As we’ve outlined in our study of ERP implementations across the globe, the challenges facing ERP implementations are numerous. Obstacles related to business process, organizational change management, and project management are just some of the potential land mines facing ERP implementations of all types.
However, Make To Order (MTO) and Engineer To Order (ETO) manufacturers face a number of additional challenges unique to their industry. Based on our research and client experience with MTO manufacturing software, below are five common pitfalls in complex and customized manufacturing environments.
Five Pitfalls in Selecting Make to Order ERP Software
- Product configuration. Since ETO manufacturers create custom products with a dizzying array of potential configurations, it is important to find software with a product configurator robust enough to handle your specific product line. This includes everything from defining business rules when creating orders, all the way through manufacturing and assembly.
- Material resource planning (MRP). Believe it or not, not all enterprise software contains robust MRP and planning tools. Given the complexity of MTO and ETO products, it is imperative that your enterprise software support planning demand for not only finished products, but also for components and parts. Effective MRP and planning tools can help significantly reduce inventory costs and increase revenue.
- Project management. Organizations that manufacture complex, low-volume, high-dollar items (e.g. aerospace and defense) can benefit from an integrated project management tool to manage large projects. This tool should also integrate project data regarding resources, parts, and labor with core financial ERP data.
- Product costing. GIven the relatively high levels of labor costs, MTO and ETO manufacturers need to have a good grasp on their product costs. Therefore, it is important to drill down into product costing functionality during the ERP software evaluation process.
- Serialization and returns. Since many MTO and ETO large-ticket items are serialized at both the finished product and component levels, it is important to understand how your potential ERP software handles serialization, returns, and warranties. Our experience shows this area to be a common pitfall for complex manufacturing software.
An effective evaluation of potential ERP solutions for complex manufacturing environments will likely contain hundreds of business requirements and selection criteria that need to be carefully considered. However, these five pitfalls should provide a good starting point when evaluating manufacturing and ERP software options.