasks in one place.

Benefits of Fiix CMMS for Textile Manufacturers:

• 27% reduction in unplanned downtime
• 10% reduction in operating and production costs with the help of Fiix’s analytics platform
• Creating and assigning work orders take less than 20 seconds
• The audit trail tool allows finding records in less than 30 seconds
• Seamless tracking of asset maintenance costs to justify CapEx decisions

Textronics Design Dobby

Design Dobby is a CAD/CAM software used in textile industry for dyed yarn and dobby woven fabrics. This software provides a comprehensive solution to designers and allows them to visualize and execute designs in real time.

With its automated capabilities, it can seamlessly incorporate weave patterns in designated sections, incorporate desired warp and weft structures into textile designs, and integrate colors according to loom specifications.

With this software, designers can eliminate the need for getting into machine specific details like values, colors, etc. The auto-generation of unlimited design patterns allows manufacturers to respond to customer needs quickly. It also supports all types of yarn creation and ensures complete size and color accuracy.

The simulation module simplifies dobby weaving by bringing it to life on a screen. There is a design database that stores all the designs and makes it easy for designers to locate designs as per their requirements.

Benefits of Design Dobby for Textile Manufacturers:

• Easy creation of true-to-life simulations for all types of fabrics
• Effortless creation of complex weave structures by combining different weaves
• Seamless integration of dobby effects directly onto designs in ornamentation or extra warp mode
• Automatic pattern creation based on a selected design
• Unlimited yarn count simulation from 0.01 to 1000 Ncc

Microsoft Excel

Microsoft Excel has been one of the most popular software for the textile industry for decades. Manufacturers rely on Excel to track and manage various aspects of their operations, including inventory. It provides the flexibility to categorize items, assign identifiers, and monitor stock quantities accurately.

With customizable templates, manufacturers can integrate Excel into their workflows and make informed decisions based on real-time information.

It gives flexibility in designing and customizing spreadsheets to meet specific business requirements. The intuitive features such as sorting, filtering, and conditional formatting enhance usability. In addition, Excel's validation rules help ensure data accuracy and integrity.

Benefits of Excel for Textile Manufacturers:

• Customized spreadsheets for tracking and analyzing various aspects of the business
• Easy calculation of stock totals with Excel formulas and functions
• Maintain order records, including customer details, order quantities, and delivery dates
• Create comprehensive reports, charts, and graphs to visualize financial performance
• Track production progress, monitor deadlines, and optimize resource allocation

FastReactFabric – A single platform to combine fabric buying and cutting

FastReactFabric is a comprehensive fabric planning software for textiles that seamlessly integrates fabric buying and fabric cutting operations into a single platform. By combining these critical processes, textile manufacturers can gain valuable insights into real-time fabric usage and wastage.

The software offers accurate fabric buying forecasts, precise planning forecasts for increasing colorways and complexity, and optimized cutting plans that remove bottlenecks and reduce remnants.

Textile manufacturers benefit from the eliminated manual efforts for fabric planning resulting in reduced duplication of data entry, workload, and errors. This software leverages big data analytics, eliminating errors and saving time spent on estimating size-ratios, wastage, and report compilation.

It can be seamlessly integrated with CAD and ERP systems facilitating smooth data exchange and enhances operational efficiency. The software also allows the senior management to effortlessly track performance across key business metrics.

Benefits of FastReactFabric for Textile Manufacturers:

• 90% reduction in fabric planning and buying time
• 5% reduction in fabric cost
• 100% end-to-end fabric planning
• A 360-degree feedback loop between cutting and booking

The textile industry is witnessing rapid growth and evolution, with technology playing a pivotal role in driving innovation and efficiency. The adoption of software for textiles has become essential for manufacturers looking to streamline operations, enhance productivity, and meet the demands of a dynamic market. These software solutions empower manufacturers to optimize processes, improve quality control, and make data-driven decisions.

By leveraging advanced technologies, such as cloud-based ERP systems, maintenance management software, CAD/CAM tools, and versatile tools like Microsoft Excel, textile manufacturers can achieve cost savings, increase productivity, and enhance customer satisfaction. Embracing these technological advancements is crucial for staying competitive and driving transformative progress in the ever-evolving textile industry.