2019-06-07 05:00:22 Growing & Complex Businesses English Its impossible to run a competitive manufacturing business today without innovative software solutions, so read our complete guide to... https://quickbooks.intuit.com/r/us_qrc/uploads/2019/06/A_Complete_Guide_to_Manufacturing_Systems_featured.jpg https://quickbooks.intuit.com/r/growing-complex-businesses/complete-guide-to-manufacturing-software-systems/ A complete guide to manufacturing software systems

A complete guide to manufacturing software systems

11 min read

According to PwC’s 12th Annual Global Innovation 1000 survey examining the world’s top public companies, those growing at a faster rate than their competitors invested 25% more of their R&D budget in software. The clear correlation between software investment and growth shows it’s impossible to run a competitive manufacturing business today without innovative software solutions.

In addition to essential software functions like accounting or inventory management, manufacturers also need industry-specific software tools to build, design, and test what goes into the final product.

You might be familiar with Enterprise Resource Planning (ERP), but have you considered a Business Management System (BMS) or Customer Relationship Management (CRM) as well? Maybe your business is growing in complexity and you want to invest in more software, but are overwhelmed by all the options and worried about making a bad investment.

The following is a list of the most common manufacturing systems, what they do, and how your manufacturing business might benefit from using them. Use it to find the software solutions that are right for your manufacturing business.

Enterprise Resource Planning (ERP)

Think of ERP software as the command center of a business—everything runs through it. Basically, it encompasses everything you need to run your manufacturing operations including accounting, supply chain, human resources, and more. ERP pulls all these different functions into one place so you have a central dashboard of sorts.

Imagine a big manufacturer with 10,000+ employees across various departments. Without a central place to contain all the information, the risk of miscommunication is huge. An ERP tries to fix this problem by integrating all the data into one place.

Before you decide on an ERP, consider this: “It is very common, and very tempting, to take existing business processes as is and automate them with [an] ERP system … While conceptually this is understandable, you must take the time and make the effort to analyze those processes as part of your ERP requirements gathering. Implementing a new ERP system is an opportunity to identify and improve/redesign your business processes.” –Ed Featherston, vice president and principal architect at Cloud Technology Partners

Pros

  • Streamlines business processes into a central system, including various departments like accounting, customer service, sales, and warehouse
  • Potentially reduces IT costs by focusing maintenance on a single system rather than multiple solutions

Cons

  • Can be extremely costly, with many hidden costs including training, maintenance, and customization (Implementation alone can cost between $150,000 and $750,000)
  • Difficult and time-consuming to implement and often means changing business processes to fit the ERP system rather than the system fitting your current processes. According to Panorama Consulting, nearly 21% of ERP implementations are categorized as a failure
  • Requires a lot of time and resources to research and implement, often with help from pricey consultants

Manufacturing Execution System (MES)

An MES gets down to the nitty-gritty of a manufacturing production cycle. It monitors the production process from order release to delivery, providing real-time data about each stage of the production line. You can track progress, manage materials, and oversee performance.

Manufacturers producing complex products with various components can benefit the most from an MES because it will give them better visibility of the supply chain and improved data collection. An MES may be a module within an ERP or can be purchased as a separate solution that integrates with an ERP.

Why you might want an MES: “You need to have an ability to get information from a device—typically machine tools or operators—that can be processed and presented in different ways—using dashboards, reports or alerts—depending on what’s happening.” –Dave Edstrom, CTO of Memex

Pros

  • Real-time data reduces time to market by allowing you to immediately respond to changes such as quantity ordered or a modified delivery schedule
  • Maintenance data on an MES can quickly communicate information, like which machines are down and for how long across departments, allowing for better planning
  • Detects the exact number of bad parts and wasted materials as well as calculates production cycle time and material movement time to help reduce costs and increase efficiency

Cons

  • A breakdown or malfunction in the system is a big risk because there’s no replacement for it

Business Management System (BMS)

Every business needs some type of business management software to run daily operations and address basic needs like payroll, invoicing, inventory and job costing. The role of a BMS is to automate and organize the most essential aspects of the business so that you can reduce time spent on data entry and unlock insights or data that are easily missed in a less elegant system.

Just about any manufacturing company can benefit from business management software. Unless the features that come with a BMS are also included in another piece of software you’re using, it’s one of the most important software investments you can make, particularly as the company grows and manual data entry becomes unsustainable.

Why it’s important to use a cloud-based BMS: “Scan all receipts and important documents to the cloud. The IRS requires you to keep copies of all financial records for at least 7 years. Before you know it, you’ve got more filing cabinets than employees! In addition, the ink on receipts tends to fade after a while. By scanning these documents and organizing them in the cloud, you can get control of the clutter and easily located documents when you need them!” –Crystalynn Sheldon, CPA and author of Fit Small Business

Pros

  • Reduces time spent on data entry, eliminating errors and duplicate information
  • Faster and more accurate invoicing, payroll, and job costing process

Cons

  • Since each BMS is different, switching from one to the other or picking up a new one can mean an initial learning curve

Quality Management System (QMS)

Manufacturers need to make sure customers are satisfied at all times, as well as meet regulatory requirements for their products. This is where a QMS tool comes in handy.

Currently, the international standard for quality management is ISO 9001. This standard is used to demonstrate that a manufacturer is complying with regulations and ensuring a certain level of quality. Gaining the ISO 9001 certification gives businesses more opportunities because it’s a requirement for doing business in certain sectors.

QMS software helps with managing documentation, risks, and audits. If you’re in an industry where you regularly face audits, compliance checks, and meeting quality standards, looking into QMS software should be a priority.

The main benefit of QMS software: “Manufacturing a variety of products for clients in multiple markets can require considerable documentation to meet regulations and standards. The right QMS software can ensure that you have met those requirements and save valuable man-hours.” –Bob Herdoiza, President of CEMOS

Pros

  • Reduces time spent on training staff because employees can access documentation in the software
  • Saves time and costs compared to using a paper-based QMS

Cons

  • Using QMS software doesn’t guarantee certification or compliance; it just helps you manage your QMS more efficiently

Product Lifecycle Management (PLM)

If an MES helps you execute the production cycle, a PLM helps with innovation, design, and build. PLM software serves to track each stage of the product lifecycle—development, growth, maturity, decline––to make sure everything is flowing.

Product developers can use it to test different designs and iterate on previous efforts. It allows them to share their designs and data with other members of the team, making it easier to collaborate and keep track of their ideas. Operating without a PLM can result in poor organization processes with employees saving their own files in various locations and communicating via email.

Tips for choosing the right PLM software: “All PLM software have common functionalities in place, whereas in few cases these PLM tools are designed specific to an industry specialization. For example, there are specially designed PLM software available for textile industry, food and processing companies, discrete manufacturing organizations and so on. It is important that the decision-making group understands the pros and cons each available software and choose the right one that suits their practice.” –Sathish Kumar, PLM Professional at Bombardier

Pros

  • Reduces errors, improves communication, and saves time for engineers by providing a centralized location for all saved CAD files that can be shared

Cons

  • Can be tricky to implement, as it takes time to get everyone on board with the software for consistent results
  • Needs a knowledgeable manager to operate the software so they know what types of files they’re organizing

Computer-Aided Design (CAD)

CAD software uses a computer’s 3D simulations to help manufacturers preview different designs and builds so that they can anticipate and adjust any flaws before the actual production begins. This is especially beneficial for companies that work with costly materials or complex designs that are more prone to errors.

Engineers and product designers can use CAD software to quickly visualize and modify designs. When compared to drafting them by hand, CAD software can perform this much more quickly and efficiently. Companies that have international facilities can also share CAD files to collaborate quickly without worrying about language barriers.

Why CAD’s benefits can also be its flaw: “In real life, [separate parts] need to be welded, or adhesively bonded, or fastened with some type of fastener—it’s easy to forget that on the screen.” –William Durfee, Director of Design Education at the University of Minnesota-Minneapolis

Pros

  • Can reduce time and money spent on design because you can detect design flaws before creating materials and quickly replicate existing high-quality designs
  • Easy to use for engineers of all levels, allowing them to create designs quickly and test with rapid prototyping
  • Improves collaboration and reduces problems of international communication by sharing visual files instead of being limited by language barriers

Cons

  • Both the software and machine required to run it are expensive
  • Requires hiring an engineer with training in CAD software and training, which can be expensive

Customer Relationship Management (CRM)

Just as the name indicates, a CRM helps manufacturers manage relationships with their customers, vendors, or partners. CRM software can track customer contact details, communications history, and sales pipelines to help close and manage deals.

Sales teams can use CRM to track leads, maintain ongoing relationships with existing customers, and gather data on different customer segments. Companies can also use the data to predict sales cycles and set clear targets.

To get the most out of your CRM, do this: “Remember: A CRM is only as good as the thoroughness of data people add to it. This seems so simple but it’s one of the toughest hurdles companies face. You spent time, money, and resources on that shiny new CRM but if no one uses it, then what?” –Nathan Kontny, CEO of Highrise

Pros

  • Improves customer satisfaction
  • Ability to customize customer data, allowing for more personalization and improved insights
  • Improves sales collaboration through a unified dashboard and project management features
  • Reduces errors and time spent on data entry by auto-filling contact information from email clients and eliminating duplicates
  • Easy to scale

Cons

  • Implementation can be a challenge without a proper customer relationship strategy
  • Needs proper leadership and focus to yield results

Laboratory Information Management System (LIMS)

Any manufacturing business with a laboratory probably needs some type of LIMS software to keep track of test results and information on samples and materials. The main function of the LIMS is to keep track of lab samples at all times, logging information like the date and time the sample arrived, when it was tested, and other data with a unique barcode.

Scientists can use the LIMS software for reporting as well as project management. Depending on the type of software, a LIMS can help scientists with scheduling and workflow, streamlining decision-making within the lab.

Factors to consider before implementation: “Implementing LIMS is an art. Just like an artist who needs to consider paints, brushes, and subject, you have to consider business needs and objectives, implementation budget and total cost of ownership, timelines, technology, and future upgrades to name a few complexities.” –Dmitri Serebrianik, Project Manager at Clarkston Consulting

Pros

  • Facilitates communication by automating reporting and providing up-to-date information that can be accessed and shared remotely
  • Improves workflow in the laboratory by inputting data into a centralized system
  • Better quality data and reduced errors through integrating with lab equipment
  • Easier to keep track of exactly where samples are at all times

Cons

  • Implementation can be a challenge without proper direction

Final Thoughts

While it’s clear that different types of software can provide specific benefits to the various stages of manufacturing, implementing the new system and calculating costs are a common challenge for any software project.

For example, if you’re looking for a software-based solution to automate certain processes, but are put off by the costs and complexity of an ERP, a less complex piece of business management software can provide the solution you need with enough features and customization to make it work for your specific needs.

A simpler, more cost-efficient solution can offer specific features built for manufacturing such as assemblies management, as well as business components like accounting and sales order fulfillment. This combination can help streamline your processes while providing minimal risk of disruption and time spent on implementation.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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