What are the critical questions to ask a manufacturing ERP vendor?

I hope the following article might be helpful to answer your question:

Committing to a new ERP system for your organization can be one of the most strategic decisions you will ever make, because your ERP system affects your company’s efficiency, productivity and ability to grow revenue for years to come. While many ERP systems have similar functionality and capabilities, there are subtle and not-so-subtle differences that can make one solution more appropriate for your company over another. So how can you figure out which ERP system is best for your company? The application’s ability to integrate with your existing systems and the vendor’s willingness to make and support customizations are two of the obvious key questions to ask,  but there are10 other not so obvious questions you need the answers to before you make your ERP vendor selection.

With the number of cloud applications on the rise, subscription-based pricing is becoming more prevalent, as is value-based pricing and other pricing schemes. Subscription pricing sounds attractive up front, but the cost of the subscription usually exceeds the cost of a perpetual license price within the first two to five years. Since most companies keep their ERP systems for10 years or more, you could wind up paying a lot more over the life of the system if you opt for subscription pricing. License-based pricing is more cost effective in the long run and provides more stable pricing for budgeting and planning.

Many ERP vendors require you to buy the entire system, even if you only need some of the functionality. You end up having to implement the entire system to make it work, even if you choose to continue using existing financial applications, for example. Worse yet, you pay maintenance on all the modules for the life of the system, even if you aren’t using them.

Many ERP vendors practice the “Love ‘em and leave ‘em” service method. You may never see anyone from the services team after your first go live day. The best ERP vendors have offerings to help you refine and improve your use of the system so you continue to enjoy value from your investment over its entire life.

Many ERP vendors quote similar prices for maintenance, usually quoted as a percentage of the price. However, not all maintenance is the same. Some vendors charge extra for new releases while others charge time and materials for troubleshooting. Knowing what services are included is important to compare various plans and ensure that there are no surprises in the future.

You will want to ensure that the vendor has both the resources and the inclination to stay current with changing regulations, newly emerging best practices and business processes and current technology. Otherwise, you could be stuck with an application that won’t keep up with your business.

Sometimes, there really is no customer service. Make sure that you are comfortable with the hours, locations and languages for customer services and support centers.

The vendors should have a ready answer for this one. Just be certain that the things they pride themselves on are things that matter to you and your business, or you could find your company’s interests and this vendor’s priorities diverge over time.

Make sure that the ERP vendor has experience in your industry and with companies your size. You don’t want to be stuck training the vendor’s team on the nuances of your business, or constantly struggling with business processes designed for much larger organizations with huge staffs.

Make sure that the vendor answers this question. If they mention something that’s critical to your operation, you’ll know this is not the right choice. If they say they are good at everything, you’ll know that they have no focus. No ERP company can be good in every industry or for every size company. Make sure you won’t become an anomaly in this vendor’s installed base.

The faster you implement the faster you earn ROI. Faster implementations are less risky and less expensive, and since vendors know this, they sometimes offer lower implementation time frames than they can deliver. Make sure they have a reference who can vouch for both their methodology and their time frame.

With these10 questions, you are now equipped to undertake an informed search for the best ERP system for your business.

Some manufacturers don't focus on key issues when considering ERP solutions and neglect to assess business model fit, and manufacturing functionality.

Main questions related to business model fit to ask manufacturing ERP vendors are:

- How does the proposed solution support the style of manufacturing?

There are many types of manufacturing environments, and hundreds of manufacturing processes are used across many industries. Each combination of manufacturing style, process, and industry has a completely unique set of requirements.

When evaluating an ERP, ensure that plant floor workers attend system demonstrations or reference visits. If the system is difficult to use, it will become shelved and the ROI will be completely compromised. If workers won't use the software, the company will not get the accurate, timely data it requires to streamline operations and improve quality.

- Can a non-programmer develop a new business process in the system?

Legacy systems featured consultants and programmers charging large sums of money to program hard-to-use functions. Latest ERP technologies are available to support new business processes tailored to need. Through point-and-click and frag-and-drop interfaces, advanced users should be able to create new screens or reports without writing any code.

- How does the system support the "extended enterprise"?

The manufacturing operation doesn't exist as a stand-alone environment; suppliers and customers around the globe require direct access to data from the enterprise. The data connections must be both reliable ad highly secure. An ERP system should expose any transaction to a customer or supplier without programming and without installing software at the trading partner. Additionally, the interface should be intuitive enough that suppliers and customers will not need training to use it effectively.

Main questions related to manufacturing functionality approach to ask manufacturing ERP vendors are:

- How are lean principles supported in the system?

Many vendors offer stand-alone solutions to perform certain lean planning functions. These are highly specialized, periodic analytical functions. Once the value streams are optimized, be sure to find out how the system supports lean execution. Is electronic kanban available? Are pull systems part of the core solution? Are transactions poka-yoke’d (mistake-proofed) at the point of origination? Is heijunka (demand leveling) available? And are these functions supported across the supply chain— with customers and suppliers?

- How does the detailed data about production, scrap, downtime, labor, and quality inpections get into the system?

These are the most important factors affecting profitability and success at a manufacturer— and this is what manufacturing is all about. If this data is captured and validated as the activities are occurring, virtually everyone in the organization will have accurate, timely information for decision-making. It is recommended that you look for a single, logical portal to capture and validate this information as it is happening on the production floor and the shipping/receiving docks.

- Are inventory records directly tied to physical reality?

Many software solutions treat inventory as a dollar amount or, at best, several dollar amounts— Raw Material, WIP, Finished Goods. They focus on the accounting transactions. There can be a big disconnect between the physical reality and the dollars in the general ledger.

Consider a system that tracks inventory at the container level— whether it is a box of purchased parts, an expensive end product with its own serial number, or a coil of steel. The inventory listing would show each “container” of inventory, the stage of production that has been completed, and the accumulated cost up to that point.

For manufacturing operations in high-precision/high-liability industries such as aerospace, automotive, medical devices, or food it is critical to track the genealogy of products. Be sure to see how the traceability function works in any system. Is it automated and streamlined, or does it rely on an operator to key in the lot number of the source material?