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Buyer's Guide

by Daniel Harris,
Market Research Associate
Last Updated: March 24, 2017


There are hundreds of software solutions on the market, many of which address every step of operations from product inception to customer delivery. For smaller businesses, however, many solutions are more complex than their needs require. To better help these buyers, we've narrowed down the manufacturing software market to focus on those solutions ideal for small businesses only (manufacturers with $10 million or less in annual revenue).

What is Small Business Manufacturing Software?

A small business manufacturing software solution provides various modules, such as bills of material (BOM), manufacturing resource planning (MRP), work jobs, sales orders, purchasing and inventory, to small-sized businesses. The system addresses the major requirements of the overall manufacturing process workflow, which is the core of small businesses.

Common Reasons Small Manufacturers Shop for New Software

Many small manufacturing firms contact us for advice as they search for new software solutions. Some are replacing manual methods and have never implemented a software solution before, while others are looking to upgrade to a new system with greater functionality. The most common reasons prospective buyers cite when looking for manufacturing software for small businesses is that they’re:

  • Transitioning away from manual methods (e.g., pen and paper);
  • Outgrowing an older system;
  • Seeking additional functionality or
  • Needing a system that’s more user-friendly.

While the reasons abound, the systems and features that address these issues are also plentiful. We do find however, that most small businesses require one or more of these basic capabilities:

Feature Function Benefit
Material requirements planning (MRP) MRP systems are used for tracking and organizing production materials and monitoring the flow of labor and equipment. These systems can also be used to help reduce shipping and receiving errors by processing advanced shipping notifications from suppliers and reporting changes in cycle counts for inventory management. Automates the initial phases of the production process.
Manufacturing execution system (MES) An MES is used to provide manufacturing managers with real-time reporting from the shop floor in order to assist with decision-making about the production process. Additional MES functions include production and labor tracking, equipment utilization and scrap reporting. Provides a real-time window into shop floor operations.
Manufacturing accounting Manufacturing accounting systems include standard accounting features such as inventory, payroll and accounts receivable, but also come with more manufacturing-focused capabilities such as sales and purchase orders, work-in-progress reports and job costing modules. Manages manufacturing-specific financial transactions and operations.
Supply chain management (SCM) While the functionality of an SCM system within a manufacturing system will likely be less robust than a standalone SCM system, this feature assists with basic supply chain management, particularly inventory control. Automates basic supply chain control and alerts users to delays and backlogs.
Customer relationship management (CRM) Within a manufacturing solution for smaller businesses, this function will assist with basic customer service and support, such as troubleshooting and the storage of customer contact information. Manages all of a company’s customer data and interactions.

Market Trends to Understand

Small manufacturers should always be prepared for unexpected changes in the market and competition from larger enterprises. Here’s a list of the current trends in the small business manufacturing market.

Small manufacturers will develop strategies more aggressively. Small-sized manufacturing companies will try and fight the digital differences that can develop between them and larger enterprises by creating strategies that embrace the latest manufacturing technologies and concepts. To achieve this, they will need to modernize their plant floor equipment and move to advanced manufacturing systems so that they can manage information more efficiently.

The adoption of robots will rise. Among several advanced technologies, small manufacturers are expected to adopt affordable and general-purpose robots. These robots will work in collaboration with the human workforce in a safe and secure manner to transform the overall plant floor activities. Also, concepts such as machine learning and visual analysis, will make it easier to deploy robots in frontline manufacturing roles, make them flexible for various types of work jobs and easier to program for complicated tasks.

Demand will drive production. Earlier, manufacturers used to push work orders to the shop floor, irrespective of the amount of work in line. However, this has now eased and current lean manufacturing practices help shop floors by requesting for a job based on the requirement. Manufacturers are applying the same concept to their high-level output planning by working closely with the sales force and customers. This helps them predict the actual demand for the future and results in lower lead times, fewer inventory items and overall satisfied customers.

Currently, even small business manufacturing software solutions provide capabilities that support demand-driven manufacturing. Hence, small manufacturers that are adopting such systems are on the rise.

Key Considerations for Small Businesses

What level of functionality do you require? The first consideration for a small business evaluating manufacturing software is how much functionality they require in a system. This will differ considerably from business to business, but starting with a clear assessment of your needs will go a long way in determining which system is the best fit.

Some small manufacturing companies may be automating only some operations for the first time, and thus may not require a full suite that includes material requirements planning. For example, a smaller firm may only need bill of materials (BOM) automation, which can be done with certain manufacturing accounting products, such as Peachtree and Quickbooks.

Does your business require an ERP system? Enterprise resource planning (ERP) systems can be used by small manufacturing companies, but are often a better fit for mid-to-large-sized manufacturing operations due to their complexity and advanced functionality (and often times, cost).

However, there are a number of ERP systems on the market tailor-made for small businesses. These systems offer more functionality than basic manufacturing software, but are easier to implement and operate than the enterprise-level ERP systems on the market.

Which manufacturing mode is specific to your business? Different products are made to support different modes of manufacturing, e.g. repetitive, made to order, mixed mode or another specific process. When evaluating manufacturing software for smaller firms, it’s important to select a product that supports your specific manufacturing type.

Otherwise, you may find yourself struggling to adapt your business processes to software that isn’t adequately designed to handle them.

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