Selecting a Manufacturing System
This post is for small to mid-sized manufacturers vetting new manufacturing software. It was written by Ian Creswell, Passport Software’s Manufacturing Product Manager. We hope you find it useful.
Outgrowing Your Basic System
Many small companies start out with a simple accounting system that may or may not provide some very basic inventory capabilities.
Typically, augmenting this with some sort of manual operational control and/or in conjunction with spreadsheets.
Eventually these companies outgrow their ability to effectively manage the operational side of their business, and more importantly, they stunt their company’s ability to grow any further.
The inability to efficiently schedule and plan their production, materials, and manage their overall operation prevent them from being able to take on new business.
So where should a smaller company begin when starting to look for a manufacturing enterprise resource planning system to help them overcome these problems?
Educate yourself about your own business before you start talking to manufacturing ERP vendors and reviewing applications! It will make the process much easier and less stressful.
It needs to start with asking yourself some important questions:
· What are the problems areas in your business that need to be solved?
· How much is this costing us not to solve these problems?
· Who should be involved in the selection project?
· What kind of budget can or should we be working with?
First, identify the areas of your business that are holding you back from being more efficient and successful. Document them because these will be one of the biggest factors in selecting the correct system.
Your Unique Processes
I get to work with dozens of new companies each year and it’s not unusual to get a laundry list of basic requests that virtually any ERP system, good or bad, will be able to handle.
To get the most out of your search, and subsequent software investment, you need to define what you think makes you unique and need to ensure that whatever application you decide to invest in can help you handle your uniqueness.
Your staff knows where you’re inefficient. They know that it shouldn’t take weeks or even days from the time a customer places an order for it to get started.
If it is, you should identify why so you can figure out how to streamline this in an integrated system.
What Are Your Challenges?
If you’re consistently running out of material needed to produce finished products, or find you never actually have what you need but have plenty you don’t, these are important things you need to be able to solve.
Find these areas, and determine how long it takes to get things like this done. As you begin to evaluate systems, hone in on these during the evaluation process and estimate out how much time you can save, if any at all, in the applications you’re reviewing.
Put a value to that time. How much is it costing you to handle the process inefficiently now and how much less will it cost to be able to do it faster, and easier?
The Cost of Remaining on Your Current System
Going through this exercise will aid you in better understanding your weak areas and where you need to improve.
It also helps you better realize how much it’s costing you to continue to use your current methods of trying to manage the operational side of your business.
It can help you quickly eliminate options as you start to review them making the search process go faster and more efficiently.
Lastly, it will help you to more accurately estimate your return on investment when you do find the right solution. Factor this into your budgeting process because these are direct savings you can achieve.
Selecting Your Team
Selecting the team to help find the right ERP system is extremely important to vetting systems. A common mistake is to charge the controller or CFO with finding the new ERP system. While they should be a big part of the process, operations isn’t their area of expertise, accounting is.
Someone more familiar with the operational side of the business should be involved as well. This will help ensure that the operational AND accounting needs are being properly met with the new ERP system selected.
Lastly, someone capable of making the buying decision should be directly involved as well. Without that level of support, I find companies often waste a lot of their own time looking for something and never get the approval to make the investment.
If the individual responsible for making the final call isn’t a part of the process, it can be difficult for them to understand the value of their investment and will tend to hold back the project.
Lastly, what kind of budget do you have for such a project? One common mistake is companies undervalue the investment in software. Make no mistake, investing in software should be taken as seriously as investing in a new machine for your operation.
If you invest wisely, you should be able to save time, money, and improve your operational efficiency, thus your ability to continue to grow. Keep this in mind as you’re considering how much capital you’re willing to invest to achieve these goals.
Going through the early planning process I’ve outlined should be done before you set your budget and even start the searching process. Know what you need before you get rolling and have some idea of how much time you could save.
Also educate yourself on the soft benefits of better planning material and production. Many companies find they can reduce overall product lead times. Sometimes significantly.
This can make you more competitive and reduce the time and cost of building and selling product. How much is that worth?
With the above knowledge, it becomes far easier to find the manufacturing software you need to improve your operation.
Carefully review applications that fall into your budgetary constraints, and ensure the manufacturing ERP system you select is going to help you solve your unique needs.
You’ll find this process much easier to do when you know exactly what you need.