What are the benefits of an industry-specific ERP system over a standard ERP system?

As you are aware the most complex part of your business is the manufacturing process. That is a fact in any manufacturing enterprise. Resource planning (MPS/MRP), hours accounting, product costing and many more modules are usually not all found in a standard ERP application. That's the reason for the higher price tag.

There may be some modules that you currently use/need and there may be some that would benefit your firm in the future. Be careful with the nice-to-haves - there are many ERP installations that are not using all of the application that they purchased.

Standard ERP applications will handle the non-manufacturing areas in very similar ways. How they handle manufacturing can be very different. I would recommend listing your key manufacturing steps and comparing them against standard ERPs.

Now take the best 3-4 and have each sales rep demonstrate to you how their package would handle those key steps. If you have steps (for example sub-contracting) that are not explicitly handled by the package then ask how it could handled. Be aware that sometimes a process can be developed without customization that will met your needs.

If you are not satisfied that a standard ERP can perform your key manufacturing steps without customization then take a look at manufacturing-specific ERPs. Once again chose that best 3-4 and have the sales reps set up demos. With these applications you should come closer to matching your steps.

There is always the added alternative/cost of customizing an ERP application. Don't let someone scare you away from it, but be very careful if it is the path that you chose. You should stay within the bounds that allow future assistance and upgrades. Customization can be a slipper slope.

To conclude, the one area of an ERP implementation that can really mess a company up is manufacturing. In my experience the manufacturing staff deep dive into the package and can really make it work. Just make sure to give them the best opportunity to do so.

The real benefit to manufacturing industry-specific ERP software (if you chose a solution that fits your business needs as has been mentioned many times above) is that you get deeper functionality than a "generic" ERP typically offers. Especially in areas like compliance and testing or sophisticated batch and processing management, the software that is built specifically for manufacturers may provide tools that more generic packages just do not offer.

The catch with generic ERP packages is that if you NEED the advanced functionality for manufacturing, you will have to add it to the generic package. This can be done without customization, but will feel clunkier than the results you would have achieved with a manufacturing-specific system.

With that said, what you will usually give up with these packages are better core modules like inventory, financials, and HR. My opinion is that many generic ERP systems may serve you well, but not excellently, in manufacturing, but will give you great productivity tools when it comes to managing your order-to-cash cycle and other core but mundane activities. I often see industry-specific ERP that has great tools for its industry, but mediocre tools for the other critical area of the busines.

As I see it there is another option to consider. We are currently talking about a Vertical ERP Application vs a Generic ERP Application and live with its functionality or customize. I think there is at least a third option - Generic ERP with Vertical Extensions.

I am biased - that is what we have done with Microsoft Dynamics in the Formula/Batch/Process Manufacturing space.

We leverage on the standard parts of Dynamics (GL, AP, AR, SOP, POP and Inventory) and we wrote the production, scheduling, compliance and quality portions needed by this industry. We feel we acheive the best of both worlds.

Much of the business processing for a formula manufacturer (food as an example) is much like every other business out there. They still cash a check, deposit cash receipts and take physical inventory. What they do differently is around production etc.

With our model we are able to leverage on the literally thousands of developers across Microsoft, Resellers and other Developers to deliver a complete solution. That lets us focus on manfacturing the unique issues brought to our table.

So we see our product as providing the Vertical ERP benefits without the limitations of having to support an entire ERP application.

Here is an example. 10 years ago CRM was not as big a deal as it is today. Now CRM can talk across the ERP product offerings and each day is getting better. If we were a Vertical ERP system we would have to worry about making that integration happen with our SOP application. In our model that is not an issue - the generic ERP is doing it for us. This allows us to focus on what we do best.

So we feel in 2001 we made a great decision. We talked about writing our own ERP but in the end we said that seems like a lot of overhead that we would be duplicating.

The partnership with Microsoft Dynamics has been great for us and for our clients.

First off there are a couple of things to consider in your selection of an ERP system. One, when you are looking at an industry specific package you are assuming that you are going to be doing the same thing forever and always. Two, a standard ERP system may be more cost effective given there are no major mods mad to the software. Because those will need to be redone with each update. So I think you should take a look at std ERP first and see the proceedures you use can be adopted to to the software. If it can't then the more specific would be the way to go.

I'm not convinced of the benefits of industry specific ERP systems. The vendors will tell you that since they are developed specifically for a particular industry, they will provide better results. But I don't buy it. There are more similarities than differences across industries when it comes to manufacturing and the ERP system designs that support them.

I helped two companies in two different industries implement the same ERP system. Both companies looked at industry specific systems, and one made a failed attempt at implementing an industry specific, before deciding on a non-specific, or "generic" system.

The best thing to do is define your requirements before you start to look at systems, then find the system that best meets your requirements.

ERP systems will lock a firm into a SOP that may not be benefit their external customers. A detailed map of internal processes as they are and how they are expected to be is a critical planning process. The catch can be that your people are experts at existing systems and not at imaginary automation systems. Vendor flexibility, modularity and the hooks between systems; say, POS to credit to AR to tax, needs to be accurate for quality customer service. (In my last experience, this was not well thought through and cash customers were regularly sent lien notices, a nightmare for everyone.)
Piloting a module becomes a critical business process to avoid the issues that could crop up. How easy is this to do? What are the costs? How easy is migration and change control? These are significant considerations.
The architecture is critical as well. Can regions or division be merged easily for example?
The front end work defining the needs and looking for solutions may be a better way to go than accepting vendor solutions when they haven’t done this work themselves in your house. Hope this helps.

I partially agree with Randy. As he rightly mentioned you should start looking at the vertical ERP. The major challenge your organisation may face with the industry standard ERPs would be;

1) TCO
2) Infrastructure in terms of HW/NW/HR
3) Tuning your process to the ERP

On the other hand; if you opt for a standard ERP system, you should be having your defined internal processes and start building your system. The advantage with the option 2 is cost and the ownership. Since you would be using widely accepted planning tools, you may interface them with the standard ERP systems without changing your process. The standard ERPs will be shipped with the operational modules like financials, purchasing, inventory, HR etc, these modules can be interfaced with each other and transform the data with the proper approval process defined.

Though ERP looks similar for all business, every business is unique and tend to have unique modules. Industry specific ERP helps you more than Standard ERP does.

I’m are sure ERP from Binarch assist you greatly in all your needs. Please let us know your requirements and our team of experts will design and deliver a unique software to exactly match your requirement ASAP.

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