ERP for Small Manufacturers: Top Considerations

    7/15/20 10:00 AM

    erp-small-manufacturers

    How should small manufacturers address their ERP needs?

    Small manufacturing companies are often caught in the conundrum of aligning business needs with sometimes arbitrary budgets. Over the past 20 years, I have worked with many small manufacturers looking for ERP solutions, and it is always an interesting balance between the functionality they want, what they can actually utilize, and what they are willing to invest financially.

    The Visual South ERP review process focuses heavily on understanding not only current business requirements, but also the five-year plan for small manufacturers. Our experience allows us to guide business owners on a journey they haven’t traveled yet and help them grow with the Infor ERP software for small manufacturers.

    3 critical success factors when selecting ERP for small manufacturing business

    1. Develop a near-term and five-year business plan. Understand what is needed from a system’s infrastructure to be competitive, keep score properly, and grow your business profitably. Without a plan, directive, and vision, it will be hard to know what tools you need to improve the business.

    2. Have a list of requirements. Identify the functionality you need before you start vetting ERP software for small manufacturers. If you don’t know what you are looking for, it will be hard to articulate what you need from a new ERP system. For example, if you are a configure-to-order manufacturer, you will want a system that has a configurator and is designed to support make-to-order manufacturing, versus an accounting system like QuickBooks with minimal manufacturing abilities. Don’t make the mistake of using a program like QuickBooks and adding on a light manufacturing system that is “kind of” integrated and “kind of” works. If you do, you will certainly be replacing it sooner than later.

    Prioritize your needs into a few lists: a top five list, a second priority list, and a “nice to have” list. Ensure the top five list is addressed in a robust manner when evaluating ERP options.

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    1. Have a realistic budget. When looking for ERP for small manufacturing, company leaders often assign an unrealistic budget to the project. It is typically an arbitrary number that is too low and does not allow the business owner to shop for a system that meets their needs. What’s commonly overlooked is the correlation between a new ERP system’s expense and return on investment. Our guidance is that you should view the ERP system as an asset…no different than a production asset. That’s because a properly rolled out ERP system will make you money. It will allow you to grow your business without using manual labor to do tasks. ERP helps you shorten lead times, measure profit, and determine which products make you the most money and which make you the least. An ERP system is equally as valuable as a CNC machine, water jet, or any other production tool. It is that simple.

    ERP companies now offer creative options for procurement. Most ERP providers have financing, plus there are cloud options with minimal up-front and support costs. And companies like Infor even provide financing for cloud subscriptions. Here’s a great reference guide for choosing ERP software for small manufacturers.

    Summary

    Finding the right ERP software for a small manufacturing company requires having a plan and executing. Many Visual South and Infor ERP customers started off with just five users and have grown to over 60 users. Those companies looked for a long-term ERP solution and partner, and achieved the goal of growing their business by leveraging their ERP system.

    If you would like to discuss best methods for acquiring an ERP for small manufacturers, please reach out for a free assessment. The team at Visual South will discuss options for your specific situation and how to maximize the benefits of ERP in a small manufacturing environment.

    eBook ERP selection

    Topics: ERP selection

    Tim O'Brien

    Written by Tim O'Brien

    Tim has over 20 years of successful experience helping companies improve their processes and operations using enterprise software solutions. Those enterprise solutions include Enterprise Resource Planning for manufacturers, Service Management for service oriented companies, and Enterprise Asset Management in the process manufacturing industry.