Introduction to ETO ERP Software

Cloud technology has thrown the gates open wide when it comes to Enterprise Resources Planning (ERP) solutions for manufacturing.  In particular, methodologies for Engineer to Order (ETO) systems make it possible to implement applications that dramatically reduce the costs and timeline associated with manufacturing, from design through delivery.

As with any enterprising endeavor, identifying business requirements is key when implementing ETO and the right software platform to support it. The phases of a related ERP implementation require a slightly different approach to familiar territory, both for the manufacturing company and for the software provider.  Here are some factors to consider when launching a new ETO ERP effort.

Implementation Objectives

Knowing the destination is imperative, and what’s perhaps most important in an ERP project is having clear and concise objectives.  As always, decisions must be made regarding standard parameters defining the project, such as time frame, staffing, budget, etc., but ETO ERP introduces some new considerations as well.  Here are the top two:

• Level of Integration – To what extent will data from previously separate systems be integrated? Cloud-based ETO solutions offer the opportunity to integrate data from CAD systems or PLM applications into the ERP, transforming engineering bill of material (BOM) data directly into manufacturing BOM, item catalogs, inventory records, etc.  This can include manufacturing routings as well as labor operations.  Deciding the desired level of integration up front will help in identifying the scope of the project.
• Client Collaboration – Being client-centered lies at the heart of ETO, so knowing to what level clients will be involved in the manufacturing process has a direct bearing on project scope, as well. Some questions to ask include:  To what extent should the client be involved in the design process?  What level of visibility should clients be given for design documents and files?  Should client annotations be permitted on designs, and if so, how will their incorporation into revisions be ensured?  Further, will CRM be integrated into the ERP?  Options chosen here can have far reaching implications on client relationships.

Procurement & Financial Functionality

Any ERP software system for manufacturing must handle financial data, whether only for billing and invoicing, or extended into procurement, inventory, staffing and/or payroll.  When determining requirements in this area, consider the clients’ Request for Quotes (RFQ) processes, and, if necessary, select software designed to address legislative or compliance concerns.  (This is particularly important for government clients, where regulations and policies dictate the process involved.)

With regard to billing and invoicing, outline any specialized needs.  For instance, does progress need to be measured in terms of percentage complete, or elapsed time, or some other measurable metric?  Will billing be done on the basis of measured progress, or are payments going to be required as individual milestones are completed?  Answers to these questions will affect which software options are best for a successful ERP.

Costing Considerations

Perhaps paramount are decisions relating to the costing of ETO orders.  Accurate costing capabilities can make or break the success of the ERP implementation, since the survival of an ETO operation depends on accurate quotes.  Some considerations for manufacturing estimates include:

• Costing Methods – Depending on the product, different costing methods may be appropriate. Software selected for the ETO must support the costing methods to be employed, whether on a process, job, or activity basis.
• Product Configuration – For complex products where many options are available, Configure Price Quote (CPQ) capabilities take on special importance. The software must handle part specifications and calculate quotes on the basis of viable combinations, with due consideration to the compatibility of the various parts, any chemicals or fluids involved, etc.
• Access to Data & Reports – Having up to date, real time data is essential in a competitive manufacturing market. When reviewing potential software solutions, consider: Does the software capture actual costs-to-date accurately and in real time? Does it project Estimates at Completion (EAC) and Estimates to Complete (ETC)?  Having access to this type of data will allow managers and clients alike make better informed decisions as work progresses.

Revisions & Field Services

Since products and processes are constantly improved, having a flexible software platform to meet the associated needs is essential.  Here are just a couple of considerations to keep in mind when evaluating ERP solutions:

• Engineering Change Orders – Bringing clients to the center of the manufacturing process for ETO practically guarantees the need for efficient handling of changes. Selected software needs to handle and track revisions and estimate the related impact on costs, staffing, and productivity.  Allowing managers (and clients) to forecast the effect change orders will have on the entire production line is a critical aspect of ETO, and defining a well-integrated change order process can have a transformational effect on a client relationship.
• Field Services Modules – Once in production, incidents requiring field services are inevitable. Considerations for software in this area include: Can work orders be tracked effectively from the time they are initiated, through deployment of resources, to full resolution of the issue?  Will there be full visibility for managers – including staffing, scheduling, time, materials, geographic concerns (such as transportation needs or mileage), and billing?  Does the software permit client access to related data as work progresses, to better keep them informed?

Compliance Considerations

Manufacturing is always rigorously controlled, but for government clients, standards compliance carries even greater weight.  Software that establishes serial numbers on the fly facilitates tracking of items and parts throughout the process, and having this data readily available goes a long way toward meeting FDA, FAA or ISO 9000 requirements.

Related to this is the management of warranties.  ERP software for ETO is available to track parts and lots by vendor, including warranties, service events, and expiration dates.  Generating appropriate notifications to manufacturer and client smooths communication over warranty-related information.

Identifying a software platform that meets the particular demands of ETO is an essential step toward ensuring the success of the ERP implementation.  CADTALK (www.cadtalk.com) provides a highly configurable platform to integrate manufacturing data across the board.  With a suite of software products carefully selected for their applicability for ETO solutions, CADTALK makes CAD/PLM to ERP integration seamless.