Manufacturing ERP Buyer's Guide

This list of manufacturing ERP software systems includes more than 100 entries. There are plenty to choose from if you and your business are in the market. Check out a few of those systems:

• SAP Business One helps small and medium size businesses to manage business processes.
• PLEX was built from the shop floor up to deliver a unified ERP
• QAD Adaptive ERP provides a comprehensive solution that supports the core business processes and operations of global manufacturers

Every one of these systems looks like a winner. So, how do you choose between so many excellent possibilities? 

What are your requirements for a manufacturing ERP?

You start with the unique requirements your business has. Why are you looking at ERP systems today? What has your customer asked for that you are unable to easily deliver? Are there processes you want to control better but the tools you have now are insufficient? Do you want to re-engineer some processes but feel your software won’t support what you have in mind?

These are enterprise-level questions, so get people from across all the disciplines within your business. Ensure everyone has a shared understanding of ERP systems, how they work, and what one can expect from ERP. Language and communication are important.

Whether altogether or separately, each function should list its requirements for ERP. Production engineering will have some needs the same as outside sales and others unique to production engineering. At this point, every requirement or wish is important.

Examine each item carefully and see if some rewording can update that production engineering one to include the outside sales item. You might find a seemingly unrelated item on accounting’s list can now be incorporated. Keep in mind this is an enterprise activity and you might toss out some wishes that have limited benefits but are not truly a benefit to the entire business.

Take the second draft of your requirements list to those who weren’t part of your initial team. Think of all the employees and associates who will use or be affected by your choice of ERP. Some of your items might be less important than you originally thought and some new items no one considered are now listed.

You are closer to the goal of making a comprehensive list of your business’s requirements for ERP. Take your revised list and prioritize it. What is the absolute most crucial requirement for your business? Order your list as best as you can. Now draw a line below all the requirements and needs your ERP must deliver.

Items below that line are still important but perhaps could be deferred. Items below the line could be considered “nice to have” and items above the line are “must haves”. This is your standard for comparing manufacturing ERP systems. Those that cannot deliver every one of the must-have requirements will no longer be considered.

Those 100-plus manufacturing ERP systems are now a much shorter list.

What features should you look for in a manufacturing ERP?

• Modules. Many manufacturing ERP systems are sold in individual modules. This feature allows a business to choose only those modules that they need to meet their requirements. A discrete manufacturer does not need to pay for process manufacturing modules and then put effort into keeping those unused modules out of the way.
• Real-Time. This is an important feature. Manufacturing ERP systems are made of many linked databases. When a purchase order is received at the back dock, all the related systems are immediately updated. Inventory of the received component is incremented. Accounts payable toward the supplier are adjusted. Production orders that require that component can now be released into production and the required resources scheduled. Throughout the system, users can query the records and get information that is automatically up to date.
• Customer Requirements Management. Manufacturing ERP systems connect outside the business as well as provide that internal real-time view. CRM, for example, links to the customers of a business. All the people within that customer can be quickly found and standard communications are delivered as needed. CRM tracks quotes that are open, completed as sales orders, or even where the order was lost. Any lost quotes get reason codes so they can be analyzed for future improvements. Which customers are more profitable? Which customers are easiest to deal with? CRM has the answers to these and many more of your business’s questions.
• GAAP. Manufacturing ERP systems will help with your accounting and financial needs. Whichever nation(s) your business operates in, the ERP you choose will enable your accounting systems to use your local rules and ordinances and publish financial statements that comply with regulations.
• Work in Process. Manufacturers have component inventory and finished goods inventory. These are similar to retail inventory in that each item is a discrete unit. Manufacturers also have production somewhere in between too. Some of the components have been used to make that finished item. Some of the labor needed has been spent too, but at any moment there is inventory in progress and manufacturing ERP systems provide the value of that inventory.
• Manufacturing Operations. Manufacturers make things. They have equipment that works along with trained people to make those things. Each finished product has a list of components that will be used, and a specific flow of operations will yield that finished product. Discrete manufacturers have a bill of materials and process manufacturers might use a recipe. Our discrete manufacturer details the flow in routing and our process manufacturer uses the recipe to detail the steps required to assemble or mix or bake their product. These operation features are an essential part of any ERP for a manufacturer.
• Business Intelligence. Manufacturers make decisions every day at every level within the organization. BI, or business intelligence, is an ERP feature that supports those decisions. Whether the decision is to build a new factory or to accept a new customer order for a specific product on a specific date, the person making that decision wants up-to-date facts available when the decision must be made. A business will have regular, standard printed reports that meet some of those decision support needs. Often a screen dashboard is a better support tool that includes customized rules and data presented specifically for one decision. Dashboards can use color codes where “red” might mean stop right now and change something. “Yellow” might suggest some change might be required and we only have a future concern now. Business intelligence also supports unique, one-time reports for a choice that might not recur. Business intelligence features are important for manufacturers as well as other types of businesses.

How much does an ERP for manufacturing cost? How much should you budget?

An open-source ERP for a manufacturer can often be downloaded for free. That is right, your ERP could cost $0! Manufacturing ERP systems might cost well into millions of dollars too. The range is wide. Keep in mind that the initial cost is only that and there are ongoing costs related to any ERP.

Free ERP will need very well-qualified people to manage the system as there will be little or no free support included. You will own the source code and some setups might require complex programming to enable the ERP to provide the desired results. The alternate ERP with a higher apparent cost could include much ongoing support at no additional cost.

ERP for a manufacturer was traditionally sold as software to be installed on the user’s system and managed by the user for the life of the software. An option now is SaaS or using the same ERP “in the cloud”. With this option, a manufacturer will pay a monthly license fee only and have all the features they need available immediately.

This delivery system also avoids a lot of infrastructure costs as well as maintenance costs such as system security and backups. How much to budget includes the initial cost (if any), plus ongoing maintenance and support and any hardware, network, or personnel costs required to operate the system through its life? Each business must make its evaluation.

What are some of the best ERP software for manufacturing?

There are more than one hundred manufacturing ERP systems listed here at ERP Focus. Every one of them is a good system. Many of us easily recognize big names like Oracle and SAP. There are others on the list you may have never heard of. Each business must start with its unique requirements.

Look through the advertised features of the systems on our directory and you will quickly eliminate some ERPs that may not be the best choice for your business. Dig a little deeper by looking at system websites and reading reviews and narrow the potential winners even further.

Read analyses in trade journals and talk with people you know in your industry. Be sure to include people from all disciplines in your business to ensure the needs of your entire enterprise are well represented. Invite a few of the system vendors to provide demonstrations of their software.

Some effort is required and the process can be long and iterative, but in the end, you will know the best ERP for your manufacturing business. Good luck!