3 Critical Questions to Ask About Manufacturing ERP Software That Are Often Missed

Sourcing the best Manufacturing ERP software solutions for your business is a difficult task nowadays with the plethora of ERP applications available on the market.  When looking at the alternative ERP solutions on the market, the typical questions often asked are about functionality, bells and  whistles, and cost.  Unfortunately, for many manufacturing companies they did not ask three key questions in their ERP software selection process that could have saved them a lot of headaches down the road.  Asking these three questions can make all the difference in your enterprise system investment ROI.

The first question to ask is how the ERP software supports lean principles.  The dilemma with lean principles is that they foster allowing individual departments to pick the ERP application or ERP module that meets their specific needs.  Empowerment at the department level is the foundation of any lean program.  The problem is that enterprise resource planning systems by nature are chosen for their ability to span multiple departments with broad brush synergies.  The real focus should not be on the broad brush benefits of the ERP system, but does the enterprise application cut the waste out of the system both internally and across the entire supply chain.  Find out if pull systems is part of the core system, if demand leveling functionality is there and are these functions supported across the supply chain with customers, partners and suppliers.

The second question focuses on how does the production data detail with respect to downtime, labor, quality control and scrap get into the system.  These areas are critical factors affecting the profitability and overall success of a manufacturing company.  If employees and manager have access to this information in real time, they have a powerful tool to deliver optimal business decisions and results to the organization. For this reason the ERP software should not require front office resources dedicated to key in data as this will lead to errors and a chain of negative events down the road.  The stream of information and data should flow from the shop floor to the executive floor in real time fashion. 

Finally, make sure to ask whether the ERP software records inventory and it tied directly to the physical reality.  A large number of ERP software solutions treat inventory as a dollar amount, or categories of dollar amounts broken out by material, work in progress, and finished inventory.  Unfortunately this can be misleading when trying to tie with the physical reality with the dollar amount.  Manufacturers should look for ERP systems that track inventory at the container, box, serial number, or product level particularly if your manufacturing operation is aerospace, medical devices, food, or automotive related.

Needless to say, picking the right ERP system for your manufacturing company is a critical task and one that you will need to work with for years down the road.  Make sure you ask the questions that are related to your industry and business in addition to the typical ERP software check list.  You will save yourself a lot of headaches both short term and long term.