Types of manufacturing computer software

  1. CAx
    1. Computer-Aided Design (CAD): Create product or factory design
    2. Computer-Aided Manufacturing (CAM): Control machine tools
    3. Computer-Aided Engineering (CAE): Simulation, validation, and optimization of products, processes, and tools
  2. Manufacturing
    1. Material Requirements Planning (MRP): Production planning, scheduling, and raw material requirements planning 
    2. Manufacturing Execution System (MES)
      1. Product Lifecycle Management (PLM): Integration of CAx, MRP, MES
      2. Quality Management System (QMS): Document management, closed-loop corrective and preventive action procedures (CAPA), feedback loops
      3. Overall Equipment Effectiveness (OEE): Availability, performance, quality, loading
      4. Computerized Maintenance Management System (CMMS): Machinery maintenance
      5. Job shop management: Production display
    3. Product data management (PDM): Central repository of product and process data
  3. ERP
    1. Accounting software: Automate journal entries and produce real-time reports
    2. Inventory management: Plan and manage receiving and delivery orders
    3. Warehouse Management System (WMS): Manage inventory receipts, picking, and packing
    4. Purchasing software: Manage purchase requisition, purchase orders, tender process
    5. Sales order management: Manage quotations and sales orders
    6. Customer Relationship Management (CRM): Manage customers and pipelines
    7. Human Resources (HRIS/HRMS/HCM): Attendance, timeoff, expenses, payroll
    8. eCommerce: Build and manage online stores 
    9. Omnichannel: Integrate with different channels (including marketplaces)
    10. Project management: Manage projects and tasks

Click here to learn more about ERP systems.

Which manufacturing software do you need?

If you are a small manufacturing business getting a manufacturing software for the first time, most likely what you need is core ERP (accounting, inventory, purchase, sales) with integrated MES. What you can do with it:

  • Input your bills of materials, and when you want to manufacture a product, it will automatically calculate your raw materials requirements
  • Manage manufacturing orders, work orders, and track sales orders until it is delivered to customers 
  • Draft purchase orders will automatically be created when there is not enough raw materials or when stock on hand reaches the minimum quantity 
  • Accounting journals and reports are also done automatically and real-time. 

If you need more modules later on, do that after core ERP and MES are properly implemented.

If you are a made-to-order manufacturing business, it is important for you to understand that most ERP for manufacturing businesses are built for made-to-stock, so most of the features they have will be useless for you (like SAP). Impact is built mostly for made-to-order manufacturing businesses, so do consider us when you are choosing vendors. We have a feature comparison table for popular manufacturing software that should help you make a more informed decision.

If you are a medium-sized manufacturing business, you will most likely customize your software no matter which software you choose. In this case, choosing a reliable implementer who understands your business processes and accounting are far more crucial than the system itself. 75% of ERP implementations end in failure. Well-known systems don’t mean reliable implementers because they are third party consultants who happen to partner with those system providers.

If you are a large enterprise, have a thorough understanding of the problems of your current system and prepare a system requirement in advance so choosing a vendor will be a much simpler process by minimizing guesswork. Ask for estimated time and fees and whether changes along the way will be possible. Find an implementer who truly wants to solve your problems because the implementation process will be a pain if you don’t. Most of ERP implementation failures happen in large enterprises.

How to ensure ERP implementation success

Before choosing an ERP system

  1. Identify pain points. Speak with your teams and find out their difficulties in achieving their team goals. Come up with practical solutions, categorize them into either technology, data, process, or people. 
  2. Create impact-effort matrix. Identify solutions that bring the most impact with the least amount of effort. Remember that impact is calculated based on company goals, not based on team goals. Oftentimes, companies find out that they have been wasting time on activities that don’t align with company goals, and what they need is to cut down on those.
  3. Quantify benefits. Identify inefficient processes that can be automated. Decide if automation through an ERP system is really necessary to optimize those processes.
  4. Perform break-even analysis. Calculate financial benefits (additional revenue and cost savings) if those processes are optimized. If you don’t know the additional revenue that it will bring, just focus on the cost savings. The easiest way to do this is to estimate the monthly salary of the team multiplied by the percentage of efficiency the ERP system will bring.
  5. Create system requirements.
  6. Set a budget. Once you know how much your net profit will increase by implementing an ERP system, decide on a break even point. In how many months or years do you want your increase in net profit to fully recoup the cost of the ERP system. By multiplying the increase in net profit by the number of months, you get your budget.

Choosing an ERP system

  1. You are buying a solution to your business pain points, not features. ERP is quite different from other business software because it’s the automation and integration that you are looking for. If you think team integration and process automation is not necessary for you, don’t get an ERP system. Just get accounting, crm, or hr software separately. They are much cheaper.
  2. The quality of the ERP consultant is more important than the ERP system itself. The majority of ERP implementation failures are not due to the ERP system, but the lack of planning and top management involvement. Don’t choose an ERP system based on brand or hearsay. When you hear someone with bad experience badmouthing a certain ERP system, it is most probably because they choose the wrong implementer (most often with freelancers or IT consultants who don’t understand accounting and business processes).
  3. Start with an affordable ERP system. Most often, the actual cost of implementing an ERP system ends up more than the initial assessment, so it’s better to start from ERP systems that cost half of your actual budget. Starting with Odoo vendors or a local ERP vendor is a good start. Go with the more expensive ERP software only when you know the affordable ones are not a good fit for you (only if you know you need certain features and the cost to customize those features are more than getting another more expensive ERP software.
  4. Don’t customize too early. If you are getting an ERP system for the first time, we always recommend businesses to implement the system without any customization in advance. This is because during your implementation process, companies often realize they have to change their business processes. When this happens, oftentimes their earlier concerns are already solved so there is no need to customize, or they realize there are more important features to customize.

Choosing an ERP vendor

We’ve heard a lot of stories where companies try to cut costs by hiring internal software developers or freelancers because they think those are cheaper. Majority of them ended up in failures (freelancers disappear with bugs unfixed, internal software developers are unclear of what to build while companies blame them thinking it’s their jobs, etc.) and they ended up starting all over again with professional ERP implementers. It took them years longer and a lot of money going down the drain.

This is how we recommend you to filter your ERP vendors:

  1. Contact 3-5 ERP vendors. Start with the most affordable ERP system like Odoo or Impact. Find out who they are (visit their websites) and contact them to learn more about their ERP software. They may already have the customizations you are looking for without you paying for it. 
  2. Assess their understanding. Assess if they understand your pain points and are able to convince you that they can solve your pain points. A good ERP implementer can tell you exactly how from the point of view of software, business process, and accounting. You should avoid those who tell you that their ERP can do whatever you need without explaining how. Most often, they themselves don’t really understand what you are talking about.
  3. Ask them for similar past clients. Although this is not a bad way to do an initial assessment, it does not guarantee future success, either. Similar past clients can have different pain points, and you don’t really know if their implementation is a success or a failure. But there is no harm in asking.
  4. Look at their employees on LinkedIn. Understanding how consulting companies hire their employees can oftentimes tell you about how much they value their customers’ success.
  5. Trust your instincts. It is much better to choose the more expensive ERP vendor that is more likely to bring you ERP implementation success, than to choose the cheaper option but they end up in a mess and you end up paying 2-3 times the price.

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Impact Insight Team

Impact Insights Team is a group of professionals comprising individuals with expertise and experience in various aspects of business. Together, we are committed to providing in-depth insights and valuable understanding on a variety of business-related topics & industry trends to help companies achieve their goals.

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