ETO Manufacturing: Excel vs Homegrown vs ERP

Can you manage a manufacturing business without an ERP?

Yes, you can run a manufacturing facility without an ERP, but that comes at a cost.

Many Custom Machine Builders use a combination of Excel spreadsheets, accounting software, homegrown systems and other disconnected tools like time collection apps. These solutions can work surprisingly well for smaller operations, especially when they are built around the company’s unique workflow. They give manufacturers flexibility and can be inexpensive and familiar to the people who use them.

The challenge comes as the business grows more complex. More projects, employees, materials, and vendors. Customer requirements expand, as well as the size of your BOMs. The amount of information to track can become overwhelming. Spreadsheets typically become difficult to maintain, while homegrown systems can become increasingly expensive and time-consuming to develop and support.

Eventually, the question isn’t whether you can manage manufacturing without an ERP, it’s whether your current system can continue to provide the visibility, accuracy, automation, and control you need to scale profitably.

Is Excel enough for a small manufacturer?

Excel can work well when a manufacturing operation remains simple.

A small manufacturer may use spreadsheets to track inventory, purchasing, labor, and other costs. This approach can work when transaction volumes are low and BOMs are short.

However, spreadsheets depend heavily on manual processes. Employees must enter information, update formulas, maintain files, and communicate changes. As a result, errors can become difficult to find.

Spreadsheets also separate information across multiple files, making it harder to see a project’s full status. For example, purchasing may maintain one spreadsheet while accounting maintains another. Engineering may keep BOM information somewhere else. Production then relies on information from several sources.

That approach becomes risky as your business grows. As Geoff from Bold Robotics says in this video, “It was a lot of work to manage it, where as now that work is managed in Total ETO”.

What are the limitations of Excel for manufacturing?

Excel does not provide the connected workflow that manufacturing requires.

Common problems include:

Duplicate data entry
Outdated inventory information
Manual purchasing calculations
Difficult BOM management
Limited production visibility
Inconsistent job costing
Version-control problems
Limited project-level reporting
Heavy dependence on individual employees
Difficulty connecting engineering with purchasing

These problems become more serious when projects change frequently. That makes Excel especially challenging for Engineer To Order manufacturers.

What about homegrown systems, can they help a manufacturer grow?

Homegrown manufacturing systems often start for a good reason. A company needs to manage its unique workflow, but it’s tough to find software that matches an ETO manufacturer’s processes. So, someone builds a solution around the company’s specific requirements.

Over time, that system can become a valuable part of the business. It reflects how the company actually works instead of forcing employees to adapt to generic software.

However, homegrown systems often reach their limits as the company grows. Adding new functionality requires more development, while reporting becomes increasingly difficult.

The system may handle the company’s original needs well, but struggle with new requirements, integrations, automation, and greater operational complexity.

Eventually, the business spends more time maintaining the system than improving it.

At that point, a purpose-built ERP can provide the same workflow flexibility while offering the functionality, reporting, scalability, and support a growing manufacturer needs.

What are the pro's and con's of a homegrown system?

Pro's

A homegrown system is built and grown over time, specifically around your processes and has increased their efficiency.
A core group of employees – typically in engineering and/or procurement know the software well.
The company controls how and when the system grows. If you need a new field, report, or workflow, an in-house team member can often add it

Con's

The system usually only does what the company needed when it was built. This is a fundamental issue because the solution was created to solve a specific problem such as “we need a better way to track our job costs”, so a homegrown system is created, but over time the company needs better purchasing, inventory management, engineering integration, etc. The company now has a system that is great for the original problem, but increasingly weak everywhere else.
Development is a permanent responsibility. The manufacturer isn’t just using software, they are now also a software company that needs someone to fix bugs, maintain databases, address security vulnerabilities, maintain back ups and more. Suddenly, this “free” solution involves developer salaries, IT infrastructure, support, opportunity costs, and more.
Knowledge becomes concentrated in just a couple of people. This is a major risk that is especially dangerous with older systems; as younger or new staff will need additional time getting up to speed.
Growth and innovation are limited. Homegrown systems can be a thing of beauty, and their creators should be proud; they solved a problem and increased efficiency. But as your team grows, you need more robust workflows, better detailed reporting, more automation, and greater reliability. Innovation also becomes reactive instead of proactive. In a homegrown system, solutions are only available after someone identifies a recurring problem. That could take a while to find and solve. A commercial ERP vendor has hundreds of manufacturers identifying problems, requesting features, and influencing the growth of the ERP and your business.

As Jeremy from Hyperion Automation says in the video below, as good as their homegrown system was, it wasn’t scalable, it wasn’t the right fit for where the business was going.

How do we know it's time for an ERP?

If your Excel spreadsheet has 47 tabs, it’s time.

Small manufacturers often reach a point where their current systems cannot keep up. Whether you’re managing operations with Excel,
rely on a homegrown system, or have an ERP that’s just not cutting it… growth changes what your business needs from its software.

If your team wants to take on more projects, that means you’ll need to handle more purchasing, engineering changes, inventory transactions, production activity, and financial data. As complexity increases, disconnected systems create more opportunities for errors and delays.

For Engineer To Order manufacturers, these challenges appear even sooner.

Every project can involve:

– unique designs

– changing BOMs

– custom purchasing

– variable labor

– project-specific costs

– customer driven revisions

– long lead time for materials

– project specific routing

– subcontracted processes

Your software should connect those activities without adding unnecessary complexity.

Growth and moving your business forward also require substantial data from your past. Improved efficiency, accuracy, and ultimately – profitability comes from learning about your past builds.

Why do we need an ERP?

Spreadsheets and homegrown systems can work well, especially when they are built around how your business actually operates. But as a custom manufacturer grows, the systems struggle to grow with. Managing more projects, people, materials, and data can expose these tools’ limitations. What starts as a flexible solution can become a collection of disconnected spreadsheets and manual processes that are difficult to maintain, expand, and report on.

At a certain point, manufacturers need more than a system that simply fits their workflow; they need a connected platform that can support the entire business.

That’s where an ERP comes in.

Not just any ERP though, focus your research around ERPs designed for ETO, otherwise you’ll be stuck with another system that doesn’t fit.

Generic ERPs aren’t bad, they’re broad!

For a Custom Machine Builder, that distinction matters! Those systems are designed to support a wide range of manufacturing models. Rarely are they ETO focused, at best, they have an ETO module. Your process is ETO from start to finish, so your ERP should be as well.

CAD integration doesn’t happen in generic ERPs, they also can’t come close to giving you the flexibility of Dynamic BOMs.

At the heart of it, your process is about projects NOT products. You’re managing unique projects that move from sales → engineering → BOM → purchasing → manufacturing → installation → accounting, with changes happening throughout the process. You need to track and manage those processes in real time.

What does a manufacturer need to track?

A growing ETO manufacturer needs visibility across the entire project lifecycle, in real-time.

That includes:

Common questions & concerns about transitioning to an ERP

What if we are too small for an ERP?

Being small does not automatically mean you are too small for an ERP, in fact, our ERP is used in shops with less than 10 employees.

The better question is whether your operation has enough complexity to benefit from one. A small Custom Machine Builder is likely to have more operational complexity than a mid-size repetitive manufacturer.

Engineer To Order projects create unique challenges regardless of headcount. If your team manages complex engineering, purchasing, inventory, production, and project costs, an ERP can provide value early. The key is choosing a system that matches your size and processes. You should not need an enterprise-sized system to manage a small manufacturing operation.

What should a small manufacturer look for in an ERP?

The best ERP depends on your manufacturing model.

A repetitive manufacturer has different requirements from a Custom Machine Builder (who needs visibility from quote through completion). Engineer To Order manufacturers benefit significantly from software that supports changing projects and unique requirements.

Look for an ETO ERP that can manage:

CAD integration
Engineering-driven BOMs
BOM revisions
Project-specific purchasing
Project inventory
Accounting integration
RFQs and purchase orders
Actual versus estimated costs
Labor and time tracking
WIP
Project profitability

An important note: small ETO manufacturers should look for an ERP that connects these functions. A collection of separate tools can create the same problems as spreadsheets.

Our ERP works for accounting but not operations... What should we do?

A quick Google search shows there are approximately 200 ERP systems available in North America alone. Only a handful of those are dedicated to manufacturing, and only one web-based ERP for ETO… we’re glad you found us!nd us.

So it’s not a surprise that we hear this a lot from Engineer To Order manufacturers.

Many small businesses start with accounting software because financial management comes first. While that software may handle invoices, payments, taxes, and financial reporting effectively, manufacturing creates additional requirements.

Should we replace our accounting system?

Not necessarily.

For a manufacturing ERP, it often makes sense to find a system that can integrate with your accounting software. The goal should be to improve operational control without creating unnecessary disruption.

For example, a manufacturing ERP can manage engineering, purchasing, inventory, production, and project costing. While your accounting system can continue handling core financial functions. The important requirement is reliable information flow between the systems.

Look for an ERP that integrates with your accounting system and can manage:

CAD integration
Engineering-driven BOMs
BOM revisions
Project-specific purchasing
Project inventory
Accounting integration
RFQs and purchase orders
Actual versus estimated costs
Labor and time tracking
WIP
Project profitability

Most importantly, the system should connect these functions. A collection of separate tools can create the same problems as spreadsheets.

How can a small manufacturer move to an ERP without disrupting operations?

Even in the best implementations, you should expect a few hiccups.

Fortunately, if you find an ERP that matches your workflow, it shouldn’t slow your team down for long. Even better, you do not need to change everything at once. Start with the processes that create the greatest operational risk. For many manufacturers, those processes include engineering, purchasing, inventory, production, and project costing.

Then establish a clear implementation plan.

Your team should know what information moves into the new system and when each process changes. That’s when you’ll be able to start measuring results.

Expect to see fewer manual processes, better visibility, improved inventory accuracy, and stronger project control. An ERP should make the business easier to manage, not become another problem to manage.

See how Total ETO fits your manufacturing operation

Ready to see what a purpose-built Engineer To Order ERP can do?

Explore Total ETO and see how it can help your team manage projects from quote to ship.