Are You Too Small for a Manufacturing Software Package?

By Mike Hart

Can a manufacturing company be too small for a manufacturing software package?  Is a typical manufacturing software package "too much system" for a company with 5, 10, or 15 employees? 

The answer is -- yes and no.  It depends on which category of manufacturing software you are referring to.  A "mid-market" ERP system designed for companies with roughly 75-500 employees is without a doubt "too much system" for a micro-sized company.  On the other hand, a "small business" manufacturing system is a practical solution that is far more efficient than using general accounting software and spreadsheets. 

Accounting Is Not the Issue

Accounting is not the issue.  No matter what you use for accounting, you will be able to pay the bills, collect money, and run financial statements.  Sure, your accounting people may prefer to use a popular accounting package like QuickBooks, but regardless what product you use for accounting, it won't make any significant difference to your bottom line. 

You Are in the Manufacturing Business

The fact is, you are in the manufacturing business, not the accounting business.  Manufacturing -- combining labor, material, and outside services to make a product -- is an inherently complex process.  And any complex process is performed more efficiently using software designed for that purpose.

Company Size Is the Wrong Measure

Company size is the wrong measure when considering whether to use manufacturing software.  Small companies can make highly complicated products and large companies can make simple products.  If you happen to need a multi-level bill of material with phantom assemblies, that need has nothing to do with your company size.  Your products are what dictate the software features you need, not your size.  

Most modules that comprise a small business manufacturing system -- inventory, sales orders, purchasing, receivables, payables, banking, and general ledger -- are no more difficult to learn and use than comparable modules in QuickBooks or other low end accounting systems. 

What a Small Business Manufacturing System Gives You

What a small business manufacturing system gives you are the manufacturing modules -- bills of material, MRP, and jobs -- that address the manufacturing process workflow that is the core of your business.  Homemade spreadsheets cannot possibly compare with the efficiency of a well designed, multi-user manufacturing application.  Why reinvent the wheel? 

Need, not size, is the issue.  If you are in the manufacturing business, you need manufacturing software, no matter how small your company may be. 

For a listing of small business manufacturing systems, please see my Manufacturing Software Directory. 

Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.

Comments

[Steve Danion]

It would be nice to have software for companies that are a contract engineering type company. We are that type of company that designs a product, then turn the product over to the customer that requested it. We need to create part records, supplies and manufacturers along with their ordering part number. We then need to create a BOM structure for all the individual modules and have it all fully indented.

The DBA Manufacturing software has features such as purchasing, inventory, accounting, banking that we just don't need. We could use the part cost field and create a costed BOM for the total cost of the components. Any purchasing we do would be for designing and building the prototype, but that is the extent of the purchasing.

We are a small company of 7 employees and have talked to both Joe and Warren about the software. What I got was "an all in one" package without any flexability to use just what we need.

I have talked to other MRP/ERP software companies and they are basically the same as DBA. I did get excellent support from Joe with technical questions I had which made me choose your software. We are with limited funds that come mainly all from investors. I really would like to use your software, but my hands are tied. I was given a price that was for up to 5 users. I will be the one that uses the software, and probably will be for a long time. What would limiting the number of users reduce the price, or is that not an option either.

By making modules that small companies like us can select the ones they need to get going, and add others on as they grow may be a thing to consider. It may open up for other small companies to use uoir software. Right now, our choice is to use your software as is, or not use it period. You have a choice to either make some money or not make any for our company. It might be something to think about in today's economy.

[Tony McDonald]

Steve, I think you miss the point, the opportunity this software could present to you. You stand that your interest is in prototype only. Expand your horizons, your offerings to the customer and supply a production ready solution. Let them tailor the purchasing etc.. Think about all the value your design team is currently generating and how little extra effort it would be to add the first thought solution to your manufacturing customers.
I have working in the automotive industry from styling studio to component manufacturing for over 30 years and in these tough times, value add is basic business common sense. My career has also included other industries and for my money DBA is the best I have seen.

[Paul]

TEM Systems Ltd 10th May 2011
17 Years ago, two of the Directors of one of Britain’s fastest growing management software development companies met under unusual circumstances. Geoff Worral was Production Director for one of the Fylde Coasts largest sign manufacturing businesses, Sean Mooney had literally walked off the boat from Northern Ireland – where he had just completed the implementation an MRP management system into a large manufacturing company, and literally had walked in through the loading bay doors of the company to see what the company was doing.
It turned out that Geoffs business had grown significantly over the previous Year – but was now suffering through lack of control over the business. It was easy for Sean to highlight where the improvements could be made (everywhere!), but harder to plan it all out to suit the particular business working patterns. Geoff took on board what Sean was saying and employed Sean to work with him to physically re-structure the business (55 Employees) to enable efficient management and control, but the major work was setting out the right processes to enable all of the jobs to be tracked and visible from start to finish. The pair realised that in this fast moving company, the processes actually had to be installed from the finish to the start, otherwise, the staff would start pushing through work much faster from the front – only to overload the staff working in the middle and the end!
The second major challenge was that of managing the relatively large amount of data that had to be stored to run with each ‘job’/contract to track all times and costs associated with each job in the most efficient way. Employing any more staff was not an option!
A number of potential ‘data management’ systems were assessed to help with the task, narrowed down to two systems that were benchmark tested. The best of these was a typical ‘module’ orientated package for manufacturing firms where the data passed from ‘module’ to ‘module’ as each job progressed through the firm but frustratingly – it was the integration (poor integration would be a better term!) that led to too many compromises and additional tasks for the users that resulted in a failure to purchase.
Geoff stepped into the breach and developed the first of what was to become many refinements of one of the UK’s most comprehensive and powerful ‘Job running Systems’ – now known in the industry as E.R.P. (Enterprise Resource Planning) systems. Sean, meanwhile, had moved on to set up his own manufacturing business – and later employed Geoff to install a development of the system within his own firm in 2000. The two stayed in contact – Geoff continuing development of the system for various firms – Sean continuing with manufacturing and fitting, until Sean’s business lost tens of thousands of pounds and major customers when the Icelandic Bank collapsed in 2008.
Aside from the circumstances, the timing was right for Geoff and Sean to look at joining together along with Paul Worrall (Marketing) to launch the (by now fully developed and tested!) product on the market. The process of setting up the support office, servers, web-site, contracts, staff and funding the business has been a major task – befitting though of a company that has huge potential for the size and quantity of clients they will work with.
The product is Total Production Manager, the company, Total Enterprise Management Systems Ltd (TEM Systems). What has surprised TEM Systems is that the market hasn’t moved forward a great deal in that 17 Years since Geoff and Sean were looking for a solution for their company. Many systems on the market today can process certain sectors of business very well – but it is the full integration of these systems into a single cohesive package that gives the best results for most companies.
TEM Systems believe the integral ‘core’ of their solution is right because it (unlike virtually every other system on the market) is JOB CENTRED. From experience, they know that once you can estimate the time & costs on a job – even if this changes throughout the job running cycle – you should be able to see, and be alerted to, every instance of when any job goes off-track, and deal with it immediately – everywhere within the business.
It’s a big aim. It’s a big system. It has to be to cope with a lot of people adding and using a lot of data within various jobs simultaneously across the whole company, live. Not only that, but it has to be easy to use, for people to be trained to use, and flexible at the outset to be tailored to each specific companies needs and market requirements.
Costs are typically at one quarter to one third of that of comparative companies that supply to write bespoke ERP systems for companies. It is impossible to cost at a standard price as each companies requirements and starting points are different – vastly different, but as a guide, the starting point for a single user system is currently around £6k (with discount). The return on investment will also vary largely from company to company. Typically, the installation of a system brings immediate cost savings on purchases, and immediate savings of time for many employees – in particular senior management. The key Return on Investment however is through the vision it can give management into the actual costs in time and money of every job / contract running through their business. Immediate feedback that highlights issues as they occur.

Sean Mooney
TEM Systems Ltd
01253 892112
[email protected]
www.temsystems.co.uk

[iphone 4s siri]

What a truly good read!!

[Desi]

Thank goodness some bloggers can write. Thanks for this post...

[Punjabi Rap]

You're indeed correct on this one..

[rss feed preview]

Terrific read.

[Updates News]

I agree completely...