Production Management Software or ERP - which is best for a small manufacturer?Practical guide to help you choose the best production planning and production accounting software, and which will protect you from bad investments.
Production management software – this is a phrase you probably typed in Google searching for a solution to your production problems, but soon were surprised to find thousands of search results, each company offering you their great product, so now you are none of wiser and still have a dilemma what’s best for your business.
That’s why here, we are going to help you to choose the best tool for your production planning. Calculate work, get rid of paper orders, and last but not least, improve efficiency and gain control over processes at the production hall.
This guide will tell you:
- Which production control software or ERP is ideal for you, depending on what you produce and how big your company is (examples of different programs)?
- What’s the difference (also in pricing) between manufacturing management software, ERP and MES?
- Accounting and inventory software.
- Production management software (MES):
- ERP system: a wide array from a few hundred to a few million dollars.
- The biggest traps you should be aware of while choosing production managing software:
- Manufacturing software implementation – typical mistakes.
- Proving wrong 5 popular myths on cloud-based manufacturing software.
PLEASE NOTE: This guide is addressed to MICRO and SMALL PRODUCTION MANUFACTURERS (5-40 people at the production hall), which intend to achieve positive effects quickly, without involving a complicated, hundred of thousands of dollars pricey system.
This is the summary which sets out the main points of the whole article:
1. Which production management software is best to choose (graph)?
2. Which production management software is best to choose (table)?
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A short explanation of the basic terms used:
- Accounting and inventory software – probably you’ve already got it. For production, it only offers a completion outlook (it shows what consists of which elements).
- Production management software (MES) – apart from production planning, we access a production hall, where employees register their work.
- simple (MES) – enables easy production planning, registration of working time, calculating efficiency and finally abandoning paper production orders;
- advanced (MES) – advanced production planning (including semi-automatic), extended registration, services, full materials cycle – however less flexible. It is very often integrated with accounting and replaces an advanced planning system;
- corporate (MES) – it usually requires co-operation with the ERP system. Automatic planning is very often connected to machines with artificial intelligence elements.
- ERP system – a wide array from a few hundred to a few million dollars; practically speaking, the difference between enterprise resource planning and a good accounting and inventory system is that the first one plans what and when should be purchased based on orders. Please note: it doesn’t reach a production hall, so it requires the addition of MES or another module.
- RWT system – registration of working time (clock-ins and clock-outs). It is usually a production management software component, or you can buy it separately, ex. with the clock-ins/clock-outs tracking system.
- WMS system – for advanced inventory management, usually works together with bar codes and high stockpiling.
Why ERP systems are not suitable for small manufactures:
- It will not work well if it doesn’t get lots of (even sometimes obvious) information. Hence you will have to spend long hours adjusting this system to your needs;
- You have to run everything perfectly, or your stocks will show such great discrepancies that you will need to prepare separate documentation;
- Forget flexibility – in the advanced system, and everything must be prim and proper, with accompanying document;
- They usually don’t have a production extended module, so you need to buy an external module to measure production efficiency or rely on a manufacturing solution recommended by the software producer;
- Be prepared for high cost at the start, and multiply the offer you got by two.
Potential traps for small manufacturers:
- Free production management app is usually a cheap marketing gimmick. Only the licences for basic modules are free, and companies make a fortune on implementation services, and you get a product without any technical support.
- Production management tool integrated with the accounting and inventory system – as it happens, due to imprecise technologies, systems will not integrate, and you may waste lots of time on detailed technology descriptions.
- Lack of online access – in practice, the smaller a company is, the more SECURE, futuristically thinking, data storage in the cloud should be.
Which production management software, ERP do you need?
The idea to have an enterprise resource planning production system, which is an “all in one” solution, in practice doesn’t work so well for small manufacturers as it seems at first glance. Although many production managers dream of such production environment. Look at the graph and choose your situation to find the best solution (the vertical line indicates the number of employees. The horizontal line describes how complex the average product is).
1. For simple products, produced mostly in-house:
(ex. machining / CNC, plastic/injection moulding industry, rubber products, cardboard packaging, simple woodwork and carpentry, printing shops/printing, steel constructions)
Challenges to deal with: better production management, work planning: the employees must know what to do, how and when, real-time production registration – you know what’s completed, how efficiently, in which time frame and at which cost.
Suggested solutions Micro company (<10 people):
- Free Google Docs sheets shared at the production hall;
- Simple, independent production management software (planning and calculating production and clock-in/clock-out times): getprodio.com (Read more: simple production management software).
Suggested solutions Small company (10-25 people):
- Simple, independent production management software (planning and calculating production and clock-in/clock-out times): getprodio.com – optimal package + RFID reader (Read more: simple production management software).
Suggested solutions Average size company (25-50 people):
- If you intend to keep it simple and you don’t need a connection with warehouse and accounting:
- getprodio.com/ – optimal package + RFID reader (Read more: simple production management software).
- If you wish to have an accounting module and a connection between warehouse and materials used: advanced production management software – simple MES, ex:
- metal industry, plastic ex. Plan de Campagne,
- other industries ex. Qcadoo, MES.
2. For more complex products, where there is a need for externally purchased elements/ operations:
(ex. robots production, exhibition stands)
Challenges to deal with: better inventory-purchase procedures, especially if the product consists of tens of elements, often purchased externally.
Suggested solutions for a Micro size company (<10 people):
- Extended Google Docs sheet shared with the office staff;
- Using completion module in accounting and inventory software, ex. Sybiekt GT or Optima XL.
- Suggested solutions for a Small size company (10-25 people):
- Production addition to accounting and inventory system targeting inventory planning, ex. MRPeasy.
- Suggested solutions for an Average size company (25-50 people):
- If you wish to keep your present accounting system: advanced production planning and registration system integrated with Optima / Subject, ex. Qcadoo.com (from about 367 $ per month + implementation).
- If you wish to implement an accounting system from the beginning: a simple integrated system with enterprise resource planning or RHO Modus functionality.
- If you estimate that your company will grow fast: wit’s worth considering investing in complex tools offering cloud storage such as ERP-s.
Take a shortcut and start planning your production online.
What is what exactly and how it can be used
(production management software – MES, ERP systems and so on)
We have to make an exception here, because there were numerous situations, when a company spent 50 – 200 thousand dollars on enterprise resource planning system, only to discover later, that it doesn’t reach a production hall!
1. Accounting and inventory software with additions
Perhaps you already use it in your company. The Polish market’s best known is Comarch Optima, which gradually had been more and more expensive, and suddenly became an ERP Optima (it’s an enterprise resource planning only by name 😉 ) and Inserted Subiekt GT, which is a good value for money. Both programs can be recommended, although neither of them is a masterpiece nor is a flop. What’s important they are going to move to a cloud and become cloud ERP production management software– which might generate future problems.
The basic functions of accounting and inventory software are:
- Sales (which is everything connected with issuing invoices);
- Orders (which means accepting the Client’s order and making a product reservation in the warehouse);
- Stock (states, WZ / PZ, also very often orders from providers);
- Completions (based on completed order and product parameters, the stock updates automatically);
- Simple CRM (which functionality leaves a lot to desire).
If you wish to have access to production, you buy a simple but separate (or integrated with accounting program) production software.
Simple production additions to accounting software
Example software: Apator Mozart
The price is based on the offer presented on the producer’s website: licence from 512 $ per working station + implementation.
The principles are to expand your accounting and inventory for easy planning of purchase and production to make complex products to fulfil your orders.
- to facilitate the production of sophisticated, multi-element products/complex products, where managing the inventory is of key importance,
- to create work schedules connected with ordering parts (usually those schedules are for the manager, not for a shop floor).
- Materials planning/products balancing.
- BOM-s (products “tree” – which parts it consists of).
- Inventory and calculation of semi-products / products.
- Advanced cost calculations.
- Work schedule, according to BOM-s.
It’s recommended for:
- the size of a company: practically speaking form 2-3 employees at the production hall up to about 10 people (when number exceed, it might prove uncomfortable to register production),
- industries: complex products, were more important is purchase planning and monitoring of semi-products then production management at the production hall ex. If you produce sophisticated farming machines on a small scale.
2. Production planning software (MES-es)
Acronyms and abbreviations tend to be quite fashionable, so most companies with an independent production management system at the production hall boast to be an MES (which stands for a “Manufacturing Execution System”). The role of MES-es is much bigger and includes complete production service, planning and accounting.
For example, even the simplest monthly subscription to Prodio software (97 $ USD per month) can be called MES: it reaches production, employees can see the working plan, and a real-time registration of work.
2.1 Simple MES-es – production planning, registration and accounting software dedicated for small manufacturers
The principles are simple – you leave behind your accounting and inventory system and start to monitor production comfortably with a new production management software. This tool is great if you want to abandon paper production orders and have full control over your production from any place in the world.
The example software: getprodio.com
The prices based on an offer from the producer’s website: monthly subscription from 97$ USD net per company
- Implementation costs / set up: 0 $ USD. The Client can set up the software themselves using the configuration tool,
- Update costs: 0 $ USD (it is always updated),
- Equipment needed: simple laptop / computer with Internet access, RFID readers + key-fobs.
To monitor and better organize production at the production hall, your employees know what to do, order (they have a schedule at the production hall), and know lead times and efficiency.
- Creating a production plan where orders are displayed on the production floor
- The production employees can register operations (and clock-ins / clock-outs).
- Registration of clock-ins and clock-outs to help work order management.
- Working history display and order’s calculation.
- Managing orders and monitoring progress (not including warehouse).
It’s recommended for:
- industries with simple products: metalworking, CNC, injection moulding, elastomers, carpentry, cardboard packaging, printing shops, tooling departments, other simple production and production-support processes (ex. plating process),
- from 2-3 people at the production hall up to about 30 people.
The example software: getprodio.com (click here to get a free trial)
2.2 Advanced MES-es with a possibility of accounting and inventory integration
This narrow group is dedicated to larger companies, which prefer to keep their accounting and inventory system or even a simple ERP (which doesn’t have as interesting production as ex. Comarch CDN XL).
Integration isn’t often as comfortable and lacking daily problems, as in case of unified ERP, but it’s possible to make some great savings. We get a good production management software, without a necessity of buying a whole accounting system.
The example software:
- Online version of production management software Qcadoo MES
- Advanced online version of MES OptiMES
Typical pricing – how much costs advanced production management software:
- For SaaS as paid monthly subscription: from 315 $ USD + about 1600 – 2600 $ USD implementation;
- For offline systems from about 5200 to 10400 $ USD for implementation + 10 – 20% of this amount for annual licence;
- Equipment: it requires a sophisticated network infrastructure.
Advanced calculations of product making, production scheduling with accounting for inventory and integration with accounting.
- Everything, what a simple production management software has PLUS:
- Advanced planning, including machine calendar, employees competencies matrix, Gantt’s graphs, etc.;
- Advanced monitoring, including bottlenecks, downtime, and OEE factor;
- Calculations and offering (including margines and provision / mark-ups on department costs);
- Warehouse management (inventory documentation, disbursement methods and attributes in documentation);
- Integration with accounting and inventory systems.
It is recommended for:
- companies, which would like to have a complete functionality of advanced planning software, but wish to keep their present accounting and inventory software,
- planners, who wish to use advanced planning functions, including automatic scheduling,
- companies aware of the number of data necessary to provide for the system,
- companies, which products are divided into small elements, where each of them needs a separate management.
2.3 Corporate MES systems (mainly as an addition to advanced ERP)
Are you surprised? It would be best if you weren’t, as it was mentioned earlier, that most advanced software systems don’t reach a production hall and need additional extensions. That’s why MES additions were originally invented.
Machine integrated MES
The truly extended MES usually has a connection to machines to register their work and all working parameters in real-time (the example of simple and accessible for small companies solution can be a Polish production system – Żbik). A graphic below is from the producer’s website, which shows a production hall with several dozen machines and their updated status.
This is probably a dream of many owners of production companies. However, it’s worth considering, especially at the beginning, if the level of complexity and the cost of implementation will pay off. Those systems also prove to be the most useful in unified production processes – ex if you have several dozen similar machines and alike products.
Planning systems with automatic scheduling and the basics of artificial intelligence
The truly “all in one”. From independent production planning to connect to machines, service works scheduling and complete registration of all processes at the production hall. Once combined with an ERP system (preferably with an automatic system based on robots), you have a complete factory 4.0 🙂
These marvels and wonders of technology can be introduced to small manufacture. When there’s a will, there’s a way, and it’s not even about the costs, but the number of data required to provide for the system to give tips and operate, is immense. However, the strength of this solution allows ex. Car factories work successfully without hold-ups, despite thousands of configurations and elements.
It takes just 15 minutes to start using Prodio manufacturing software and schedule the first production order
3. ERP systems – basic „processors.”
This is one of the best marketing products in the IT history – software which can do practically anything, but in standard version offers almost nothing, because the company, which is responsible for implementation, has to make money. The best example is the companies that decided to change from Comarchow’s Optima and go through a few thousand zlotys worth implementing Comarchow’s ERP CDN XL. It turned out that some functions or reports are available in simpler software, and for the advanced program, they have to be written on request.
Other examples of the most popular resource planning systems for smaller companies include SAP Business One and Insert Navireo.
What is a PRACTICAL difference between operating of ERP system and an accounting program?
It isn’t the access to production or human resources (this module you can buy as an addition to simple accounting software). Still, a basic resource planning system usually doesn’t have any production module, and you have to buy it as an extra.
The difference between accounting and inventory software and the advanced program is calculating material from the warehouse (which is called material demand). For example, if you produce a bed, which consists of a frame and a matterrace, the earlier mentioned CDN Optima, will show you the total number of frames booked, based on the number of beds ordered. However, it won’t use this information while making a purchase plan connected to the production process until CDN XL, from the same producer, will point it, but you have to spend tens of thousands before.
Please remember that practically none of the ERP-s reach the production hall, so it is not a standard feature.
The idea is that you buy a basic version of advanced software and next upgrade or modify it to suit your needs better. Usually, you end up buying additional modules to get your solution work somehow:
- The production module for ERP – enables creating of products technology and work planning;
- MES registration module for production employees, where they can click completed works/operations to appear on the production plan;
- CMMS (managing maintenance, machine service, etc.);
- WMS (warehouse managing system, operating on bar codes).
To sum up, the newest advanced planning programs are sophisticated tools, where you buy a “foundation” and build on it a perfectly tailored system, adding as many “building blocks” as you need. If you wish to have an ERP for production, you have to search for ERP + MES.
The typical cost of ERP for a company with 35-50 people
- Base and licenses: from 5300 $ USD – 13 200 $ USD + on average 400 – 1 200 $ USD for each working station;
- Adjusting cost and production additions: on average twice as much as the cost of licence;
- Maintenance and updates: about 20% of the cost of the licence;
- Safe budgeting:
- the simplest solutions such as Modus – 9200 – 10 500 $ USD,
- market standard: 65 600 $ USD,
- market leaders: 105000 – 157300 $ USD.
Production management software – be aware of traps
Watch out for “free production management software” or “open source ERP.”
- Free is usually only basic modules licences (such as ex. OpenOffice), any dedicated modules must be purchased at additional costs;
- Independently installed systems usually don’t have any guarantee and technical support, and they might not be developed any further;
- Imagine that possibly you managed to install some open-source planning program and there is another JPK, which you have no idea about;
- Software implementation and adjusting it to your needs as well as maintenance are paid, and fees are very high – this is the “revenge” of free licence policy;
- It turned out in total balance that “free” software is more expensive than the paid ones and involves higher uncertainty.
The smaller the company is, the faster it should move to a “cloud”, as sooner or later that’s the way all business will go 😉
- Installing any software in your company, you have to realize, that in a few years time, you might have to start from scratch;
- Practically speaking, for small companies, without an IT department and an advanced network, an online service is much safer than storage data at their premises.
- The term “cloud” for production software shouldn’t scare you, because the data is on a particular server in a secure location (as it is in Prodio), it isn’t all over the Internet, as in other cloud services.
Integration with accounts and inventory module isn’t always worth doing.
As an entrepreneur, you strive to have work automated. You fight to eliminate dispensable procedures; you wish to pay once only and have everything in one place – this thinking is like a grist to the mill of companies, which want to sell you the idea of “integration”.
Integration is great, but it requires precision, and the system should be tailor-made for the company.
Each waste and what will happen with it (to go to the warehouse or the trash), each technological change or different raw material used by an employee MUST BE ACCOUNTED FOR in the system. Otherwise, just after 2 months, it will be impossible to count your stock automatically calculated and based on production. No products can be taken without being physically ordered, and all actions must be put in the system (it will be blocked otherwise).
You might now think it’s great and that finally your small manufacture will be organized – but when there are really many orders. The machines can’t work because you didn’t enter all the necessary data into the system. You may go back to old good paper orders and leave this new system behind, although you spent on it several dozen.
Automatic planning – won’t pay itself off!
Gantt’s graph and a dream of one magic button setting a production plan is a topic of many talks between company owners.
Meanwhile, although there appeared many different programs, which promise to plan everything themselves, so far it is still necessary for the software to know before it starts the planning process:
- calendar of availability of production employees, time off work, their work presence,
- matrix of competencies, to know who and in which scope can perform an operation on which machine,
- service and maintenance schedule,
- perfectly prepared technology of the product, including changeovers, with exact lead times, possible replacement by other machines, types of tools used for a particular machine
- properly run warehouse and inventory system and raw material- products allocation.
If you fail to provide any of the above parameters, you can forget about even the best of algorithms automating the production for you 🙂 The software is a small company that should tip you on your machines occupancy and estimated lead time of production. And this is exactly what we wish you 🙂
Manufacturing software implementation – typical mistakes.
Failed manufacturing software implementations are a taboo topic in the manufacturing world, often swept under the rug. Why do manufacturers fail?
Do you want to avoid these implementation mistakes?
1) Perfect theory
You have an idea of your perfect manufacturing scheduling software and a list of potential problems and difficulties. Regardless of tips, we give you – reality will put all of them to the test the most effectively. So no more theory, start practising!
2) Let’s start after the season ends
How much time and money must be wasted to find a few hours for constructive optimization finally?
3) All in one package
There are small manufactures, which wish to invest in advanced production, inventory and accounting software. Ok, but remember that your flexibility will also be limited and your daily tasks hindered.
4) I don’t have my data because it’s in “the cloud”.
It is a much better solution for small manufacturers to store all software data at the external server with an encrypted connection, simpler, cheaper, and more convenient than internal infrastructure.
5) I can’t afford it…
Is 5% a lot for you? Let’s say you employ 15 people and spend about 30 000 euros each month on their salaries. If you increase productivity by 5%, you are plus 15 636 euros in a year. You are right – you can’t afford to buy Prodio.
Proving wrong 5 popular myths about cloud-based manufacturing software.
1. Security of online cloud-based manufacturing software is often much higher than the internal network infrastructure used in small manufacturing.
2. Availability of cloud-based manufacturing software
3. What happens if we decide to “close up the shop”?
4. Automatic update of cloud-based manufacturing software.
5. Access your data.