tl;dr
- ETO manufacturers are vastly different from those who build the same product(s) repeatedly, so they need several additional/different ERP features. This includes Dynamic BOMs, real-time job costing, and part tracking.
- ERP software with features that provide insightful and valuable information, including historical data, full project visibility, and sales estimating info are necessary for growth.
- Be sure you discuss maintenance and service for your ETO ERP. Ask the ERP team about customizations they’ve made for other Custom Machine Builders. This can give you an idea of the problem-solving skills you’ll be working with. It could also spark an idea that will benefit your facility, too.
The Best ERP Software Comes With The Best Features For Your Team!
Custom Machine Builders operate in a dynamic and complex environment. Precision, efficiency, and adaptability are paramount here. The Engineer To Order (ETO) space is growing along with the demand for more customized solutions. This boom in business is inspiring Integrators, Panel Shops, and OEMs to streamline their processes. Becoming more efficient is the best way to complete more projects in less time, without sacrificing quality.
To meet the challenges that ETO manufacturers face, Custom Machine Builders need ERP software designed for their unique workflow. Enterprise resource planning solutions are used in many industries, including manufacturing. When it comes to custom manufacturing though, most ERPs aren’t a fit. That’s why it’s important to investigate ERP features and prioritize them with your team.
In this article, we’ll explore the ERP features that Integrators, Panel Shops, and OEMs need. These tips will help you as you explore your software options and ultimately simplify implementation and use.
1. ETO ERP Software with Dynamic and Nested BOMs
Engineering is the heart of ETO manufacturing. Yet, engineering for Custom Machine Builders is vastly different than any other type of organization, including the make to order (MTO) industry. Research from Purdue University shows the characteristics that make ETO a unique niche include a very distinct business process, low production volume with high levels of customization, and many change requests throughout the design and build phase..
First and foremost, an ETO ERP must support a nested and dynamic bill of materials (BOM). This cannot be understated. The dynamically changing nature of custom design manufacturing makes this requirement compulsory. Without this functionality, finding parts and all their instances for assisting in the build remains tedious and manual.
2. ETO Manufacturers Need CAD Integration
Where would your BOM be without CAD integrations? Most of your BOM is designed by your engineers in various 3D and electrical CAD systems, such as SolidWorks, Catia, Creo, Inventor, AutoCAD Electrical, EPlan and SolidEdge. Integration with CAD is key to picking the best ERP/MRP system. Doing so streamlines processes throughout your organization, particularly in engineering and procurement.
3. Procurement\Purchasing link from Engineering
Project designs at ETO organizations change… a lot. Challenges in manufacturing and material sourcing, as well as customers’ needs, are major reasons for design changes. Bringing novel concepts to life also has engineering challenges. Without a system designed to manage this, procurement becomes incredibly time-consuming and error-prone.
Additionally, long lead items must be communicated to procurement early on. ERP software that allows partial releases of your BOM to purchasing saves your organization from downtime. It also allows procurement time to find materials at the lowest price. This is the best way to ensure that custom design manufacturers don’t end up with an avalanche of parts to buy all at once. Time is a buyer’s best friend.
4. Real-Time Job Costing
Custom Machine Builders need to know as soon as possible what they can expect for material costs. This is more than just “actual costing”. ETO manufacturers need to consider “preliminary costing”, as the designs are being completed. It also needs to include “committed costing”, which happens as your materials are ordered and labor is incurred.
Most systems are good at actual costing, but very few can provide committed costing and even fewer can provide preliminary costing. Yet, it’s crucial to know in the design stage and before the build phase begins, how your materials and labor are adding up. During this time, it’s still possible to redesign and even renegotiate with your customers. Not realizing the full costs involved until the end of the project is too late.
5. Supply Chain Management Through Your ERP Software
A report by Deloitte shows 79% of organizations with high-performing supply chains achieve revenue growth significantly above the industry average. Integrating supply chain management with your ERP enables real-time visibility into the availability of components and other raw materials. Such insight means a Custom Machine Builder can reduce downtime and mitigate the impact of supply chain disruptions.
If your materials arrive late, your project will ship late. If your materials don’t arrive at all, you can’t ship at all. It’s imperative to keep on top of open orders, ensuring vendors are committed to delivering the materials you need, when you need them.
6. Quality Control and Compliance
For Integrators, Panel Shops, and OEMs, adherence to quality standards is non-negotiable. An ERP system with quality control features built-in ensures you’re meeting industry standards. Defects are avoided and custom satisfaction is improved; it’s a win-win.
7. Project Management and Visibility
A study by Gartner shows that effective project management can improve delivery times by 25%. Such a boost is great for customer and employee satisfaction. Complete project visibility allows you to track your project workflow, empowering management with real-time information. This data should be available to your team at any stage of the build and in predesigned or customized reports. It’s also beneficial if you can export this valuable information in your preferred format such as Excel or PDF.
8. Historical Data for Growing ETO Manufacturers
Custom Machine Builders need to have historical data available, whenever needed. This saves time and costs by allowing estimators to reuse parts of previous designs or even entire projects. This will prevent previous mistakes in the event of similar future jobs using the final corrected BOM from those older projects. Managers should be able to pull data for forecasting upcoming material costs, examine and produce reports that help evaluate all the key aspects of the business.
9. Service and Maintenance
After-sales service is a crucial but overlooked or forgotten benefit of an ERP designed for ETO manufacturers. With the right ERP, your business will grow. So, make sure it grows with you! This isn’t just a benefit from the software, but rather the company behind the software. It’s a good idea to ask the ERP team about customizations they’ve made for other Custom Machine Builders. Not only will it give you an idea of the problem-solving powers you’re working with, but it could spark an idea that will benefit your facility, too.
Conclusion
The above tips are the most significant ETO ERP features for Engineer To Order manufacturers to consider when comparing systems. However, it is far from a complete list. Remember, the best ERP software comes with the best features for its team. We recommend you also consider functions like: sales and prospecting, part purchasing and sales, change orders, shipment and packing slip tracking, fabrications/work order tracking, accounts payable, accounts receivable, time tracking, receiving… the list goes on.
Your ERP software should fit your business needs today, and going forward as you scale. The system should also flow with your business, and not make you adapt to fit the software. Highly specialized systems do just that, and in turn, they reduce implementation and training costs because they are intuitive to your business and easy to work with.
Written by Jay Boychuk
