Interesting article I read by Industry Expert Christopher Baum on the Software Advice Blog – http://erp.softwareadvice.com He writes that the ERP manufacturing software industry is optimized and focused on larger manufacturing facilities with greater than 100 employees. The problem with that is according to the article “about 90 percent of the manufacturers in the United States employ less than 100 people. Smaller manufacturers have adopted ERP to varying degrees but have always struggled because the systems were not optimized for smaller operations”.
Todays manufacturers are much smaller, much more dynamic in terms of their software needs and most importantly need a solution that can change quickly to the type of manufacturing they do. You tend to find today many repetitive manufacturers are making customizations to their products to satisfy the requirements of their customer or geography. This moves away from the traditional manufacturing structured build approach to more of a quick turn style – quote it, build it, bill it.
Today most of the smaller companies do not have the time or the resources necessary to maintain many of the current ERP solutions in the market. Many solutions seem to have been built for the 1970’s with little change to meet the flexibility of the global and domestic marketplaces. They assume dedicated personnel to manage each of the key functions in the software.
Traditional software solutions have a step by step process that usually takes longer to setup then it does to quote then build the product. Capturing data after the fact has more importance then proper setup so a good flexible solution will allow that approach as opposed to following strict setup guidelines needed prior to any transactions occurring.
It seems smaller companies do not see the benefit of a formal ERP system when it requires each and every step to be performed in setting up an item that will only be produced one or two times. They need to find something similar quickly and easy (product search) and be able to quickly copy the skeleton of the job or product structure, make some quick changes quote it, release it as an order, produce it, bill it and report it.
What the large ERP software manufacturers don’t seem to understand is that the marketplace has changed. The challenges that a small manufacturing concern has to deal with forces them to be a leaner organization with less overhead and an ability to improve transactional velocity (the speed at which a transaction can be executed is a primary competitive issue in being able to be competitive against less cost labor from foreign competition). It also forces them to change their approach and take on types of business that they wouldn’t in the past. It may be complimentary but a different type of manufacturing (more make to order vs. repetitive). The software needs to be able to handle these variations with ease not workarounds.
The article goes on to discuss changes that have occurred and are needed in the industry. He discusses the integration of the buyer and seller, data storage and sharing and Integration of ERP and other systems.
The article points out one of the most important things that this author has been saying for some time. Build it and bill it and don’t tell me I need more people to run my system to do it!