Manufacturing Software

Buyers guide

What Is Manufacturing Software?

Manufacturing software is a tool that provides functionality to plan and execute projects from beginning to end, while automating materials planning, production tracking and scheduling and product lifecycle management.

Benefits of Manufacturing Software

Manufacturing software provides your business with several tangible benefits, including the following:

• Widens supply chain visibility. Manufacturing software (or an Enterprise Resource Planning system for manufacturing) can be integrated with other systems for a holistic view to make adjustments based on events throughout the supply chain.
• Stronger production planning. Production processes can be optimized when manufacturers analyze data and identify actual costs and time needed to complete specific steps in the process.
• Improved compliance management. Manufacturing software keeps a record of activities in the system, including materials used, maintenance tasks and safety measures, which helps you prove compliance during audits.

Competitive Advantages of Using Manufacturing Software

Our digital world requires that businesses adopt a sufficient level of technology just to remain competitive. Manufacturing software designed for your specific type of production helps your company:

• Scale your business. If you only have 100 contacts to deal with, then you might be able to keep all of their information straight using a simple Excel spreadsheet, or even pen and paper. Larger companies, however, deal with thousands or potentially millions of contacts and customers, which require CRM software in order to keep that information well-organized and accessible.
• Operate more efficiently. When everyone in your company has access to your customer and contact data, you can deal with those customers more efficiently and avoid the dangers of over or under-contacting them. You can also track those interactions and analyze that data for more efficient resource planning.
• Protect valuable intellectual property. A manufacturer's most valuable asset is usually their method of production, not the product itself. Software helps preserve and protect these trade secrets when combined with proper security tools.

Business Segments Using Manufacturing Software

Manufacturing software is used by many businesses, across a variety of production types. Each company has its own needs, but you'll likely fall into one of the following segments:

• Industrial machinery. These types of manufacturers produce a wide variety of equipment or materials used for machinery or infrastructure, typically for other companies or organizations.
• Food and beverage. Producers of food and beverages have stricter regulations and guidelines to follow to ensure product quality, and more importantly, safety and compliance.
• Electronics. Electronic device production usually involves partnering with a number of third-parties to perform certain processes or supply parts and materials produced elsewhere. Managing these relationships is crucial to this segment.

Features Guide

A List of Common Manufacturing Features

When comparing manufacturing software, it's important to understand the functionality included in each. The most common functions of these systems are listed in the table below:

Feature Details and Examples

Material requirements planning (MRP): An MRP functions to ensure the various factors that make up the final process and product come together, which involves a bill of materials, labor and equipment costs, reordering for inventory, scheduling production tasks for machines and generating quotes. An MRP is fundamentally used to manage all of the events that drive production efficiency.

Manufacturing execution system (MES): A manufacturing execution system is specifically designed to help companies optimize their production efficiency and quality. An MES takes and executes the production plan created in the MRP, which includes the bill of materials, schedules for production machines, inventory requirements and more. The system also tracks machine use so scheduling can be maximized.

Manufacturing accounting: This functionality manages all the financial records of the company, focusing on the costs and revenue from production. Some items are specific to the manufacturing process—such as sales orders, purchase orders, change orders, work-in-progress reports and job costing modules. When integrated with an ERP or standalone accounting software, this gives you a valuable view into the financial impact of production.

Production planning and scheduling: This feature works to help companies make more analytics-driven decisions about dividing up work, based on available capacity instead of just total capacity. This way, managers can prioritize jobs that are more critical to the business and shift others around intelligently. This functionality is particularly useful for make-to-order or highly complex manufacturing processes.

Manufacturing Software Buyers' Top Requested Features

Software buyers typically ask for a few key features most often—ones like MRP and MES, which are manufacturing-specific. Accounting, quality management and supply chain-related functionality are requested to compliment the core systems.

Pricing Guide

How Manufacturing Software Is Priced and Hosted

Due to the specificity of needs and requirements for which manufacturing software is developed, companies can almost always find a system that fits their budget and deployment model. However, manufacturing vendors don't publish full pricing details on their websites and instead ask you to call for a price quote based on your company's needs.

Pricing models run the gamut, from subscription-based models paid monthly to one-time, upfront payments. While cloud-based software is a popular choice for most industries today, the traditional on-premise deployment—where the vendor installs the system on your hardware—can offer greater control over the data produced on your shop floor.

Alternatively, the cloud-based model offers a greater level of convenience and (typically) a much lower upfront cost.

What Businesses Typically Budget for Manufacturing Software

Looking at a recent sample of manufacturers who call us for software, most (77 percent) say they don't have a preference between cloud or on-premise systems. That's normal—these buyers usually want to weigh other factors before deciding on how the system is delivered.

Cloud-based software is very often subscription-based, but vendors may have monthly pricing or perpetual license for both types of deployment. During discussions with our software advisors, buyers relayed their expected budgets for each pricing model:

(Please note that these prices do not include any potential up-front fees, such as installation and training.)

Hidden Costs of Manufacturing Software

Due to the complexity of a manufacturing environment, a handful of hidden costs exist in the form of services that get the system to perform the way you want and to help your employees and managers to use it correctly.

• Training and support services are critical to the long-term value of the system, including hands-on instructions and ongoing upgrades.
• Installation costs are likely required so the vendor can help integrate the system with your specific manufacturing situation.
• Customization may be necessary to tweak the user interface or make other changes to avoid cumbersome workarounds. This can increase the total cost.
• Vendors may also provide hardware, such as sensors or controllers for more visibility and remote management, which are separate purchases.

FAQs

What Are the Key Functions of Manufacturing Software?

To recap, manufacturing software offers some key functionality:

• Material requirements planning (MRP). Manages the materials and components, including costs, labor and equipment needs.
• Manufacturing execution system (MES). Gives users control over shop floor operations and tracks key performance indicators for labor, production and asset usage.
• Manufacturing accounting. Keeps a record of financial transactions—a general ledger, accounts payable and receivable, inventory, payroll and more.
• Production planning and scheduling. Helps create production plans while factoring in inventory levels, existing jobs and real-time machine capacity for a more realistic schedule.

What Questions Should I Ask Vendors When Evaluating Manufacturing Products?

Demos of the system can give you a feel for whether the product is a good fit. Evaluate manufacturing software carefully and ask questions based on your specific needs, production type and business goals.

Some of these questions may include:

What features of your system are particularly useful for my type of manufacturing?

Depending on your production situation, you may be able to distinguish among a few top products by the functionality that is designed for your needs.

What parts of the software do users most frequently report problems with?

It's important to get a sense of the common issues users have with the system. This can reveal ongoing problems and the strengths and weaknesses of the vendor's support services.

What are the set-up costs for the software?

This question is especially important for manufacturing vendors. You'll likely need some help integrating the system properly due to the complexity of a manufacturing setting.

What are some popular add-on modules or hardware?

Most vendors offer extra modules that add niche or advanced functionality. Make sure to ask vendors about these options to understand which are most valuable to customers similar to you.

What Are the Differences Among MRP, MRPII and ERP?

The manufacturing software market is evolving, leading to multiple systems with overlapping functionality. It can be confusing, but we have research to make things more clear: MRP vs. MRP II: What's the Difference?

How Can I Develop a List of Manufacturing Needs?

We've delved into the vast amount of options for manufacturing software buyers and laid them out in a couple of reports about ERP modules and ERP feature comparison. Review our research and create a list of necessary features and those you want to implement later.

What Can Enterprise Vendors Offer?

Maybe you're a larger manufacturer and need something robust to help keep your operations healthy. Software giant SAP provides solutions for thousands of companies, but their competitors could be your best option. This report includes a breakdown of SAP's major competitors: Top SAP Competitors: The Best SAP Alternatives for Your Business

Tips & Tools

Relevant Articles

Here are some recent articles about manufacturing software you should check out:

• "Cloud ERP vs. On-Premise ERP"
• "What Factors Determine the Cost of ERP Software?"
• "Alphabet Soup, Oh My! What You Really Need to Know About ERP vs CRM Report – 2016"
• "ERP vs. MRP: Which Is Right for Your Manufacturing Business?"

Recent Events in the Manufacturing Market

Here are some important recent events concerning manufacturing, the economy and software:

• U.S. Manufacturing Continues to Rebound. After a more than 10 percent decline in U.S. exports in 2015-2016, the National Association of Manufacturers reports that, in 2017, exports totaled $1.32 trillion, nearly 5 percent more than the year prior.
• Advanced Manufacturing Expected to Transform Industry. Gartner offers several predictions about how new technology will impact manufacturing—within the next few years, up to 50 percent of manufacturers will utilize the Internet of Things, virtual assistants, 3D printing and blockchain technology.
• Many Manufacturers Struggle with Digital Transformation. A new McKinsey survey reveals that the transition into Industrie 4.0 is a major challenge. Despite 92 percent saying they feel ahead or on par with competitors, many don't see the bottom line results yet. Follow our research for tips on how to make this transition successful.

Software Related to Manufacturing

The manufacturing software landscape includes a set of highly-related, but specialized, systems that can be used alone or in combination with your manufacturing software to help you meet business goals:

• Material Requirement Planning (MRP) Software: Material requirement planning software provides core functionality that includes cost estimating, materials and production planning and forecasting. Systems may also offer features to generate price quotes and support discrete or engineer-to-order manufacturing processes.
• Manufacturing Execution System (MES): Manufacturing execution systems support quality assurance and improvement focused on the production line. Included features allow companies to analyze asset performance to correct inefficiencies.
• Manufacturing Accounting Software: Accounting software for manufacturing offers core financial management features, such as a general ledger, accounts payable and receivable, inventory and payroll. Industry-specific features like job costing and work-in-progress reports are also included.
• Manufacturing Production Planning and Scheduling Software: Manufacturing planning and scheduling software helps production managers by using mathematical models to better simulate and understand the production environment. More advanced than standard MRP tools, best-of-breed manufacturing planning and scheduling platforms help improve production efficiency with apps for capacity scheduling, varied scheduling priorities and forecasting for what-if scenarios.
• Manufacturing Inventory Management Software: Inventory management software for manufacturing assists in tracking production components, spare parts and expendable materials to reduce carrying costs and optimize quantities on hand.

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