How do you know when it’s time to upgrade or replace your manufacturing system?  That is, if you have one. 

Perhaps you fit into one of these categories:

• You are managing your manufacturing operations using manual methods and it is becoming increasingly obvious that it’s time to automate
• You are using entry-level software and want to move to a new level
• Your manufacturing systems are old and showing their age; you’re ready for new technology

 If any of these scenarios resonate with your current situation, it’s time for a change. And you can use some help. 

Below we’ve included parts of an informative booklet from Sage North America, a supplier of business software and services.  “How to Chose a Manufacturing System” provides a lot of vendor-neutral information, ranging from whether or not you should buy manufacturing software to questions to ask your potential software supplier and consultants.

Below we’ve reprinted the last section of the booklet first: “Six Reasons Why New Manufacturing Systems Fail.”  Then we move to the beginning chapters and present a simple test that can help you determine just how ready you are to take the plunge.

Six Reasons Why New Manufacturing Systems Fail

1. A faulty inventory item numbering scheme

Consider a company that has two sources for chips. Even though each supplier has its own part number for the item, the company didn’t map out its own part numbering scheme properly. As a result, the item appears to be out of stock even though there are still chips on hand from the other supplier. There’s a right and a wrong way to set up inventory control when you have more than one supplier. If the program you’re using doesn’t have multiple supplier capabilities, you won’t be able to properly set up Inventory Control to reflect this. Make sure the system you are considering maintains a cross-reference between your internal part number and each supplier’s part number.

2. Insufficient control of content for bills of material

Every BOM needs to be entered correctly from the start, based on specifications received from engineering. Even if the BOM has all of the right components in theory, sometimes in practice quantities aren’t exactly what they need to be and then people on the shop floor start to personalize as they assemble. It’s critical that engineering and manufacturing communicate effectively over the correct structure of BOMs and that only qualified people are keeping BOMs up-to-date. Regardless of the size of your manufacturing operation, a robust security system will restrict unqualified people from using certain critical functions of the software.

 3. Inaccurate inventory on hand

One of the benefits of an integrated solution is that you eliminate redundancies in your system. One of the drawbacks is that errors can be compounded. If your inventory on hand is miscounted from the start, the error will repeat itself throughout your system. And the last thing you want is to be forced to close down for several days to do a physical inventory in order to identify discrepancies and reset your on-hand quantities. Manufacturing systems that offer “net-change” physical inventory functions will make it easy to correct stock counts without having to halt production activities.

4. Lack of agreement between engineering and manufacturing

Before implementing any system, it is absolutely essential that you reach an agreement between engineering and manufacturing on your goals and how you’re going to get there. It doesn’t matter how sophisticated your software is if you don’t have appropriate buy-in from these two departments. Work with your consultant to develop a thorough implementation plan. Make sure everyone in engineering, manufacturing, and management signs off on the plan before you begin installing software.

 5. Unrealistic expectations of what the system will be able to accomplish

Know exactly what you want to accomplish with your new system. You wouldn’t buy a Chevrolet to travel 200 m.p.h., nor would it make sense to pay a lot of money for a Lamborghini just to keep it in the driveway. Buying functionality you won’t ever need is just a waste of money. Make a careful list of the functionality you really need, adding a few of those “would be nice” items. Award major points to manufacturing systems that have a built-in growth path, especially if you can test-drive advanced functions using your own familiar data.

 6. Failure to determine the company’s needs in accounting, manufacturing,engineering and data collection

It is vital that you spend time thoroughly evaluating your company’s needs before choosing and installing any system. Get a complete review of the requirements in accounting, manufacturing, engineering and data collection. This is a mandatory step in the process – and one that cannot be skipped. Doing your homework in the planning stages will pay off ten-fold when it’s time to connect all the pieces. Ask your reseller if consultation and training is available directly from the software supplier.

 Now that you’re forewarned, it’s time to move on to the test to see if you actually need a system and, if so, what you can expect.

 Should Your Company Buy Manufacturing Software?

This simple test will tell you just how ready your company is to adopt a new manufacturing system.

1. Does your company currently use bills of material or recipes?

oYes. Go to question 2.

oNo. Stop. Most manufacturing companies rely on bills of material (BOMs) or recipes to track their material requirements. If you answered “no” to this question, you probably aren’t in the market for manufacturing software; instead, a job shop package may be what you need. Check with your local consultant for more information on available job shop solutions.

2. Does your company currently have some kind of manufacturing software in place?

oYes. Go to question 3.

oNo. Stop. You face a serious competitive threat from other companies that are reaping the benefits of manufacturing systems. Read the rest of this guide and get started on an implementation plan today.

3. Has your company experienced huge growth or significantly altered its lines of business in the last three years?

oYes. Stop. Growth or other significant business changes mean that you’re outgrowing your current systems. If your growth path is projected to continue, you need to consider new systems right away to ensure that your current system does not become obsolete.

oNo. Go to question 4.

4. Does your manufacturing software integrate seamlessly with your accounting software?

oYes. Go to question 5.

oNo. Go to question 7.

 5. Is your manufacturing software more than three years old?

oYes. Go to question 6.

oNo. Stop. If your integrated system was chosen carefully within the last three years, it should be working just fine. Before proceeding with a new purchase decision, discuss your situation with the consultant who helped you implement your current system.

6. Is there a satisfactory upgrade available from your current software supplier?

oYes. Stop. Contact your software vendor to find out more about upgrading your system right away.

oNo. Stop. You need to find a new supplier with a more serious commitment to ongoing product development. Now is a god time to take a look at the products available in today’s market.

 7. Is your accounting software more than three years old?

oYes. Go to question 8.

oNo. Stop. Without complete integration of your manufacturing and financial systems, you won’t get the full benefits of computerization. Blame and frustration will rule the day. Be sure to consider only those packages that can demonstrate full integration.

 8. Is your manufacturing software an in-house package invented or developed by your internal programming/IT staff?

oYes. Stop. Your system was probably developed years ago, before there were so many excellent software packages to chose from. Upgrading your system now will eliminate the ongoing cost to maintain customized software. As custom systems age, maintenance gets more complicated and often more expensive. But be prepared for a little extra effort, because your IT group may oppose a packaged solution that wasn’t developed internally.

oNo. Stop. Your old accounting system and nonintegrated manufacturing package are begging to be retired. The benefits of harnessing new technology can pay big dividends. The earlier you get started on an upgrade and conversion plan, the sooner you’ll see results.

The booklet also includes information on calculating consulting costs, determining if you can afford to buy or not to buy, electronic commerce, and hosted applications services.