In the ‘50s, when you bought a car, there were maybe three things to consider:
- Do you want the anemic, six-cylinder engine that offers fuel economy, or do you want the huge, gas-guzzling V8?
- Do you want a radio?
- Do you want plastic wood, leather seats, and a hood ornament?
Buying ERP software used to be like buying your father’s Oldsmobile.
Early on, buying what was called Material Requirements Planning (MRP) was almost as simple. MRP handled a limited number of things for companies in the business of making products — mostly manufacturers. MRP was about making sure that everything needed to produce items scheduled for production was on hand. It helped companies streamline inventory and reduce acquisition costs while still honoring production commitments.
Things became more complex with the second generation of MRP (MRP II). The scope of the system began to expand, and the goal was to effectively coordinate, manage and integrate the entire manufacturing process. Where MRP was primarily concerned with getting supplies and parts to the factory on-time, MRP II extended into the manufacturing process itself. This included the human component, the effective management of money driving the process, and again, the material.
Enterprise Resource Planning (ERP) took this broad approach and brought in all of the other supporting roles and processes within the organization. The goal is now to use a single system that supports essentially everything your company does.
Good News/Bad News
ERP does almost everything. That’s the great promise that is made, and it’s also one of ERP’s biggest drawbacks. ERP does so much that it causes the buyer to be overwhelmed by functional choices.
What is essential, what is superfluous, what is nice to have, and what is too much trouble to bother with? These levels of delivered value vary by stakeholder and can compromise the overall effort to successfully implement a system.
Before you move forward with selection and implementation, it is essential that you decide what features you need, which systems offer them, and which vendors are aligned with your goals.
Key Functionalities for Manufacturers
Obviously, not all companies have identical requirements. Variations in company size, supply chain complexity, product complexity, market volatility, regulations, and other factors differentiate one company from the next. So-called “advanced manufacturers” (those who use technology to improve processes) have unique needs of their own. A wide variety of accelerator technologies are available to help tailor and extend generic ERP to better address the needs of modern manufacturing.
At Cincom, we see five specific technologies manufacturers should consider for their stack. These will help your company stay responsive, flexible, and efficient, moving beyond repetitive workflows into mass personalization and a stronger focus on your customer.
1. CPQ – Configure Price Quote
Products are complicated today. Parts, assemblies, and subassemblies go together in assorted combinations to address a multitude of needs. Two products might have 90 percent common parts but address two entirely separate and distinct applications. Not only is there a huge knowledge requirement associated with the physical products, there are many different bodies of knowledge needed for the application itself. CPQ tools build that knowledge into specification questionnaires that automate the configuration decision-making.
Pricing is every bit as complex because of this structural variability. Over time, multiple quotes, ballpark pricing, and RFP response mean that any given deal will have a pile of quotations associated with it. CPQ treats each one like a formal quote. The data is time-stamped and tied to a specific list of products and volumes. There are no misunderstandings about pricing at close.
2. Engineering Change Management (ECM)
As products evolve and change, usually in response to customer-driven initiatives, the volume of information about those products begins to mushroom. Over time, multiple generations end up deployed in the field, and current models address multiple markets. The complexity of managing all of that information from a support and selling point of view is daunting.
Engineering change management (ECM) helps your company built complex products and improve and enhance those products over time without losing sight of the very real differences between iterations. This is especially important for not only ongoing field support, but also for understanding configuration capability.
3. Enhanced Supply Chain Management
Today, complex products are produced with supply and part contributions from blocks away, miles away or the other side of the planet. A production system is supplied by a never-ending ballet of part and supply movements from here to there then to the plant floor and onto the line.
Visibility is essential. Suppliers must have the ability to see into the future and know when there is a large requirement in queue or even quoted before a customer. They should also know if part or supply availability from a source is threatened, and whether it’s time to choose an alternative.
Companies can’t afford to sit out a few days while some contentious political issue is resolved in a supplier host nation. Delays caused by weather, strikes, or any other factor must be offset by alternative sources.
This starts with having visibility into the supply chain.
4. Marketing Automation/Sales Enablement
The near-legendary cat/dog relationship between marketing and sales is now just a bad excuse. Marketing automation tools are designed to integrate into CRM and CPQ systems to facilitate alignment between sales efforts and marketing plans.
Technology doesn’t replace effective communication between department leaders, but it does make plan execution much easier and more effective.
5. Lean Manufacturing
Being lean doesn’t always require additional software, but you can magnify the effects of well-crafted lean strategy through the effective application of technology.
Consider Kanban on your assembly line. This can be built into your production supply and warehousing systems. In fact, moving toward a demand-driven manufacturing model is a prime candidate for lean strategies.
The best thing about Lean is that it gives you a footing for expanding and growing your enterprise.
* * *
ERP is challenging, but it’s a necessary tool for the modern enterprise. One of the many keys to success is knowing what is useful and what is not. Despite the proliferation and complication of the software market, companies do not have to implement everything at once.
The priorities should be:
- The basic system
- Features that deliver measurable advantage (more product produced faster or at a lower cost)
- Features that deliver operational stability and ease of use
- Features that improve convenience
Make smart decisions up front, and your implementation will deliver more ROI in a shorter amount of time.
Lou Washington is a blogger and senior writer for Cincom Systems, a provider of CPQ, CCM and other business technology solutions. Lou draws on his combined 45 years of manufacturing and business technology experience to offer businesses insight into improving their most critical processes.