ERP Selection Requirements for ETO Based Companies

Mid-market engineering-based manufacturing companies have different ERP requirements than other types of manufacturing. The engineering skills of the company are sought by their customers to design and develop components, end products, systems, installations, or buildings. They have many of the same supply chain needs, but their business processes vary in sales, engineering, product data management, estimating, project management, and costing.

The business for an engineering-based company centers on designing something for a specific customer – hence the term engineer to order. The typical business process involves the following steps:

• Marketing – identify and market to prospects for the engineering services
• Sales – identifying the need at the prospect
• Estimating and quoting  – develop an initial design, estimate the cost with vendors, and develop a quotation for the delivery of a solution that is unique to the customer
• Processing a new order – converting the quote to an order and building a project plan to deliver
• Design – engineer the solution for the buyer
• Purchase materials – order unique materials and track them to the production process
• Production – manage the delivery of components and production/assembly of the designed product
• Quality – manage the production according to the customer’s specification and certification requirements
• Service – manage the delivery, installation, and technical support of the designed product in the customer’s supply chain plan
• Costing – capture the costs of all the design, procurement, production, quality, service activities to compare actual costs to quoted costs and determine profitability.

These processes require function not normally seen in basic ERP. The vendors that are addressing the ETO market are integrating the following functional areas integrated into their offerings:

• CRM – visibility into the opportunities and activities of the ETO sales process
• Product LifeCycle Management (PLM)– manage innovation, engineering activities, and product data including
  • Product development management – tracking ideas through a “stage/gate” development process
  • Product data management – building new components and products “on the fly”
  • Project management – manage various stages of product data: as designed BOM, as produced BOM, as installed BOM, and as maintained BOM in the field
  • Document/drawing management
• Estimating and Quoting – create new design bills of materials, production processes, costs of new materials and  develop a cost structure that drives pricing and quotes
• Project Manufacturing Planning – plan unique materials and production steps required for the engineered product
• Service – manage delivery, installation, and post delivery support
• Costing – visibility into profitability of a quote and of a job with actual costing.

Many of Ultra’s clients have all or a portion of their business that has ETO processes. We have seen the evolution of ERP function from ERP vendors that have focused on the market. Here is a list of vendors that are addressing the ETO ERP market:

• SAP All in One
• Oracle – both Enterprise One and E-Business Suite coupled with Agile
• Microsoft Dynamics AX – but you will also need ETO industry add-ons
• Infor Syteline (SL) – coupled with their PLM 8
• Epicor 9
• IFS
• ABAS
• Global Shop Solutions
• Consona – see their Encompix product
• Visibility
• Jobscope

Monthly, Ultra Consultants conduct a webinar on ERP vendors for a specific vertical market. In November we conducted a webinar on the top ERP Vendors for complex manufacturing. Watch our website for our live and on-demand webinars and specifically our webinar on the top ERP Vendors for ETO Manufacturing.