Questica Blog

How to determine if your engineer-to-order company needs an ERP system

Engineer-to-order manufacturers should consider scaling opportunities, current software problems and accessibility issues when determining ERP needs.

Running a custom-design manufacturing business requires executives and managers to effectively and properly allocate the company’s resources in an efficient and timely manner. Failure to do so may result in budget overruns, lost revenue and client cancelations.

One of the most effective ways to combat this misallocation of capital, time and materials is to implement a configurable enterprise resource planning solution. While an ERP system provides the necessary tools to create better budgets, greater transparency and increased accountability, only a little more than a quarter of respondents to a recent industry study stated they used ERP systems. The survey conducted by Illinois-based accounting firm Sikich LLP found that 53 percent of those polled relied on manual processes, such as paper-and-pen techniques, to measure key performance indicators. Meanwhile, only 26 percent utilized an ERP system.

Speaking with Manufacturing.net, Sikich’s Jim Wagner expressed concern over the fact that so few manufacturers were taking advantage of this crucial digital budgeting software.

“The persistence of manual processes in the industry is troubling,” explained Wagner. “Technology can help companies grow more efficient, lower costs and better serve customers. It has the potential to transform the industry and drive success, but companies need to make full use of it to realize gains.”

As global competition continues to increase, engineer-to-order manufacturers should not discount the many benefits an ERP solution provides for these companies. The following examples provide a starting point for manufacturers to determine whether they need an ERP system for their organizations.

Misallocation of resources in an engineer-to-order manufacturing plant can make it difficult to scale operations.Misallocation of resources in an engineer-to-order manufacturing plant can make it difficult to scale operations.

Scaling opportunities

An engineer-to-order manufacturer that has no plans to rapidly scale up production might be content with its current resourcing situation. On the other hand, a company poised to quickly expand operations needs to have the tools in place to handle the drastic change the company may experience during this scaling process.

New workflows will need to be introduced for employees; the company’s supply chain may need to be expanded, with additional vendors brought into service and a greater volume of goods being built; but more importantly, the organization’s resource allocation will need to be overhauled – in some cases significantly – to cover an increase in revenue, overhead and orders that accompanies a major expansion. As noted by TGO Consulting, an ERP system brings an organizational value to a company that is extremely worthwhile.

“Even without immediate plans to scale, manufacturers can still benefit from an ERP system.”

However, even without an immediate plan to scale operations, it doesn’t mean the company won’t benefit from an ERP system. Often the biggest obstacle to business expansion is the lack of available resources necessary for scaling, whether that includes purchasing more material to build a greater number of products, hiring additional employees or dedicating money to a marketing campaign, among numerous other routes. But having a robust ERP system in place can potentially allow the engineer-to-order company to create more accurate financial forecasts and ensure current projects are on schedule and within budget. With this ability to drill down and get the granular data about the company’s resources, there’s a greater chance of executives and managers finding ways to cut costs, trim budgets and potentially find the extra resources needed to grow the company.

Not enough access to budgetary data

While most people try to detach from work and not worry about these issues when they leave for the day and go home, it’s not always as easy as it sounds. What’s more, some individuals willingly take their work home with them every day. No matter the work-home life balance preferences or responsibilities, there’s always a potential chance of having to spend some time dealing with work issues away from the office or plant. Not having access to this information away from the company can make this work difficult or even impossible to complete.

In addition, even the supposedly simple task of looking up a key detail or specific line-item entry for a budget can potentially take a considerable amount of time if this information is siloed off between departments or stored in countless spreadsheets located on a variety of local servers. Having to email around to various employees or dig through a hard drive or filing cabinet to answer an easy budgetary request is a waste of time and resources.

Too many programs currently in use

A company that needs to use several different types of software to manage various aspects of daily operations may find itself having to use different stop-gap measures and other workarounds to conduct business. Is one kind of software used to track shipping and a different one used to monitor receiving? Having to download a file from one program, convert the data to a different format, email it to a coworker, who then uploads it to his or her computer not only wastes time, but it opens the possibility for information corruption, mishandling or loss.

Custom-design manufacturers faced with any of these problems can benefit from implementing Questica ETO, a configurable, enterprise resource planning solution specifically designed for the engineer-to-order sector.

Take the first step!