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Whether it’s process automation or standardization, critical drivers of any future growth rely on a robust system executed by a team that collaborates. A great manufacturing ERP system implementation comes from the team actively working together across the main process areas, including product planning, sourcing and engineering, distribution, service and compliance.

How to Select an ERP System

If considering implementing an ERP solution, the question to ask isn’t whether your company would best fit with choosing a potential “Suite” or “Point” alternative. Instead, it would be to ask how theseERP solutions can best serve you to grow into the future with speed, stability and security. Selectingan effective ERP system, in this case, can be done by following a brief guide of ten clean-cut steps:

1. THERE'S NO "Y" IN MANUFACTURING - SO "WHY" AN ERP?

The process of choosing an ERP system is similar to that of being in the development phase of themanufacturing life cycle; the decision gets analyzed, refined and evaluated before it’s escalated tothe next step. Before manufacturing any product, the design must be carefully evaluated to ensureit’s correct and fitting to proceed. Produced goods are usually cost-effective, stable and robust.Suppose your company’s daily operations often find itself in bogged-down environments internally, with messy or inefficient data, slow and immobile systems, or frustrated employees. In that case, you might be in the market for a new ERP.

2. BUILDING THE TEAM: CHOOSING THE ERPAND ITS STRATEGY

Just as production lines internally align vendors, suppliers and staff alike, the ERP team creates organizational alignment to the buy-in and basics of a manufacturing ERP system. The team wouldneed to answer questions such as, “How willleveraging a Business Case aid the decision toproceed with the ERP project?” and “What questions will the business case & ERP team ask and answer?”

3. UNDERSTAND THE BUSINESS REQUIREMENTS

Being prepared will make all the difference in an ERP project. While most companies try toorganize themselves, the resiliency of everyday best-practice habits, documentationprocedures and overall internal alignments will genuinely enable the focus to understand business requirements. Facilitating business process mapping, triaging conditions into differentpriority groups and holding Requirement Gathering workshops will help understand which ERP is best to consider.

Whether in Sales & Order Processing or Logistics & Distribution — all companies have differentstrengths and weaknesses that an ERP can elevate and improve. Utilizing an effective solution willalways produce exponential results. For example, when in process areas such as migrating fromTraditional to Modern Order Processing Systems, gone are the days of handwritten notes and paperfiling. We’re operating digitized cloud-based systems from multiple countries!

4. DISCOVER OPPORTUNITIES FOR IMPROVEMENT

Through the weeks of understanding business requirements and planning, the ability to prepare for the Future State becomes clearer through documenting pain points and identifyingimprovement opportunities. This process will discover unique findings for every company — there is always something to improve on! Innovation typically lurks, but in this setting, it is more bountiful with modernization.

ERP software solutions at their core are completely integrated financial management solutions that manage all aspects of production and distribution-based businesses, aligning financial management, HR, supply chain management and manufacturing or distribution with accounting.Understanding the scope of change for your organization is essential for the project’s success toprevent being overwhelmed by any other potential changes via scope creep. The team will have to wear many hats and ask many questions to narrow down process improvement: “Are we following industry best practices?”, or “Are there any data processes that seem redundant and are isolated in information silos?”

5. DETERMINE THE DATA MANAGEMENT STRATEGY

Just like in the world of manufacturing — where market offerings tend to go through rigorous manufacturing and inspection processes before shipping out – the idea holds true when gettingready for data migration into a new ERP. A manufactured product needs to be finished and preparedbefore being delivered to the client; the same holds for data. Data needs to be ready for migration andchecked for accuracy before cutting over to the new system.

It would not be uncommon for a company’s data to be spread across multiple existing systems in the current technology stack, stored in different structures, formats and often with un-synced duplication.A data management strategy to compile, clean up and re-organize all data types for a future ERPimplementation would also put your company in the best position possible regardless of whichsolution is chosen. Postponing data management strategies as a priority often leads to cost overruns.

6. SHORTLIST POTENTIAL SOLUTION SYSTEMS

When design engineers put together a functional and cost-effective design for a Bill-of-Materials (BOM) in hopes of designing a manufacturing product – the same mentality of holistic and careful decision making applies to choosing and shortlisting an ERP. Different criteria can be followed when selecting a new system, but the best approach is to consider all the various reasons and arguments.Such criteria in evaluating an ERP can be based on a solutions’ industry experience, the vendorreputation, cost, scalability and visibility (such as, “Is this system recently or constantly updating?”).

In real-world best practices, true compatibility comes when different criteria come together, just as anapproved manufacturing prototype would be well versed in the pros-and-cons of other draft designs. Shortlisted potential solutions can be selected based on their traits in any category, but an ideal ERP should:

• Balance out the middle ground of a reasonable investment both upfront and along the journey;
• Match in the features and business cases that one would be looking to solve for;
• Be a product that can both scale and receive support/software updates in time.

7. SCHEDULE ERP VENDOR DEMOS

With a finished Bill-of-Materials (BOM), manufacturing engineers begin the long process of figuring out how to produce the best version of the product in “real life.” Everything is up forconsideration; the same logic should also apply tochoosing the suitable ERP. A product demo willalways help walk through the program as if it was already in place, or in other words, a flavor of what’s to come. Once the shortlist of ERP programs has been chosen, a Request-for-Proposal (RFP) can be sent out. When scheduling a demo, the following must be considered:

• A Request-for-Proposal (RFP) is traditionally used as a tool to communicate your list ofdesired business requirements, allowing thevendor insight into your business to provide a personalized demo.
• Providing Demo Scripts that mimic your real-world processes with small sets of real-life data (albeit can be altered for confidentiality) would help boost the prospect of a demonstration that is tailored to“the ’Needs’ and ‘Wants’.” Allowing the vendor time to share their version of the “art of the possible” is key to gaining perspective of their solution. 

A demo should provide a customized look at functionality, ease of use and organization. With each demo, the team should evaluate the ERP’s ability to solve the company’s business requirements quantitatively and qualitatively.

8. CONDUCT A REDINESS ASSESMENT

No matter how good or great a manufactured product may be, the question lies at the end of the product development process: “Is this product a ‘Go’ for launch?” — a question that can be answeredin a variety of ways due to a myriad of different and underlying reasons. With an ERP implementation,the same is also the case. Whether before, after or in-between ERP vendor demos, the question of“Are we a ‘go’, now, for a new ERP?” must also be asked.

It could also be for many different reasons that a ‘Yes’ or ‘No’ is the answer – the only ‘wrong’answer is an uneducated one. Organizational alignment and the ability to champion change management will directly affect tackling the project scope. Even if an ERP solution matches all the business requirements and use-cases as perfectly as possible, it could be possible that the timing of implementing it now is another story. In other words, the Readiness Assessment and company-wide self-reflection are just as important as the search externally!

9. NEGOTIATE WITH  ERP VENDORS

Just as the manufacturing world comes with negotiating both upwards and downwards with vendors and customers, overhauling an entire ERP system also comes a significant investmentof time and capital from both sides of the transaction. Be prepared for a negotiation process that will include time, costs, scope and resource impact with benchmarking of other similar projects in the industry.

On top of providing assistance and expertise throughout the ERP decision-making process, an ERPAdvisory team of consultants can also help provide savings of up to 30-60% in the long run (variedby vendor flexibility and organization size). By (1) helping you decide on a negotiation strategy, (2)providing their input on the price and cost quotes relative to their experiences and (3) conductingtotal- investment/ownership cost analyses. Your position to hold steadfast throughout thenegotiation process is significantly stronger than engaging alone as a company.

10. MAKE A DECISION(OR SELECTION!)

With all things reviewed in all directions, the laststep is to make a final decision. By this step, your company should be in a position to make a selection: your business requirements are very defined, supported by concrete business cases; internal leadership has given their buy-in, and the organization is in alignment to proceed forward; the project team is championing organizational change and the project at length and the vendor demos have returned with clear presentations and quoted price points.The only path ahead is now to make the final decision, and Withum is prepared to be alongside the journey at every step of the way.

Jennifer Barrows

Business Development Executive

T (407) 701 4333

jbarrows@withum.com