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If you are a manufacturing firm that is considering an Enterprise Resource Planning (ERP) solution, you have an important choice to make.
Should you select an ERP system specific to the manufacturing industry or one that is more general in scope?
There are many choices out there, and it can be confusing to know the right direction to go in.
In this post, we’ll get into each type of ERP, what they do, and the differences between them. Then we will explore which type might be best suited for your business and how to make the final decision.
By the end, you’ll have a better handle on what makes sense for your specific business needs so you can move forward in your search.
What Is an ERP system?
An ERP system is computer software that handles a company’s business operations to automate processes and streamline operations. It connects departments so they can communicate better and work off of the same real-time information contained in a single database.
What Is Generic ERP?
Generic ERP handles a business’s primary functions, which can vary per solution but typically includes Accounting, Financial Management, Customer Relations Management (CRM), Sales and Marketing, Purchasing, Inventory Management, and Human Resources. These are fully integrated modules that work together to effectively manage the business operations. It can work out-of-the-box or be customized to meet more specific needs.
A good ERP system will be powerful and able to grow your business. You can conduct transactions with a few easy clicks, and workflow is updated in real-time so everyone has accurate information they can access instantly. In addition, it provides dashboards that show critical information and help managers make smarter and faster decisions since they can quickly and easily get deep analytical data.
What Is Manufacturing ERP?
Manufacturing ERP is software made specifically for the operations of a manufacturing business. It is made up of modules that are fully integrated to handle the generic business operations as well as the manufacturing operations. Again, the modules may vary per vendor, but typically they contain all of the modules noted in the generic ERP category, plus Production Management, Warehouse Management, Quality Management, Supply Chain Management, Material Requirement Planning (MRP), Advanced Planning and Scheduling, Manufacturing Execution System (MES), and Shop Floor Execution.
Manufacturing ERP software provides the modules that handle the front and the back end of the business fully integrated to work together for an end-to-end solution. It is designed to help manufacturers take control and overcome the challenges faced in the manufacturing industry. A good system will allow you to purchase the modules needed at the start and add others later as necessary.
Generic ERP vs. Manufacturing ERP
To make it easy to see the difference between the two types of ERP systems, the chart below outlines how they compare in various areas. When choosing an ERP system, it’s important to outline your challenges and what you want the software to achieve. Once you have that buttoned down, it will be easier to know what type of software makes sense for your business.
|Generic ERP||Manufacturing ERP|
|Customization||This depends on the business. If how it performs out-of-the-box is enough, then customization is not needed. However, if more functionality is needed, plan on some customization.||Manufacturing ERP is less like to need customization as it is designed for manufacturing companies, so it is more likely to provide the necessary capabilities. However, it might require some tweaking if specific needs must be met.|
|Functionality||This software is designed to fit basic business needs and is not designed for any specific industry.||Manufacturing ERP is designed to provide deep functionality for specific manufacturing needs, such as connecting with shop floor machines and strong inventory and quality control features.|
|Vendor Knowledge||The vendors will understand general business functions, and if more specific capabilities come into play, an outside consultant will likely be needed.||The vendor of a manufacturing ERP should be well versed in the manufacturing industry and understand its challenges and how to overcome them.|
|Cost||Not as expensive as it has less functionality.||More expensive as it has deep industry-specific features to help manufacturers be more competitive.|
|Maintenance and Development||The vendor should maintain the system, however, if manufacturing-specific functionality is needed down the line, add-on software will be necessary, and it will need to be installed by an integration specialist familiar with the manufacturing industry. Add-ons can become problematic when you need maintenance and updates to ensure the two or more systems continue to work together. And that can become expensive and complicated for users as the systems have different interfaces.||Manufacturing ERP will be maintained and developed by your vendor, who should have deep industry experience.|
|Modules||Handles basic business functions.||Handles both basic business and manufacturing operations.|
Which ERP Is Right for You?
So should you go for a generic ERP or a manufacturing-specific system? To determine which is right for your business, you first must evaluate your business needs. Below are some steps to help you figure out which ERP system makes sense for your company.
- Understand your business operations and the challenges you need to overcome. Form a team that can evaluate all of the processes requiring automation and create an outline of your business needs to understand what you want from your ERP system.
- Figure out the capabilities that will be needed from the software. For instance, do you need strong quality management, in-depth inventory control, supplier performance metrics, shop floor monitoring, etc.? Once you know what you need vs. what is just nice to have, it will be easier to figure out what type of software makes sense for your company.
- Do some research into different systems and see how their functionality fits the needs of your business as you have it defined. At this point, you will begin to see if a generic or a manufacturing system makes the most sense for your business.
- When considering systems, be sure to look at reviews. See if the vendor continually invests in technological advancements, understand how their training and support work, see if the system has a track record of agility or adapting to future needs, and see if the vendor understands your industry to help you have a successful implementation.
- Avoid doing a lot of customization. If the features of an ERP system are not a close match to your requirements, you will likely need some customization. However, these changes can be expensive, make it longer to implement, and problematic down the line as you need to update/upgrade the software as it will most likely require some help to work around the customizations.
- Speak with the vendors to receive answers to any of your questions regarding functionality or any other concerns. Your team will get a feel for what system makes sense for your business to help you grow now and into the future.
An ERP system has become essential for growth in this competitive business world. It provides businesses with the technology, collaboration, and security needed to move forward.
For more information on choosing and implementing the right ERP software for your business, read our 7 Best Practices for ERP Implementation. If you would like to learn about manufacturing software designed for small to midsized manufacturers, take a look at OptiProERP that is embedded into the SAP Business One platform.
The post How to Compare Manufacturing ERP vs. Generic ERP Systems appeared first on ERP Cloud Blog.