5 Considerations When Choosing Manufacturing ERP Software
By: Dan Johnson
Choosing manufacturing ERP software can be a daunting task for today’s modern discrete manufacturer. There is wide variety of systems available for enterprises of all sizes and in all industries. So what’s really important in selecting manufacturing ERP software?
Here are five important considerations that might surprise you when it comes to evaluating and choosing a manufacturing ERP system:
1. Can the system improve your entire business, not just the discrete manufacturing part? Many manufacturers make the mistake of considering only how manufacturing ERP software will handle the discrete manufacturing portion of their business, not how it can affect their entire organization. Simply fixing a specific bottleneck or process may not warrant the disruption that can result from instituting a fundamental change such as installing a new ERP system.
Instead, companies should be considering issues that are so substantial they will require chaotic change in order to make significant improvements. It’s these kinds of challenges that should establish the criteria that drives the crucial decision of selecting the right ERP system. For example, let’s say you’re having a problem creating on-time shipments, which increases work-in-process (WIP) and cost of goods sold. This puts your ability to deliver product in jeopardy. This is a very expensive problem that needs to address not just work-in-process, but dynamic scheduling and processes affecting things in addition to WIP, such as supply chain management, inventory control, and delivery.
2. Will the manufacturing ERP software pay for itself in 18 months? If you’re a complex discrete manufacturer, you need to look at an ERP investment in the same way you look at purchasing a piece of equipment for your shop, with a similar ROI. Some CFOs will look at the total cost of ownership (TCO) instead, which might go out, say, over five years and is used to drive tax benefits. But that’s not telling you if you’re getting a solid return on investment. And that’s what truly affects your bottom line. Is your manufacturing ERP software going to pay for itself in a reasonable amount of time, which for today’s manufacturers is typically within 18 months?
3. What manufacturing ERP software do the competitors I respect use? The reason is simple. If someone’s out there kicking your butt, it’s wise to know what tools they’re using, including their ERP system. Even if you end up buying a different system, evaluating your competition’s ERP software will enable you to gain an understanding of its strengths and weaknesses, which will provide some competitive advantage.
4. Is my ERP consultant focused on helping me solve my problems or just on selling me software? Purchasing and implementing manufacturing ERP software can be an expensive prospect for today’s complex discrete manufacturers. That’s why it’s so important to select the right ERP consultant. You want to partner with someone who will help you work through the problems facing your business organization and manufacturing operation to determine the most appropriate ERP solution.
5. Is the software intuitive enough for employees to learn and use quickly? Today’s new employees are often Millennials who are used to quickly and easily learning new apps and operating platforms on their own. Most are simply unwilling to sit in a classroom and be taught how to use a piece of software and learn the theory behind it. It’s important that they be able to embrace and exploit manufacturing ERP software for both the company’s and their own success.
Manufacturing ERP software, chosen carefully and implemented properly, can be a transformational business initiative that can not only improve your discrete manufacturing floor operations, but your entire company as well. These five considerations will go a long way in helping you make the right ERP software decision.