Manufacturing ERP Needs to Be More Than Vanilla
Published by : Industrial Automation
Ranga Pothula on how to weed out vanilla ERP systems that over quote their capabilities and claim to work for manufacturing businesses.
As an ERP buyer for manufacturing, you will come across several options with their claim to be suitable for any industry or situation. In reality, each ERP systems' design supports concrete business processes based on size and micro-vertical. Implementing an ERP outside its core expertise increases the risk and costs for you.
Vanilla ERP systems and their problems
A vanilla ERP refers to an ERP system that majorly relies on add-ons to provide industry-specific functionality. The software development companies that develop such vanilla ERP products, often referred to as ERP publishers, rely on their resellers to develop industry-specific features. In some cases, a manufacturing ERP project might include dozens of add-on vendors providing different functionality.
The vanilla ERP systems with multiple add-ons would require you to sign multiple contracts with several vendors. As a result, you will not have access to a central authority or a single point of contact. Even if a vendor claims to be a single point of contact during the sales process, you will find yourself caught up in debates and blame games once you get issues post-installation. Or the lead vendor may blame their sub-vendors for the problems.
You will also face problems in upgrading the software as each vendor would follow their release cycles, and at times may overstep on each other, preventing the upgrade. Just to give you a perspective on this challenge, each feature that you may notice on your user interface may have thousands of lines of code running in the background. And each line can result in a merge conflict if two vendors compete for the same line of code. If both vendors cannot pinpoint an issue in case of a problem, they will blame the other vendor.
While it may not be possible to get all features in one system, you should attempt to get the essential elements. For example, you should not use an add-on for BOM functionality or outside process management for a subcontract job. You could use an add-on for integration with your e-commerce or EDI system as that's not the core process of the ERP system, and most ERP systems may rely on add-ons for such features.
How manufacturing ERP differs from vanilla ERP
A manufacturing ERP system such as Infor CloudSuite Industrial (Syteline) provides most of the crucial features that manufacturers require out-of-the-box. Specifically, the following features would require an add-on (or customisation) with a vanilla ERP but comes out-of-the-box with a manufacturing ERP such as Infor CloudSuite Industrial (Syteline).
Manufacturing Chart of Accounts: Unlike distribution or retail businesses, manufacturing businesses have many moving parts requiring tracking their costs. The manufacturing ERP must track different costs without making the chart of accounts too verbose or needing to perform journal entries, defeating an ERP's purpose.
Manufacturing Costing: Manufacturing businesses have busy shop floors with complex machines and their diverse components. A vanilla ERP can only accommodate the costs at the machine or resource level. It will struggle to track the costs at the component level. For example, tooling inside a machine could be far more expensive and could age differently. If your ERP doesn't support the detailed costing out-of-the-box, your costing could be inaccurate or need customisation.
Manufacturing Scheduling: A vanilla ERP doesn't support the complex scheduling needs of a manufacturing organisation. As with costing, the scheduling will face similar challenges if the capabilities of the vanilla ERP support costing only at the machine level. Also, suppose you are in the regulated manufacturing industry, such as a medical device or automotive. In that case, the problem could be worse because you might have multiple lots moving simultaneously on the production line. If your vanilla ERP doesn't support pre-assigned lots, you may need to schedule manually or require expensive customisation.
Manufacturing Process Collaboration: A manufacturing organisation collaborates with several sub-vendors as goods move through the production line. A vanilla ERP may support light manufacturing processes that could be similar to assembling a product. A manufacturing ERP has sub-vendor operations built-up as part of the ERP so that you don't have to track the movement of the inventory manually.
Manufacturing Reports: The detailed chart of accounts and costing would require you to have reports specifically designed for manufacturing businesses. With a vanilla ERP, you will need to develop these reports for each of your business use cases, with each report costing you $5-10k for the consulting work. Manufacturing ERP solutions package these reports with their solution as part of their license.
The consequence of choosing a vanilla ERP for manufacturing
A vanilla ERP would require manufacturers to use several add-ons or expensive customisations to meet their complex needs. You will notice the following consequences if you bought a vanilla ERP:
1. Alienated users: if your users don't connect with the system, they will try to bypass it and not enter crucial data required for your planning. It's hard to relate to a poorly designed system.
2. Risk of the project failure: customisations and add-ons are highly error-prone and risky for the project's success. You might not only end up losing money on customisations, but you also may not be able to use the ERP system at all.
3. Multiple points of failure: when you use one product with its release cycle, you have one variable that might disrupt your process. With each add-on and their release cycle, you increase the risk exponentially.
At the surface level, most ERP systems might appear similar. However, they all have their unique capabilities and focus. A real manufacturing ERP system such as Infor CloudSuite Industrial (Syteline) will support the crucial needs of a manufacturing business out-of-the-box without requiring add-ons or multiple vendors.
If you are currently evaluating a manufacturing ERP, make sure to review the contract thoroughly to identify different add-ons and the comprehensive purchase guide to develop a deeper understanding of the ERP purchase process.
Ranga Pothula is MD India Sub-continent & SVP Global delivery services, Infor. Ranga is spent over two decades at Infor since he joined Baan Corporation in 1997, which is now owned by Infor. During his tenure, Ranga played key roles in product development, delivery services, managed services (IMS) and has been responsible for global delivery services operations in India, the Philippines, Egypt and Poland over the past few years.