Avoid These 5 Mistakes When Buying Manufacturing Software
Software selection is an important, time-consuming task that may have long-term effects for your company. It’s by no means a foolproof process, involving a careful balancing of stakeholders as well as the software vendors or resellers. Manufacturing software in particular needs experienced buyers who can accurately assess the needs of the company and compare them against the solution offering in the market, beginning with the big questions – stand-alone MES vs manufacturing as a part of your overall ERP strategy, for instance – down to the nitty-gritty everyday functionality your users will be facing. Here are 5 key pitfalls many companies have faced over the years. If you’re going into your manufacturing software selection process, arm yourself with lessons learned by your predecessors.
1. Ineffective Requirements Gathering
Since Manufacturing software typically presents a significant financial investment, companies need to go through a thorough vendor selection process to find the solution that is right for them. RFPs are a popular choice, mainly for larger vendors, wherein you outline your requirements and ask a select group of solution providers to explain how their software meets your needs. However, RFPs are notoriously unreliable. Manufacturing software providers–or any software provider, for that matter–see them as a way to get a foot in the door. Information is presented in such a way to suit the vendor’s needs more so than the buyer’s.
It’s key to delegate the requirements gathering to the individuals with the most in-depth knowledge of how the manufacturing system will be used. Ask your vendor for a proof-of-concept or reference customers. While the vendor will undoubtedly put you in touch with their happiest customers, talking to someone who has installed the software will at least get you a better sense of all the steps involved in the process.
2. Pricing Hikes
Vendors will typically make a first bid in the requirements gathering phase. Manufacturing vendors, however, can be very secretive about their pricing. The quote they provide on the RFP should be seen as an opening bid, because in reality, once you tighten up your requirements, your vendor will most likely increase their pricing. Elements are added–think of EDI, life cycle tracking, etc–and even adding users will likely increase your licensing price tag.
The answer? Sign a Statement of Work for an agreed-upon scope. Usually it’s best to start small: implement the basics, get the product up and running, and use it for a while in a real life environment. You may have requirements after the fact you couldn’t have predicted at first, or you may want to add bells and whistles once the product has stabilized. These can be agreed upon through change requests, which add additional scope and cost to the original project in a controlled manner.
3. ROI Ambiguity
It’s hard to calculate ROI on manufacturing software. Usually, ROI comes from cutting headcount or improving processes that lead to hard dollar savings. Manufacturing software, however, aims to provide you with more control and visibility of your business as it relates to manufacturing.
The key, therefore, is to look at how manufacturing software increases your overall effectiveness, which in turn may lead to better time utilization of your staff and supplies, as well as greater inventory turnover, less downtime because bottlenecks are actively being addressed (old equipment, supply shortages, etc.), and more accurate real-time data.
4. Holding on to Broken Processes
Manufacturing software is not a band-aid to fix a broken process. Nor should it be customized to adapt to a broken process. Companies moving to a manufacturing solution should consider their current processes and seek advice on how to improve them. Based on the process recommendations they receive–from industry experts, other companies that have successfully implemented a manufacturing solution, or their prospective vendors–they should determine to what extent the manufacturing software options they’re evaluating suit those recommendations.
Ask yourself, for instance, how you are currently handling your accounting, and to what extent you want to integrate it with a manufacturing solution. Are you using a job shop system, bills or materials, inventory accounting? What other systems may you already have in place that will rely on information received from your manufacturing system? Determine what departments will be affected by the new system and how their processes will interact with your manufacturing software. This is particularly pertinent for a company that has undergone a lot of growth (through acquisitions, for instance), where you have a lot of different (legacy) systems interacting with one another.
5. Incompetent Resellers
So much of a software vendor’s success in the market depends not just on their customers, but also on their resellers. Many vendors will make sure their resellers go through extensive training and certification; however, this is not something you can blindly rely on. While the solution you are buying from a VAR is essentially the same as what your vendor of choice offers, the reseller may not have as much experience in setting it up or training your staff. A successful implementation requires a reseller who is experienced not only with the product, but also in the field–someone who knows how to setup the system for a discrete manufacturer versus a basic job shop operation, for example.
As a software buyer, you should ask for a reseller’s certifications. Ask for success stories and references. How many installations have they done so far, and how many of those are willing to field a reference call? What does the certification process look like? Does the reseller go through periodic re-certification? Many manufacturing software providers work with a host of resellers, so you have a choice of who you work with. The success of your implementation depends as much on the reseller as it does on you.
Find more manufacturing selection and adoption tips, as well as many other handy manufacturing software materials, by visiting our manufacturing resource center page. If you’re ready to start reviewing your system options, be sure to download our free Top 15 Manufacturing Software comparison report.
We’d Love to Hear from You
What were the biggest challenges you faced when you bought your manufacturing software? How did you overcome them? Or, for those of you just starting this process, what are the biggest question marks you have? Tell us in the comments below!