In today’s challenging business environment, midsize manufacturers are faced with increasing pressures from both domestic and overseas competition—pressures to reduce costs, improve and maintain quality and decrease lead times. Designers and builders of capital equipment face special challenges due to the complexity of the products they build and the unique requirements of this engineer-to-order (ETO) environment.
Today, companies look to information technology to help improve their processes and gain a competitive edge.
But most systems have their heritage in the Material Requirements Planning (MRP) philosophy developed in the1960s. This concept utilized computer power to calculate time-phased material requirements. It later evolved into MRPII promoted by APICS and Ollie Wight during the 1980s, and further evolved to the Enterprise Resource Planning (ERP) systems available today.
The original premise of all of these systems is that material planning is the center of the universe. The typical manufacturing system was designed with an MRP process at the heart of the system. The emphasis of such systems is on standard bills and routings and standard costs.
Companies in the ETO world have different requirements. Designing and building complex products to exact customer specifications frequently involves long lead times and heavy engineering content. To win business, you must provide accurate estimates and quotations to a demanding customer base. Unlike the majority of manufacturers, capital equipment manufacturers typically purchase material to a specific project or job. You need to do progress billing and collect actual costs to projects. Often, you will not receive payment for a project until it is installed and operating at a customer’s site. So, cash management is of vital importance. And after the sale, you need to track warranty information and provide aftermarket services, including the sale of spare parts that may constitute a significant share of your company’s business.
If you are an ETO or project-based manufacturer, here are ten questions traditional manufacturing software vendors don’t want you to ask. Before you invest in new software to run your business, you should carefully consider the following questions.