Manufacturers experience a remarkable ROI when implementing an ERP. It’s trickier for Custom Machine Builders, though; they need to find an ERP that matches their workflow.
Key Takeaways
- A successful ERP implementation starts with choosing a system that complements your unique workflow. It will provide full project visibility and show reporting metrics at all stages of a project. It should also help improve the quality of your parts and machines while minimizing project completion time.
- Tips for implementing an ERP include staying within budget (including any implementation and training costs). An ERP consultant may provide helpful info and connections, but it’s vital to work with someone who understands your ETO needs. Including key staff while researching and comparing ERP systems is also important.
- Define success and schedule regular approvals with all departments at the beginning. This helps ensure everyone is on track and has no confusion or concerns.
Have you heard any of those scary stories about ERP implementations gone wrong?
We have… a lot. Many Custom Machine Builders come to Total ETO after trying to implement an enterprise resource planning system that’s built for standard manufacturers. But you’re not standard, are you? Engineer To Order manufacturers are as unique as the machines they build, that’s why we love them.
ERP Systems are Valuable
There’s no shortage of evidence proving the value of an ERP system. However, hearing the stories of implementations gone wrong can cause an organization to ditch the idea altogether. Yet, you still need to streamline your business processes! Such opposing views make it difficult for a custom manufacturer to pull the trigger on finding an ERP solution, and rightly so.
Nevertheless, giving up is not the answer. Data from Nucleus Research found that for every dollar invested in an ERP solution, manufacturers received an average of $7.23 in return. Instead, custom manufacturers, especially Integrators, Panel Shops, and OEMs benefit from a little extra research in the beginning.
With the right ERP, a Custom Machine Builder can:
- Track project workflow and see reporting metrics at all stages of a project. This empowers management with real-time information, significantly improving processes in sales and accounting.
- Improve the quality of their parts and machines. It’s easy to ensure parts are inspected as well as record & follow up on quality issues for purchased parts with embedded non-conformance reports.
- Improve project completion time by releasing the BOM to procurement in stages. Purchasing gets a head start with long-lead components. They can also issue and revise RFQs and POs with just a few clicks, based on changing BOM demand.
Tips for ERP Implementation Success
Good things come to those who wait… and you might need to wait for a few months. Typical ERP implementations are around three months long. We’ve had clients complete the setup in one month and others take several. Many factors play a part in the implementation time, including company size, the amount of time you dedicate each week, and even the software you’re integrating with, such as CAD or accounting.
One thing that all quick implementations have in common is a well-focused and motivated team. Automated Drive Systems, for example, had a speedy implementation.
When asked how they accomplished so much in such little time, President Brenden Fritz attributed it to his employees’ excitement. “When staff saw the improvements and how they’d benefit, everyone was on board”. Learn more about the quick implementation ADS had, including their first major wins with Total ETO, here.
TIP #1 Start with the Right ERP Vendor
This might sound like a given, but one of the most common reasons an ERP implementation fails is because the ERP software didn’t match the organization’s workflow. This is especially true for Engineer To Order (ETO) manufacturers. For those who make standard machines (the same design over and over), a standard ERP can do the trick.
The unique nature of Engineer To Order manufacturing, however, requires ETO manufacturing software as exceptional as their organization. Customizations can be made during most ERP implementations; it’s to be expected. Too much customization, though, is a problem. When an ERP solution isn’t a natural fit for an organization, it increases the time it takes to get the system up and running, as well as the costs required. Research from Panorama revealed that moderate customization in the range of 11%-20% is the sweet spot: anything above that could complicate and extend the implementation process.
TIP #2 Don’t Lose Sight of Your Budget
In the same report, Panorama Consulting found that average implementation costs were 3%-5% of the overall solution. Yet, 57% of ERP implementations still exceeded their budget. Be sure to include training costs in your budget and incorporate the opportunity costs your team may face. On average, the research shows implementation costs an average of 6.5% higher than the estimated budget.
Another way to control the implementation costs is to find an ETO ERP that includes training and implementation. It may sound too good to be true, but Custom Machine Builders do have an option that minimizes the expense and lends to the implementation projects’ success. Total ETO, for example, fits so well with Integrators, Panel Shops, and OEMs that human-guided training and implementation are included in the cost.
After determining that an ERP is the right system for your organization, address implementation costs as soon as possible. If there’s true synergy between your organization and the ERP, it’s also in the best interest of the ERP to ensure a successful implementation. It’s rare when an ERP system will include the costs of implementation or training as Total ETO does, but they will still want to work with you to keep implementation within budget.
TIP #3 Consider an ERP Consultant
When it comes to utilizing a different ETO manufacturing software system, knowledge is power. Consultants can be a great source of information and provide tips for implementation as well. The catch… if you’re Engineer To Order, then you need a consultant who specializes in ETO manufacturing. As we mentioned above, one of the trickiest aspects of buying and implementing an ERP for Custom Machine Builders is finding one that matches your unique workflow.
TIP #4 Include Key Staff when Researching ERP Systems
Employee resistance to change can be an obstacle during ERP implementations. A recent study from Deloitte shows 72% of employees resist change due to fear of job loss or increased workload. However, when your procurement manager, for example, is included when your team demos the product, they become excited about how efficient their department will be. Having full support from your team can reduce the time and costs involved in an ERP implementation.
Additionally, implementations are often improved when there’s a project champion. Someone within your organization who’s motivated to keep the project on track. This should be a full-time member of your team and/or an employee who has been with the organization long enough to understand your current challenges and be motivated to overcome them. Not only does this improve your ERP implementation, it ensures you’ve fairly evaluated all features.
TIP #5 Keep Communication Open
Ironically, one of the benefits of an ERP system is improved communication within the organization and with clients. In the meantime, it helps implementation if the manufacturing team communicates clearly and often. Poorly structured communications lead to bottlenecks and we’ve seen momentum can make or break an implementation.
TIP #6 Schedule Regular Approvals
A common reason for implementation failures is not getting the desired results from the ERP. A great way to avoid this hurdle is by setting milestones throughout the project. During each stage of approval, plan and test functions to confirm everything is performing correctly. Project stakeholders or department managers should sign off after each approval. Every time a milestone is checked and approved, you’re not only improving the implementation timeline, but your team will have renewed motivation for continuing.
TIP #7 Define Success
When you first considered using an ERP to improve your processes, you had a vision, probably several. You knew there were areas within your organization that needed improving. These could include:
- Providing more accurate sales quotes.
- Completing more projects in less time.
- Increasing the quality of your final projects.
- Improving sustainability while minimizing waste.
- Reducing costs in procurement while improving your supply chain.
Keep track of your current challenges and your goals. These will be used to measure progress during implementation as well as the overall return on investment. Clearly defining your goals at the beginning sets you up for success. You’re more likely to select the right ERP in the first place and these goals will keep your team motivated during implementation.
Conclusion
Successfully directing ERP implementation challenges requires a strategic approach. Understanding your organization’s goals and aligning them with your team’s needs starts the project off on the right foot. Open communication between your team and regular check-ins help to keep the project moving forward. Specifying a realistic budget and time commitment keeps the project and the implementation team on track.
Need help navigating all the manufacturing software options? We can help! Book a demo today to get your team excited about the growth ahead.
Written by Jay Boychuk
