Trends

ERP is at the heart of modern engineer to order manufacturing

Total ETO

Engineer to order manufacturing is an industry in transition. While overall manufacturing employment in advanced economies such as the U.S. has been declining for decades, the productivity of these workers has at the same time had to increase over the years thanks to automation due to equipment built by engineer to order manufacturers.

 

What does the manufacturing industry look like in perspective?

Numbers from the U.S. Bureau of Economic Analysis and Bureau of Labor Statistics charted these trends between 1947 and 2011, with a few notable findings:

  • Employment in the manufacturing sector actually peaked in 1980, at close to 20 million persons. It remained close to that level until around 2000, when it took a dramatic dive that continued until early 2010. The Federal Reserve Bank of St. Louis estimated there were slightly more than 12 million manufacturing employees near the end of 2016, which was slightly higher than the in 2010 and roughly equivalent to the level of the late 1940s.
  • However, productivity gains have more than made up for the loss in manpower. By early 2012, a factory worker was able to produce as much output in an hour as his or her equivalent could in an entire day in the 1940s. There are many reasons for this dramatic long-term increase, including increasing automation as well as other upgrades to factories and supply chains. Today’s employees are able to do more with less than their predecessors.
  • Although the absolute number of manufacturing employees only dropped off somewhat recently, the share of manufacturing within the entire economy has been diminishing for much longer. It peaked in the mid 1940s during the Second World War and has been declining ever since. This trend demonstrates the industry has not grown as quickly as the rest of the economy.

 

Looking ahead, there are many new developments that could continue to remake manufacturing as a whole.

 

There is the emergence of nanotechnology and 3-D printing. Without a doubt, manufacturers have a lot to adjust to in the years ahead, which is why the capabilities of their enterprise resource planning solutions will become more important than ever before.

 

The evolving role of manufacturing ERP systems

A modern highly specialized ERP system is indeed the key component in engineer to order manufacturing operations, since it integrates multiple critical applications (such as accounting systems and customer relationship management modules), helps remove the burden of manual spreadsheet-based activities and ensures the full business process – from prospecting and estimating to sales and product launch – is handled as smoothly as possible. For these reasons, the ERP system must be highly specialized so that it is easy to implement, intuitive to operate and cost-effective to maintain. Using a general purpose manufacturing ERP for an Engineer-to-order organization is like trying to fit a square peg in a round hole.

 

Does an ERP solution hit all of these marks? Many of them do not. There are several key issues that prevent them from being optimal fits for the workflows of today’s engineer to order manufacturers:

 

1. Unspecialized ERP or General Purpose Manufacturing ERP

General manufacturing principles are highly different than those of the engineer to order manufacturing process. Even similar systems such as MTO (Make to Order) and ETO (Engineer to Order) principles, while very similar, have significant differences such as the way materials are stocked. MTO organizations employ a static, or mostly static BOM (bill of material) while ETO organizations need to design most projects from scratch. These processes have very different needs from each other, and even more significantly than traditional manufacturing organizations.

 

2. High costs

Implementation costs with most ERP systems is very high.  The time spent implementing can be even more costly due to the time-consuming nature and difficulty to set them up. One vendor estimated the typical small or medium-sized business could expect to spend between $150,000 and $170,000 to get an ERP system up and running. Important variables include the the size of the organization, the number of users and the extent of the third-party integrations that need to be tied into the ERP infrastructure. These costs drop significantly if you choose a highly specialized system for your specific niche of industry.

3. Difficult integrations

An ERP system is not an island. It needs to be a hub for all of the important applications and workflows within your manufacturing business, a role that will only become more vital as innovations become part of day-to-day operations. An ERP system that cannot easily be connected to your accounting platform or to your 3D CAD software is one that will cause problems today and tomorrow. It is better to have a system that is capable of being integrated with a wide range of CAD and Accounting apps.

 

4. Jack of all trades, master of …

ERP systems that try to do too much can quickly become the Jack.  Highly specialized or verticalized systems provide the best of breed for your niche organization. Systems that try to do everything often end up not doing anything very well.  For example, a system that specializes in Accounting like QuickBooks will be better at general accounting functions than a system that tries to do it all AND accounting.

 

Total ETO: The ERP system that meets all your engineer-to-order requirements

As an engineer-to-order manufacturer, you need an ERP system that is affordable and accessible, while still being more than capable to support your custom design manufacturing business. Total ETO is the perfect solution in this context.

 

With Total ETO, you get the only software designed by and exclusively for ETO manufacturers. More specifically, its integrations with accounting and CAD are simple, its automation features help replace tedious Microsoft Excel workflows and its implementation is quick and painless. Best of all, it knows when to innovate and when to integrate.

 

“With Total ETO, you get software designed by and exclusively for ETO manufacturers.”

As you move from prospecting all the way through shipping, Total ETO is a valuable asset at every step. For example, the graphical project tree it provides during estimating is a useful tool for sales teams during quotation and negotiation. It also assists with the staging of materials for production, which is critical for keeping track of parts, creating barcodes and supporting quality inspection, and shipping finished goods.

 

With manufacturing becoming an increasingly automated, creating more work for ETO organizations, ERP systems like Total ETO are more important than ever. Don’t leave anything to chance. Learn more today about Total ETO.

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