Many small manufacturing firms have avoided taking the ERP plunge, fearing it could cost too much, tap out their IT resources or not really be a good fit for their way of doing business. Now that cloud ERP has emerged, many of the previous barriers to ERP entry have fallen. There’s no software to buy, no annual license or maintenance fees and no new servers, storage or backup systems required. All that’s required are PCs with an Internet connection and a monthly per-user rental fee.

ERP Manufacturing

Does Cloud ERP fit the bill for small manufacturers? (Part 1)

Sometimes the old “If it sounds too good to be true…” adage applies. That can be the case with cloud ERP if you are not a discriminate buyer, with the right set of questions to ask. The two-part set of articles is designed to help small manufacturers develop their own cloud ERP checklist. Here are the things to look for in a cloud ERP system.

Is it a good fit? In the traditional, on-premises ERP marketplace, general purpose cross-industry systems have all but given way to industry, even niche-specific solutions. The same mindset should govern your approach to cloud ERP. The system that’s right for you will have solutions specific not just to manufacturing, but the type of manufacturing you do.  A make to order, make to stock or mixed mode manufacturer will have different functional requirements. Look for a system that can help you manage job costs, design and engineering, factory floor and warehouse operations. If your strategic plan calls for lean manufacturing and quality improvements, don’t compromise on an ERP system that can’t help you get there.

Most cloud ERP systems designed for small manufacturers are going to have implemented “best practices” for most common business processes. But every organization is unique. So you’ll want to carefully map your business processes and ask prospective vendors if their software can easily and inexpensively be adapted to your business. We aren’t talking about costly source code changes that have to be made by software engineers. The right cloud ERP system should have built-in tools that make it easy to make minor modifications.

How will it impact the shop floor? Everything happening on the shop floor impacts every other part of the enterprise. The front office needs accurate data from the factory in real time. But workers have a job to do and can’t be made slaves to the system. A cloud ERP system that’s right for small manufacturers will support technologies that automate data capture, with the wave of a barcode wand, for example. Labor and material costs flow directly into job costing applications, inventory control can anticipate finished goods and all departments that need data from the factory have ready access to it.  

How will it impact the rest of the organization?  ERP systems now have modules that span the enterprise, such as customer relationship management (CRM) for sales, product lifecycle management (PLM) for engineering, and warehouse management software for inventory control. In a cloud ERP system, all the modules you need should be included and pre-integrated. The objective is to replace all your current legacy software packages and spreadsheet-based solutions; take inventory of all the automation you have in house right now and then make sure the ERP system you choose as replacement solutions as part of the package.

Continued in Part 2

Written by :

Don Lucky