Why implement an ERP System in a small manufacturing company?

MANY smaller manufacturers are content running their business on a simple accounting system while managing the operations side of their business with some combination of spreadsheets and manual tracking processes.

The feeling is “We’re too small for an ERP system.”

This couldn’t be further from the truth. There are systems designed specifically for the smaller company that can help you do so much more with your business.

Why should a smaller company invest in manufacturing software for small businesses?  An ERP system can help manage accounting processes as well as manufacturing operations. Here are a few simple reasons:

  • Run more efficiently
  • Allow yourself to grow
  • Improve profitability

Let’s explore these a little deeper.

Run More Efficiently

Though many companies feel like they have things ‘under control,’ the reality is quite the opposite. When managing the plant manually, you lack the visibility to ensure that you are getting things done in a timely fashion.

There are many reasons for this though one of the big ones is not having the material you need when you need it.

So often, a $1.00 component being overlooked can hold up an order with thousands of dollars. When talking with a new customer in Illinois, they brought us to a work bench, held up an empty inventory bin, turned it upside down and said, “this simply can’t happen anymore!”

The bin was supposed to have 500 washers in it. These aren’t washers you can get at the local hardware store, they were specialty washers required for this particular product.

Their manual system indicated that they should have 500 in stock and as such, they never ordered more.

They assumed that they had what they needed. This one item was holding up a $50,000.00 order and it had been sitting for nearly a month past it’s due date awaiting them to come in.

Better Visibility

So many operations run into this same scenario. Sometimes it just holds up an order for a few days. Other times, it could result in the order sitting for months waiting for the material to come in that should’ve been ordered much sooner.

This is where small business manufacturing software can help. The system will provide the visibility you need to highlight material deficiencies when you still have time to do something about it.

We’ve seen customers implement manufacturing software for small businesses and reduce lead times by as much as 50%.  In the process, they’ve made themselves more competitive in their respective markets.

Increase Profitability

You’ve probably already started to make the connection here. By increasing your efficiency, potentially reducing your lead times, and making better use of your production resources, you should be able to improve your profitability as a small manufacturer.

Add to that the ability to better estimate and track costs on products, and you have just set yourself up to compete with much larger competitors in your marketplace, and you’ve set yourself up to handle short, and long-term growth.