When looking for the right ERP solution, there are numerous candidate solutions to choose from. So how do you differentiate between them to select the right one for you? Well the starting point is to understand your business in terms of its business processes and rules that you use to operate. This might seem a strange statement, but in all my years of consultancy, it has always surprised me how little many organisations really have a good grasp of what makes them tick. In particular, you must understand which processes are key to differentiating yourself from your competition. Now before looking at the market, you need to allocate budget. ERP software is not cheap but, there again, the ROI can be enormous. Now you can look at the market.
Bloor Research has just finished a Market Review of the ERP market, where we looked at some 34 products. What stood out was that all the packages supported the main functionality of running a manufacturing business. So how did differentiation occur? Well the answer was it was down to verticalisation, i.e. support for fabrication, automotive, pharmaceutical, CPG, etc, and to that wonderful term “ease of use”. Phil Nicholls, Managing Director, eMerge Information Technology Ltd told me, “In the cut-throat, competitive and acquisition-laden world of Enterprise Resource Planning (ERP), there is one attribute that all system suppliers claim. A claim, which is in danger of being so misused that it becomes meaningless. That is User-Friendly”. One solution aimed at the SME market that stood out for me was Priority, which is marketed in the UK by eMerge-IT.
Who produces Priority? Priority is developed by Eshbel, an Israeli software company. The company was founded in 1986 and Priority was first released in 1988. The product is now in its 13th version and there are over 3000 installations around the world. The largest customer has some 1000 seats. It is built on a Microsoft .NET platform and uses Microsoft SQL Server as it DBMS engine (although Oracle is also available). Eshbel has some 80 employees. The product is marketed by a number of distributors across the world, the largest of whom is another Israeli company, Medatech Information Technology Ltd. Medatech have some 170 employees and 15 years experience. In 2001, Medatech set up a UK subsidiary, eMerge-IT, to provide marketing and support for Priority. Emerge-IT is based at Chandlers Ford in Hampshire and has some 20 employees.
In my view an ERP has to provide the following basic modules for a manufacturer:
- Financial management, which should cover not only the basic sales, purchasing and general ledgers but also provide support for Asset Accounting, Financial Consolidation and Financial Control. These need to be associated with financial warehouse capability.
- Customer management, which should cover the ability to set up sales accounts and territories supported by contact management associated with the ability to manage leads and opportunities as well as handle mail shots. There needs to be support for customers to be able to place orders through a web front-end without the involvement of any of the manufacturer’s personnel. In today’s flexible market, price management, with rules for discounting, is a very important piece of functionality. For certain industries rental and promotions management is also important.
- Sales management, which not only has to cover the process of handling all your sales order types, but should also cover estimates and quotes in a similar vein. With main company's sales forces being remote from their base for the majority of the time, there is a need to provide sales force automation capabilities. It is also key to have support for sales literature as well as marketing campaign support. From an analysis viewpoint, for many organisations, analysis by sales channel is important as is pricing analysis and optimization and of course profitability analysis.
- Supplier management, as for customer management, support here is crucial. If you are using 3rd parties to provide logistical support in terms of warehouses and transport then there is a need to be able to incorporate their data into your ERP to be able to get a complete picture. There is a need to support foreign trade as well, of course, for billing and invoicing.
- Production Planning is, of course, what MRP and ERP were designed for. So you should be looking for capacity requirements, materials requirements, sales and operational, shop floor as well as support for ADO. Even for SMEs, there is a need for support for multi-sites and often this is now involved across international borders. The two other services required are support for engineering change management and lean manufacturing. There needs to be a good BI capability to divvy up these plans and simulate changes. The package also needs to be able to handle your type of operations (discrete, process, service, MRO).
- Materials management, which covers all the processing associated with your bill of materials, as well as the movement of goods in to and out of the factory as well as its movement inside the factory complex.
- Operations management; for me this covers all the tasks that are under the control of the Operations Director. This will include quality management with support for customer feedback capture as well as incident reporting and escalation management. For workforce management there needs to be support for task allocation, resource scheduling as well as an interface to HR to obtain absence details.
- Human resource management has four basic strands to support. Firstly there is the support for bringing people into the company, what is often referred to as Onboarding. This becomes associated with the ability to not only create but also maintain employees’ records. The second strand is around career and succession planning including training. The third strand is about payroll expenses and includes attendance recording. The final strand is that there is a portal capability that allows employees to look at and manage certain details themselves; this is often referred to as employee's self service.
- Plant maintenance has often been considered a subsidiary business function in ERP, but in my mind, for a manufacturer, this is a crucial part of managing your assets on the shop floor. For those organisations that manufacture plant and service it, then this component needs to cover spare part inventory control and external location management along with job order control. Plant maintenance helps with lean implementations by allowing you to carry out preventative maintenance.
- Services (after-market) management is a set of business functionality that is becoming more and more important as manufacturers look to adding additional revenue sources to their portfolios. This has been important for certain manufacturing sectors for some time, such as white goods, automotive and aerospace. Sub functions required to be supported are warranty management as well as call management.
- Product lifecycle management is another module that has been seen in the past as a subsidiary one. However, in my view manufacturers only keep going if they are innovative and this means they keep refreshing their product portfolio. PLM is aimed at providing the user with software necessary to control the research and development process of product development.
- Laboratory information systems have become more and more important as manufacturing takes the quality message inherent in lean manufacturing to heart. The module provides support for managing the taking of samples and the testing of those samples.
- Business intelligence is about being in control. All ERP solutions provide a set of data warehouses that are associated with modules in their ERP solutions. However, in addition, manufacturers need to be relating data across these Chinese walls in the package as well take in external data. In today’s world we also have the need to do this in near real-time!
So what makes Priority an interesting ERP for SME manufacturers? Firstly, this is due to breadth of coverage that the package delivers. As can be seen from Figure 1, Priority covers all of the above mentioned functionality and except for PLM does this fully.
Figure 1: Assessment of Business Functionality support of Priority (Source: Bloor Research)
From a finance point of view, Priority provides support for all manufacturing operations with a financial impact to be automatically modelled with cost of goods sold transactions and journal entries. There is full compliance with UK and European tax rules and multi-company environments can be consolidated in a single set of head office company accounts.
Priority provides full support for all production planning, materials management and operations management activities in an agile, fast moving market place. This support works whether a company makes to stock, makes to order, makes to forecast or any other variation of manufacturing regime.
CRM support provides the ability in full from both within conventional sites but also remotely from any location that has access to a telephone line. The web-browser interface brings sales force information on all customer data and contact details. In addition the Marketgate interface provides a web site to allow customers and prospects to place orders and monitor their order progress.
From an HR viewpoint, Priority stores all personnel records and provides record keeping and HR development, career management and candidate selection capabilities. At present there is no support for Payroll although this is being released this year in version 14.
The second reason that SME’s should look at Priority is the ability to add vertical as well as horizontal special modules to the base. Emerge-IT provides, amongst others:
- The Textiles module is an industry-specific module to assist clothing manufacturers to manage their production, sales and inventory according to style, size and colour.
- The Hire module provides specific functionality for the equipment hire industry.
- The Instant Addressing Module makes use of Experian’s QAS system, an address management and identity verification solution. This module is aimed at those organisations who want to be able to generate customer details accurately every time by inputting only the post-code and building name/number. This results in highly accurate address information being automatically generated with the minimum of user input.
Finally you get all this capability at a very good price with localized support from a company that understands not only the technology involved but also the business of manufacturing.