In the manufacturing business, success is about more than having a strong workforce. Instead, it’s about streamlining your business processes to create an environment where your employees can thrive, you can boost production, and, ultimately, where you meet client expectations and customer demands.
And there is no better way to do this than with the right software.
At HighGear, we’re committed to guiding you on your journey to bettering your organization. So, in this guide, we’ve explored the advantages and disadvantages of ERP systems, as well as ERP alternatives, to help you drive your business toward success.
Understanding ERP Systems
Enterprise Resource Planning (ERP) systems are software solutions that help real-time management and ensure streamlined operations within an organization. In the manufacturing industry, ERP systems are important tools for boosting operational efficiency and overall productivity. This is because they centralize data across different departments, allowing for:
- Better resource tracking
- Improved supply chain management
- More accurate financial management
ERP features
One of the most common features of an ERP system is inventory management. This helps manufacturers monitor stock levels, reduce excess inventory, ensure timely restocking, and more.
Additionally, financial management tools assist with budgeting and tracking expenses, which leads to better decision-making.
In some cases, ERP systems also include features that aid in:
- Procurement
- Production planning
- Human resources
- Customer relationship management (CRM)
The Advantages Of ERP For Manufacturing
Implementing an ERP system can provide several benefits for manufacturing companies, which is why it’s often considered a smart choice in such a competitive market.
Improved customer service
One of the major advantages of ERP systems is how they boost customer service.
By keeping customer information and order details in one place, ERP systems allow you to respond to questions and solve problems faster. Customer service teams can also access everything they need (like contact information and order history) right away. This can lead to faster and more personalized support.
Customized reporting
Most ERP systems offer real-time data insights and customized reporting tools to track metrics that matter most to your business.
So, instead of digging through piles of data, your teams can easily generate specific reports to help them make important decisions based on the latest information.
Better collaboration
ERP can improve collaboration across departments within your organization. After all, when everyone uses the same integrated system or platform, teamwork becomes a lot easier.
Additionally, your teams in sales, logistics, and production can share information with one another more effectively. This helps to reduce the risk of miscommunications or misunderstandings and can speed up processes in their respective departments.
Improved productivity
ERP systems help boost productivity by automating repetitive tasks and simplifying manufacturing operations. As a result of less manual data entry and more standardized processes, your employees can focus on more valuable work. In a type of domino effect, this leads to better efficiency and much faster results.
The Disadvantages Of ERP For Manufacturing
As more industries face the need for digital transformation, the need for comprehensive manufacturing workflow software is becoming more apparent.
But is an ERP system the right choice?
Despite the advantages of these systems, they also come with several disadvantages that are important to be aware of. These include:
Increased complexity
Unlike workflow automation software for manufacturing, the biggest challenge with ERP systems is their complexity. These systems are often extensive and can be somewhat overwhelming – especially for smaller manufacturers or mid-sized businesses.
There is also a risk of over-customization since trying to tailor the system too much can lead to complications and even implementation failures. This complexity can make it hard for your employees to adapt to and, therefore, fully utilize the system.
Cost
The upfront costs for ERP systems can be high. Over and above purchasing the software, you’ll need to factor in expenses for hardware, training, consulting services, and long-term maintenance. The ongoing costs to maintain the system, like subscription fees, can also become expensive when you need more than one software or solution to meet all of your needs.
While larger enterprises may be able to afford these expenses, smaller companies with limited budgets may not be able to handle this type of financial burden.
Time-consuming implementation
Deploying and integrating a traditional ERP system can be lengthy. Generally, transitioning from your existing systems to a new ERP can take months or even longer, depending on your organization’s size and complexity.
This implementation period can disrupt normal operations and lead to declines in productivity as your employees learn and adapt to the new system.
Rigidity in business processes
Another downside of traditional ERP systems is their rigidity. While they help standardize processes, this can be limiting for manufacturers who have unique workflows or specific needs. An ERP may be unable to accommodate these specialized processes, forcing your company to change its operations to fit the software rather than the other way around.
This lack of flexibility can suppress innovation and make it difficult for your business to adapt to changing market demands.
How To Choose The Right ERP Alternative
Since ERP software is often expensive and complex, many manufacturers look for more practical alternatives. But how do you go about finding alternative solutions that suit your organization?
There are a few steps to choosing the right ERP alternative, including:
The Lean selection method
A smart way to approach choosing an ERP alternative is by using a systematic process like the lean selection method. This can help you find the right fit rather than picking the most popular or cheapest option.
The nine-step process is influenced by lean manufacturing principles, and includes:
- Establish your needs: Start by reviewing your current processes and try to identify why you need a new system. You should also answer these two important questions: What is missing from your current setup? What do you hope to gain by using a new system?
- Collaborate with your stakeholders: Ideally, you’ll want to create a team that includes department heads, end users, and external advisors. Their input will help you better understand what different areas of your business need from a new system.
- Define your requirements: Develop a clear list of essential features and capabilities you want your new system to have. This helps narrow down your search.
- Research potential vendors: Be sure to research your potential vendors thoroughly to see which ones align with your needs.
- Justify the need: Decide if you need a brand-new system or add-on tools for your current software.
- Prove the system’s capabilities: Ask your potential vendors for a demo or trial of their software to assess how it works for your organization. This also gives you a good idea of the software’s functionality.
- Rank potential vendors: Sort your top vendors based on how well they meet your needs. You should also consider how well their demo software performed and how the cost of the system fits into your budget.
- Negotiate terms: Once you’ve chosen your top vendor, you can finally enter negotiations around a contract with them. Remember to consult a legal expert to make sure everything is in order (if necessary).
- Sign and implement your new system: Lastly, you can finalize your contract and set up an implementation plan. Make sure your plan has the lowest possible downtime and try to keep the adjustment period to a minimum to avoid disruptions.
Important considerations
When trying to figure out what your business really needs from software, you must examine what key features you require.
Your business may be in serious need of workflow automation. Alternatively, you may need other features like task management or custom integrations. Also, remember to factor in the potential cost savings and whether an ERP alternative will integrate smoothly with your existing systems.
For example, a tool like HighGear’s no-code workflow platform may be the ideal choice if you’re looking for something streamlined but powerful.
Asking questions
Throughout your evaluation process, you’ll need to ask vendors important questions like:
- Does this software allow for scalability as my business grows?
- Can the system handle the specific requirements of my industry?
- Will the software reduce complexity?
- Does this system require a lot of adaptation and training?
The answers to these questions can help you assess whether the new alternative is the right fit for your organization.
The Best ERP Alternatives For Manufacturing Workflows
ERP solutions can be powerful tools, but their high cost and complexity aren’t always a great fit for every business. Luckily, there are a few alternative systems you can consider that may offer more streamlined solutions tailored to your specific needs.
CRM software solutions
If managing customer relationships is a key focus for your business, dedicated customer relationship management (CRM) software could be a great alternative. Unlike a full-scale ERP system, CRMs zero in on customer data, interactions, and sales processes.
Additionally, they make it easier to track leads, manage communication, and boost overall customer satisfaction.
With CRMs, you can build stronger customer relationships and make data-driven decisions about your marketing and sales efforts.
Specialized automation tools
Sometimes, a lean manufacturing tool that is designed for specific tasks may be exactly what you need. For example, you might need a tool to handle inventory management, order processing, tracking, or human resources. In this case, specialized automation tools, like HighGear’s workflow software, can offer you custom solutions without the massive overhead of an ERP system.
For example, if you’re struggling with supply chain management, you can invest in a tool that is designed specifically for that task. These solutions are often easier to implement and much more affordable. Plus, they can still integrate with your existing systems to keep everything running smoothly.
Cloud-based solutions
If you’re looking for flexibility and scalability, then a cloud-based or SaaS option may be worth considering. These solutions typically allow you to add or remove features as your business grows without the need for costly infrastructure or constant updates.
They are also accessible from anywhere, making remote work easier. Plus, they reduce the time and costs associated with on-premise software maintenance.
Why HighGear Is The Perfect ERP Alternative
If you’re looking for a user-friendly and flexible ERP alternative to traditional ERP systems, HighGear’s comprehensive workflow solution is your answer. With tools like our Workflow Assistant, you can easily automate tasks and manage projects without the need for complex coding. Plus, this feature helps to streamline processes, boost efficiency, and ensure timely task completion.
Our customizable forms also make data collection and management across departments more straightforward. In turn, this reduces manual work and the associated risks of human errors.
At HighGear, we’re also familiar with the benefits of workflow automation. That’s why we’ve designed software that meets all of these expectations – from improving productivity and decision-making to affordability and simplicity.
FAQs
What are the four types of ERP?
The four types of ERP include:
- On-premise: The software is installed locally.
- Cloud ERP: This is hosted remotely and accessed online.
- Hybrid ERP: A combination of on-premise and cloud-based software.
- Open-source: This offers customizable, community-driven software solutions.
Can CRM replace ERP?
No, CRM focuses on managing customer interactions. On the other hand, ERP manages broader business processes like finance, inventory, and production.
While CRM systems can implement ERP, they generally serve different functions and can’t fully replace the scope of an ERP system.
Final Thoughts
If you’re struggling to make a decision between an ERP system and alternative software, the first step in your decision-making process should be understanding:
- What an ERP system is
- What this type of system can offer you
- What kind of alternatives are available for you to choose from
Using this guide, you’ll gain a better grasp of these concepts. That way, finding the right manufacturing workflow solution for your organization will become much simpler.