If you’re a small business owner that manufactures or distributes physical products, and you do not have an ERP (Enterprise Resource Planning) system, you may be wondering when you should make this investment. It’s common for startup manufacturers to use financial software, like QuickBooks and spreadsheets, to track payroll, inventory, sales, expenses, and more. But as your business grows, these systems get cumbersome, expose you to risk, and limit your ability to make critical decisions.
So, how do you know it’s time for an investment in an ERP? Here’s a guide to help you evaluate your risks and measure the opportunity of implementing a great-fit ERP. You are probably ready for a real ERP if:
1. You use spreadsheets and/or Access databases to run much of your business
Spreadsheets are powerful tools for tracking, tabulating, and even automating some data entry. You may have templates set up to estimate costs, track inventory, keep customer data for marketing, and much more. You may even be a guru at formulas, pivot tables, linking, and macros. However, no matter how sophisticated these spreadsheets, or Access databases, they fall short when:
When you use an ERP solution, you gain the benefits of manufacturing specialists who already know the system. There are financial, operational, quality, and production people who contributed to the ERP’s original design and can train your organization on how to use it.
2. You want to become ISO certified
In the manufacturing business, your customers expect quality products at competitive prices, delivered on time. You want to reduce your cost of quality, drive down expenses, and decrease lead-times to improve overall profitability. The International Organization for Standardization (ISO) provides an internationally known standard for Quality Management Systems (QMS) to help manufacturers accomplish these three goals. Additionally, if you sell to other ISO certified manufacturers, they will need your products to be certified as well. ERP systems provide the infrastructure and data-management needed for these QMS procedures, which means it’s a good idea to have an ERP to ISO certify, even if it’s not required. ISO is all about documenting your manufacturing processes. The documentation without an ERP system can be time consuming and tedious. To prevent repeating this difficult document process twice, it’s best to put your ERP implementation ahead of the ISO certification.
3. You have more than five employees and plan to grow.
An ERP system ensures that necessary customer information entered at the time of quote follows through to invoicing. The people in production see the specifications entered at the time of the sales order. Shipping sends the products to the correct shipping address, using the customer’s instructions on the Sales Order. Without an ERP, you need the same documents (Sales Order, Purchase Orders, Packing Slips, Invoices, etc.), but if they are created separately, they are prone to errors, take longer to enter, and are not linked to financial reporting.
In summary, you know you need an ERP system when your current business processes consume too much time, depend too much on one or two people, don’t provide the information you need, and don’t support your growth plans. Get started today on your ERP search and discover how an ERP system can launch your manufacturing business to the next level.