How to Select Discrete Manufacturing ERP Software

    6/15/22 10:00 AM

    select-discrete-manufacturing-erp

    Address your business issues

    When selecting discrete manufacturing ERP software, choose an application that addresses your business issues. That should be the primary goal of an ERP evaluation, but we often see the focus of the evaluation shift to matters that truly do not impact the business. Cool features can distract you from picking an application that can help discrete manufacturers manage their business better. That’s why a plan is needed that includes an ERP Evaluation Checklist.

    The evaluation project manager should gather two lists of requirements: one from the executive team and one from other department heads.

    Refrain from having too many members on the evaluation team. Typically, around four stakeholders should suffice, assuming those members are subject matter experts on the complete business processes. If there are too many team members, it gets difficult to schedule meetings, keep the team focused on primary goals, and manage internal politics and conflicts. These team members will also be heavily involved in the implementation part of the project.

    The executive team’s list is necessary to ensure that their short- and long-term vision and goals are addressed with a new ERP. The new ERP project needs executive ownership, and there is no better way to get that than by obtaining requirements from the C-suite and owners of the company. Typically, we see that when they are excluded, there are issues with getting final sign-off on purchasing a new system—or the project veers in alternative directions when final approvals are needed.

    The evaluation project manager should also get a list of requirements and business goals from department heads, including sales, engineering, procurement, production, material management, quality, accounting, and service. These requirements are typically much different than their executive counterparts. For example, accounting may require the ability to email an invoice in PDF format. That is important for the billing unit, but it is much different than the president wanting to grow sales by five percent year over year while only growing headcount by two percent. The executive will be more interested in strategic goals such as growing revenue, introducing new and more competitive product lines, ability to do “what if” analysis if additional production assets are needed, or possible consolidation of activities across multiple sites.

    Once requirements and goals are assembled, they need to be prioritized. Define what you critically need to help your discrete manufacturing business achieve its executive goals, while also addressing departmental requirements. When this is complete, a foundation will be in place to qualify varying discrete manufacturing-focused ERP providers.

    The next step is to create a short list of vendors—no more than four. Otherwise, it will be noisy due to the numerous calls, discovery sessions, demonstrations, implementation reviews and scoping, software licensing specification discussions and pricing, and final negotiations. The sheer number of activities taking place during an evaluation can make it overwhelming for the evaluation team from a content, attention, and time perspective. In short, it can be arduous.

    Areas of focus for discrete manufacturers

    The next step is to effectively manage the product demonstrations. A few primary areas to investigate in the discrete manufacturing ERP system are visibility of orders and managing customer expectations, planning and scheduling, and job costing. Those areas are typically pillars of a discrete manufacturing operation.

    Visibility

    Ensure the ERP system can provide enterprise visibility into the entire order cycle from opportunity through shipment. Managing customer expectations is critical for winning new business and keeping satisfied customers. Possessing Capable to Promise (CTP) abilities is a game-changer for sales and customer service, as they will allow your organization to give real estimates of when products can be shipped. They will also inform you when you cannot make an order’s promise date, unless you make changes. The discrete manufacturing software should be able to provide constraints affecting a delivery date, whether it be materials, capacity, or even outside processes.

    You also should have an application that shows you where an order is in process, including “In Engineering” phase, “Production,” or “Ready to be Shipped.” The ERP system should provide this ability with options like a Project module and order lifecycle tracker. The software you choose should also come with a modern shop floor execution system providing visibility into WIP and expected time of completion.

    Planning and Scheduling

    Everyone schedules, but not every manufacturer has a formal planning and scheduling system. Understand what options the ERP system provides. Also ensure that scheduling is not a third-party system. If the ERP needs to use a third-party scheduling tool, then they are not serious about addressing discrete manufacturing needs. Understand how the scheduling tools look at material availability and lead times, and match that up with available capacity to schedule jobs. Scheduling production and having proper material requirements are both critical to successfully running a discrete manufacturing company.

    Costing

    Make sure to have flexibility with relation to costing methods. Typically, discrete manufacturers use actual costing since jobs are not repetitive. Due to the discrete manufacturing mode, there are many different materials and operations used because of the orders being more specific to the customer needs. The ERP system needs an infrastructure for designating and capturing costs. It’s important to understand what is provided, because having true and trusted costs are an integral part of a properly operating discrete manufacturing facility.

    Summary

    Maintain focus when selecting a discrete manufacturing ERP system. It takes time, and you must follow a process and stay within those process lanes. Evaluate the systems based on your needs, not the areas your sales team is focused on. Keep your team focused on the overall goals as defined by the executive team, while also meeting the needs of the departments.

    Visual South has been involved in hundreds of ERP evaluation projects. We have numerous documents that can help you, including a guide to selecting ERP software. If you would like to discuss what you have in mind and get feedback, register for a free assessment. Our team is happy to provide guidance on best practices for selecting and implementing a new discrete manufacturing ERP system.

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    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.