There are some essential considerations that manufacturers should take into account before diving into a manufacturing ERP implementation project. In this manufacturing ERP FAQ, you'll find answers to three common manufacturing ERP questions from Bob Parker, group vice president of research for IDC Manufacturing Insights.

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Should I use the ERP vendor service organization or should I use a third party?

Generally, if you are looking for technical information and are looking to optimize the performance of your ERP system, then it's probably good to use your vendor's ERP consulting services. It's less fruitful to use the vendor's consulting for business level issues. In that situation, third-party consultants or system integration firms that specialize in implementations in your industry are the best bet.

What license discount can I expect from the vendor?

ERP vendors negotiate contracts several times a year. So if the vendor is offering a 60% discount, but won't offer anything toward the maintenance, a question we frequently hear from our customers is, "Is that a good deal?"

To understand the correct answer for your business, it's important to understand that the vendor might be making up the percentage of the discount with the lack of discount on the maintenance. So you need to think about the right license discount along with whatever maintenance concessions you can negotiate from the vendor. To do that, you need to understand that the vendor has a cash flow in mind so you should negotiate with the same thing in mind. For example, ask yourself what sort of cash outflow you want and target the negotiations around license discount, not each individual negotiating point.

Where should my manufacturing ERP implementation end?

ERP has traditionally stopped at the front lobby of the manufacturing plant, but that's changing. ERP vendors are adding more capabilities for the factory floor and the warehouse, as well as transportation and logistics. So it's worth looking at what vendors have to offer.

However, when you get down to the factory floor -- depending on which manufacturing segment you're in -- it may or may not be a good idea to use ERP. About half the time you're going to be using a more specialized product.

The bottom line is that there's no pat answer to the question. The answer will depend on what you're trying to do. ERP systems are very rich and built for input screen transactions, but if you try to apply this to the factory floor it doesn't necessarily translate very well.

If you haven't looked at ERP systems over the past 10 years, then you might want to weigh the costs and benefits of a manufacturing ERP system vs. a standalone manufacturing execution system (MES). ERP vendors have invested a lot of money and time over the past decade developing versatile products with multiple modules that could satisfy multiple manufacturing needs without your having to take on another vendor relationship.

What other resources would you like to see on manufacturing ERP best practices? Email us at editor@searchmanufacturingerp.com.

About the author: Catherine LaCroix is a freelance writer based in Portland, Ore. She covers technology used in business, education and healthcare.

This was first published in December 2009

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