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Top Tips for ETO Manufacturing Transformation

Top Tips for ETO Manufacturing Transformation

Leave a Comment / Aerospace & Defense, Automotive, Blog, High Tech & Electronics, Industrial Manufacturing / By / December 28, 2024

Manufacturing is difficult. And if you are in an ETO manufacturing (Engineered-to-order) business, the process is even more difficult. You don’t have the luxury of producing the same commoditized products as MTS (Make-to-stock) manufacturers. Due to the heavy engineering involved, your products may not be as simple as a repeatable job in the case of MTO (Make-to-order) manufacturers.

As an ETO manufacturer, if you’re fortunate enough to be in highly differentiated sub-industries, you may enjoy sufficient margins. Examples of such industries include Industrial Automation or Machinery. In these industries, process efficiency might not be a primary concern. However, if you’re in a highly competitive market with shrinking margins, it’s crucial to find ways to reduce costs and increase profits. This is especially true if your sales have stagnated or you’ve reached market saturation.



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Why is ETO manufacturing so common?

Are you in an industry with a strong focus on design, such as engine or aircraft manufacturing? In such cases, you might not have much flexibility due to the lack of standardization between projects. While efficiencies can still be achieved in these industries, this article is focused on sectors where companies tend to overuse ETO practices. This is still true even though some of these manufacturers could adopt CTO (Configured-to-order) instead.

The drivers for ETO manufacturing

One reason could be that ETO manufacturers initially lacked a strong product background. They started out as contract manufacturers or engineering shops, maintaining that model. Over time, they became too large to even consider changing their business model, supply chain, or production processes. Another reason might be that this approach has traditionally been the norm in the industry, with most companies simply following suit. Additionally, there could have been historical technical limitations. The limitations were these businesses needed to support highly configurable products, which influenced their operational choices.



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Is consumer demand a factor?

Historically, consumer demands have driven the need for product configuration. For instance, in industries like window and door manufacturing, furniture, and certain equipment sectors, configure-to-order has typically been the approach. This is because their sales teams needed configurable options to provide accurate quotes.

In contrast, industries like sign manufacturing, fireplaces, or more commoditized sectors operate differently. In these cases, consumer demand may not drive product configurations. As a result, these businesses tend to operate as ETOs by default, even though their products may not be as highly engineered and could be produced in a more modular fashion.

Do ETO organizations consider them as a manufacturing business?

When we spoke with a team at a robotic industrial process automation manufacturer in Hamilton, Ontario, and referred to them as a manufacturing business, they didn’t respond well. They saw themselves as a cutting-edge technology shop that managed client projects. In a similar conversation with the VP of Operations at a sign manufacturer in Toronto, they shared a similar perspective. When we suggested a few ways to simplify their processes, they struggled to relate to any product terms. They thought in terms of orders and jobs, unable to see any commonalities between the two orders that could drive a transformation of their business model. This was because the business had been operating with an ETO mindset since its inception.

Although they had BOMs, they struggled to visualize the modeling of products. They didn’t consider themselves a manufacturing business, believing their processes were uniquely different. This is a challenge often discussed in business school case studies when trying to shift a service organization into a product-driven one. Such transformation efforts require a shift in mindset, which is typically one of the most difficult challenges to overcome within an organization.

Although we initially struggled, once we started thinking about Lego blocks, they began to relate. We realized that with some variations, we could develop repeatable processes supported by configurable variants. This shift in mindset required them to think about modularization as a two-step—or even multi-step—process. First, they could prepare and inventory the base modules, then manufacture the remaining modules and assemble them with the base components.



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The benefits of business model transformation

This change of mindset could bring, as it did for the organizations discussed above, several benefits outlined below:

  • Faster time-to-market: Reducing preparation time helps customers get their orders faster due to reduced lead time. This could be a huge edge over your competitors. Also, in the case of businesses such as sign manufacturing, faster time-to-market is of paramount importance as time-based triggers drive the demand, such as remodeling or rebranding of a facility.
  • Highly personalized products: This change also allows you to enable personalization aspects of your products, such as walking your customers through a configurable virtual product portal that helps them visualize their selections before they can place the order. This would not be possible with ETO, which has limited (otherwise expensive) options for your sales demonstrations, primarily based on case studies or brochures. Product configurators could be a highly effective tool for your sales and marketing teams.
  • Fewer Mistakes: Since we have separated the process of making a base from the rest, there will be fewer mistakes as base-making is standardized and repeated.
  • Improved Quality: Repeated processes help identify trends for improvement, and consistent processes enable better process control. This results in superior products.
  • Financially Efficient: the tendency to engineer every order from scratch can create a culture of duplication and inefficiency, which can be eliminated through standardization. Streamlining these processes helps with reduced costs.
  • Product Strategy: typically in ETO organizations, it’s very hard to find which projects are profitable and which are not. It’s also hard to extract data to do financial analysis. Repeatable modules allow you to do better planning and analysis of financial data.

ETO manufacturing with CTO

Also, just because you can convert some or all of your products to CTO doesn’t mean that you will stop taking ETO orders. Your sales process based on CTO would help your clients visualize and have more confidence in the customizations they might need. This will not only reduce the risk for them, but they will also have more confidence in doing business with you. Finally, as you accept more customizations, you will be able to evolve your configuration options and product strategy.

While the change in mindset is the first step to taking advantage of this transformation, you will need a system that can support the changed processes; otherwise, it may be harder to enforce. Depending upon the level of configurations required, a suitable modern ERP system that is designed to support hybrid and mixed-mode manufacturing while integrating with your CAD system will allow you to enable such transformation in your organization.



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This resource provides a framework for quantifying the ERP selection process and how to make heterogeneous solutions comparable.

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Conclusion

ETO manufacturers can take advantage of several opportunities, especially now that modern ERP allows you to have complex business models and transform business processes, but the first step starts with changing the mindset and taking baby steps as you ramp up for your large transformation efforts.

When you are ready, at least think about different opportunities you may be able to tap into because of advancements in technology. You just need to call an independent ERP consultant such as ElevatIQ to learn the options available to you at any given time.

Top Tips for a Digital Transformation Champion

Top Tips for a Digital Transformation Champion

Leave a Comment / Aerospace & Defense, Automotive, Blog, Chemicals, Consumer Goods, Distribution, Food and Beverage, High Tech & Electronics, Industrial Manufacturing, Life Sciences, Retail / By / December 28, 2024

Years back, I had this big idea that I strongly believed in and felt could be a game-changer for my employer. I had everything down to be a digital transformation champion. The design. The prototype. The user experience. The hockey stick graph. The customer persona. The target market. The strategy. However, knowing my CFO from my experience, I felt nervous about pitching. I often heard “voices” in my head that CFOs don’t believe in big ideas. Their role is to shut them down.

Over the years, as I worked closely with financial executives, I’ve come to understand that pitching to them isn’t as challenging once you understand what they care for. Read on to learn how to tailor a pitch to your financial executives’ needs.



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The Pitch

A good pitch consists of four essential components:

The purpose of the pitch.

This is perhaps the second most important component of the pitch. It must include the overarching benefit, which connects to either the bottom line or the top line. Let’s take an example of a hypothetical pitch.

“By replacing the legacy ERP, we would be able to ship your products within 24 hrs. I have analyzed competitive data. Through that, I learned that the competitors who can ship within 24 hrs have been growing their sales by 2x. Based on my market research, our customers prefer sooner delivery. Because they want the online experience to be closer to walking to a store, with near-real-time gratification of their spend, the ERP transformation project would help us increase our sales by 20%, boosting customer experience as well as employee satisfaction.”

As you can see, how this pitch tries to connect with the overarching benefits of increasing sales. As well as providing specific details on how that would be done. This is how a digital transformation champion needs to frame the pitch to get the attention of the CFOs.

What’s in it for them?

This is perhaps the most important component of any pitch. If a pitch is not aligned with the audience’s interest, it’s probably a non-starter. CFOs are responsible for managing the bottom line. That is, they are not only responsible for ensuring that the company can meet revenue objectives and collect cash but also responsible for containing costs. When sales teams fail to deliver on their commitments, they ensure that the bottom-line objectives are met. The best way to score with CFOs is to put yourself in their shoes. What would you like to hear in a pitch yourself if you were them?

What’s in it for you?

While you might feel that this part may not be as important, it is equally critical to show your commitment and credibility. If you have not outlined how this would personally impact a digital transformation champion, it’s hard to assess if you have analyzed it thoroughly, avoiding any biases with your proposal. This also helps in ascertaining the sustainability of the idea to ensure your commitment to it in the long term.

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A good call to action.

Before attending the pitch meeting, take time to anticipate potential outcomes based on how the discussion might unfold and prepare a call to action for each scenario. For instance: 1) they might fully embrace the idea before you’ve even finished pitching, 2) they could dismiss it immediately, or 3) they might remain neutral and request additional information. Remember, a deal isn’t finalized until it’s truly sealed.

This is the mindset a digital transformation champion must adopt when navigating various scenarios. For instance, if the idea is completely rejected, you could ask probing questions to uncover whether there are any aspects of the idea that might simplify their work or address their needs.

In most cases, engaging them in conversation will provide valuable insights that can help you refine and align your pitch to their interests. However, the most critical part of the meeting is determining the next step. Once you’re out of their immediate focus, they may quickly forget what was discussed, potentially requiring you to start over. Having a clear call to action and a defined next step ensures you stay connected and remain on their radar.

When pitching, keep this in mind: the best pitches are the ones where you hardly have to pitch at all—your champions will advocate for you and handle the job.

The Champions

You might be wondering how, as a digital transformation champion, you can gather market data and field insights about what customers value and how competitors are performing in comparison to you.

To gain these insights, it’s essential to build strong relationships with the sales and marketing teams. While your expertise lies in technical skills, which they may lack, you can leverage these skills to analyze customer and market data through secondary research, such as reviewing internal data sources. In exchange for their field or market knowledge, this collaboration can be mutually beneficial. If you present this data effectively, it could prove valuable to them, creating a win-win situation. Additionally, if you gain the support of your sales team, they can become powerful advocates and pitch on your behalf.

Your champions can also offer valuable insights into what your CFO is likely to prioritize, as they may have more experience interacting with other executives. They can help you tailor your pitch to better align with the CFO’s interests. When selling to champions, your goal is to make the idea feel like it’s their own. If they’re not willing to take ownership of it, chances are you won’t be able to sell it to the CFO either. This can serve as a useful test to assess whether the idea is worthy of the CFO’s time. You may only get one opportunity, so when requesting a meeting, ensure that it’s truly worth their time.

The Financials

While ideas are important, CFOs are primarily driven by numbers. If you’re not experienced in calculating ROI or TCO, consider building relationships with interns in the finance department who have formal education in NPV and future cash flow analysis. They may be eager to showcase their analytical skills to the CFO. Bring them onto your pitch team and let them present the numbers. The more team members you have supporting your pitch, the better.

Your objective during the pitch meeting is not just to grab the CFO’s attention. If you’ve thoroughly analyzed how this idea benefits you in your role, their attention will naturally follow, assuming everything goes well. At this point, your main goal should be to gather as many people as possible in the room who are ready to pitch on your behalf. During the meeting, your role is to act as a moderator, guiding the flow of the discussion, determining who speaks when, and maintaining control of the situation.

The financials are only valuable if all assumptions are thoroughly vetted. Ensure you use reliable sources and have sufficient data to support your claims, as this is crucial for impressing a CFO. Evaluate all financial risks associated with the idea and prepare a backup plan for each one. If you overlook or ignore even a single financial risk, your entire plan could be questioned.

How do you excite CFOs?


Keep in mind that it is in a CFO’s best interest to consider projects that contribute to managing the company’s bottom line. If you’ve done a thorough job analyzing the numbers and gathered credible evidence to support your claims, CFOs will pursue your idea if there’s even the slightest chance it could provide financial benefit to the company.

CFOs have a deeper understanding of financials than anyone else in the company, so they focus on the financial feasibility of your next big idea, which is honed through experience. Just because one idea didn’t succeed doesn’t mean the next one won’t. The best advice we can offer is to never stop trying!

Is QuickBooks an ERP System?

Is QuickBooks an ERP System?

Leave a Comment / Automotive, Blog, Chemicals, Consumer Goods, Distribution, Food and Beverage, High Tech & Electronics, Industrial Manufacturing, Life Sciences, Retail, Service Companies / By / March 26, 2025

QuickBooks is not necessarily an ERP system, although commonly referred to as one, as some people feel that ERP and accounting systems are comparable (and interchangeable). If you are in a group that does NOT regard it as an ERP, then this article may not be for you. However, if you do regard it as an ERP, then read on to learn about two camps inside the QuickBooks ERP group:

  1. The first camp considers it the most intuitive, tiny ERP system (terribly simple), perfect for companies who don’t have large budgets and overarching needs.
  2. The second camp, on the other hand, regards it as the most terrible ERP system (simply terrible), prone to errors and causing similar issues as spreadsheets, such as duplication of data across systems, lack of control, unavailability of real-time financial data, and overreliance on analysts for reporting.

In either case, read on to learn more about why these camps differ in their opinions about QuickBooks.



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Terribly Simple ERP camp: QuickBooks is the best ERP ever

To some extent, we agree with their assessment. That QuickBooks Enterprise/Online/QBO /QBE (collectively referred to as “QuickBooks” henceforth) is most certainly one of the easiest ERPs ever built. Why? Because it is designed for users who don’t have experience with any other more sophisticated ERP systems. Moreover, its design is friendly for accountants or business users with preliminary accounting knowledge (or needs). Yet most of the complex tasks are still expected to be performed either manually or through the use of spreadsheets.

When you log in to QuickBooks, everything looks great. You can create invoices or bills without any limitations and perform journal entries as you like. Financial statements that you need for the most common usage are all pre-built. The batch process is super easy, and you just have to watch a couple of YouTube videos to master it. You can connect your bank accounts with one simple click. And all your transactions are right there for you to perform reconciliation or close books. The recurring entries and closing process is super easy as well.

The users of this camp feel that QuickBooks is the best system ever designed. And every single ERP system out there must be inspired by its business model. Now let’s hear from the second camp why they feel that it’s terrible.

Simply terrible ERP camp: QuickBooks is the most terrible ERP system ever

If everything is so easy about QuickBooks, why does the 2nd camp feel that it’s terrible? Well, to understand their perspective, let’s first analyze the demographics of these groups.

Recapping the point mentioned above for the 1st camp, the user base of that camp didn’t have experience using a “real” ERP system.

The 2nd camp, however, consists of users who have used at least one ERP system in the past or have significant experience solving complex business or accounting problems–using a system. They have seen the fully automated, end-to-end integration of the processes first-hand. And they understand that their lives weren’t as difficult when they had access to such a system. They didn’t have as much chaos and didn’t have to manage as many spreadsheets. They also didn’t have to create as many ad-hoc processes even though the other company was much larger in terms of operations.

While the 2nd camp agrees with the 1st camp about the overall ease of use of QuickBooks, they feel that QuickBooks’ design has limitations as per their experience.

An Example of a Hypothetical Business

To understand this better, let’s take an example of a hypothetical business. When a business is small, say under $5 mil, their teams are small, too. Their employee strength could be 5-6 people, with each employee independently responsible for their functions. One is for sales, the other is for purchasing, and the third is for accounting. They can manage their functions as they want without overstepping.

Continuing to the same example. Once a company grows past $5 mil, the order volume will most likely go up. More people will need to manage each function. The functions such as operations or finance would grow in proportion as well. With more people added to each group, they will bring unique perspectives to each problem, different ways of documenting processes, and different ways of performing the same tasks. With the functions being independent, they would have their budgets and freedom to buy the software/tools that make them efficient. The added growth would lead to additional processes, such as geographic or product expansion.

While QuickBooks could be great to assist with accounting for this company, the other processes would remain largely manual or disconnected if managed in different software (such as an inventory or WMS add-on for QuickBooks, or an add-on to integrate Zoho or Salesforce CRM with QuickBooks, FreshBooks, Xero, or Sage). For instance, inventory is not connected to the accounting system, or the warehouses are completely isolated or running based on an “honor system.” Or the sales system living a life of its own or running manually. Likely, there will not be end-to-end visibility or limited control over the processes.



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Another Example of This Camp

Let’s take a hypothetical example of a business problem at this stage if their salespeople or customers ask them to sign a large contract where they expect them to deliver within 10 days. Without the data available for previous successes (or failures), it’s very hard to commit to the delivery date (and execute with confidence). If they need the necessary data to back up their decisions (and whether they have enough capacity to commit to such demand), their data will be duplicated across multiple systems. They might also need the help of an analyst who can quickly crunch a report.

As you can imagine, it would be a nightmare to be in this position, and this is why they feel that QuickBooks is simply a terrible ERP system, as It is not designed to be an ERP system.

Now, you must be wondering which perspective you should focus on. In other words, which camp should one join?



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Here are our take and recommendation

We recommend identifying your tribe. Are you a company that is under $5 million in revenue (with limited experience implementing a real ERP)? In this case, we recommend managing with QuickBooks and with isolated systems (such as an inventory add-on for QuickBooks, a WMS add-on for QuickBooks, or an add-on to integrate Zoho CRM with QuickBooks). Or the combination of manual processes augmented with the use of spreadsheets.

On the other hand, once you grow past $5 million, then it might be time to migrate to fully integrated processes and consolidated data siloes. This new state would require embracing the new dynamic as their design removes data siloes, operating on one data model, to reduce operational reconciliation overhead. This would be a mindset shift as it might feel like increasing some work because of the boilerplate with such data and process model. But it will help with the overarching operational efficiency, allowing you to scale.

It’s just unfair to compare QuickBooks with an ERP system (or call it an ERP system).

What if I want a system that is as easy as QuickBooks but has all the bells and whistles of a sophisticated ERP system

Well, for all practical purposes, we have some bad news for you: such a system doesn’t exist. While there are systems that would be closer to providing a similar user experience, replicating the same user experience is nearly impossible.

Think of it this way: Honda Civic Coupe might smoothly swerve around turns, but replicating this experience would be nearly impossible when your family is ready for an SUV. Upgrading to an SUV (or an ERP) requires a mindset shift and getting used to the new ways of working. Comparing SUVs and Honda Civics is unfair as they are designed for different purposes, just like ERP systems and QuickBooks.

Top 8 Advantages of Canadian ERP Consulting Companies

Top 8 Advantages of Canadian ERP Consulting Companies

Leave a Comment / Aerospace & Defense, Blog, Chemicals, Consumer Goods, Distribution, Food and Beverage, High Tech & Electronics, Industrial Manufacturing, Life Sciences, Retail, Service Companies / By / December 28, 2024

The Canadian government has several programs each year for Canadian companies to digitally transform their businesses. These programs may be available for specific industry verticals, such as Automotive or Food and Beverage. The other programs, on the other hand, may help with specific initiatives, such as digitally transforming businesses or exploring industry4.0 opportunities. Some Canadian companies are also government-approved digital advisors through the CDAP or DMAP program. These grant opportunities might only be available if you work with Canadian ERP consulting companies.

Top 8 Advantages of Canadian ERP Consulting Companies

1. Local Expertise

Lack of in-person site visits could make or break an ERP implementation. While ERP consultants work with a variety of businesses and may have prior experience working with a similar business, each business has its own unique processes. To develop an understanding of these processes, the team must survey the site. They should also closely observe users and how they perform their daily operations, interacting with them to develop a deeper understanding of implied requirements.

The other reason why ERP projects fail is that key details are lost in translation. For example, if the entire team that is actually implementing the project is working remotely and only the sales team is available for on-site interactions, the core team will have a hard time following the requirements. They will also have a hard time implementing them in alignment with the business needs.

Lack of in-person site visits could make or break an ERP implementation.



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Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.

Download Now

2. In-person Support

If you are a business that hardly requires hardware interaction, for example, say if you are a professional services company or a consulting firm, you might not need as much in-person assistance.

However, if you are a manufacturing or distribution business and your users are not as tech-savvy, most likely, you will be automating your warehouse as well as the shop floor. If they face issues while using barcode readers or recording time on the shop-floor monitor, they would require in-person assistance. You might also require assistance with label printing, etc. This could even be a more pressing need if you don’t have an in-house IT to help with your issues. A local consultant would be handy if you are not able to ship your orders or invoice your customers due to hardware or training issues.

The other reason why ERP projects fail is that key details are lost in translation.



ERP Selection: The Ultimate Guide

This is an in-depth guide with over 80 pages and covers every topic as it pertains to ERP selection in sufficient detail to help you make an informed decision.

Download Now

3. Canadian regulations

Canada has specific nuances when it comes to its tax structure, e.g., HST and GST computations and their reporting. The fixed assets laws are always evolving, requiring the consultant to be knowledgeable of local laws and regulations. Finally, there are specific provincial taxes, such as environmental taxes on shipped goods in each province.

Requirements such as these may not even be supported by the ERP product as they are highly localized. While some custom development may still be required for these requirements, you can at least save some time by hiring consultants who are already trained with the local laws and regulations.

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4. Cross-border Process Expertise

Most Canadian businesses transact with US suppliers and customers. They also purchase raw materials from or ship finished goods to the US. If you have any cross-border transactions as part of your business, you might have specific documentation requirements for NAFTA, such as a certificate of origin.

Unless you are a very low-volume business and you plan to produce this documentation manually, most likely, you would require this documentation to be produced by the ERP. Canadian ERP consulting companies are knowledgeable and can help you with these needs.

5. Intercompany Expertise

If you transact with the US, most likely, you may have a US entity to do business with the US customers. If so, it’s also very likely that you will be performing some inter-company transactions. In some cases, if you also have a holding company, you may need to consolidate your financial statements to be able to report at the parent company level.

To capture inter-company transactions and their taxes appropriately, the consultant must have prior knowledge of inter-company transactions as they relate to US and Canadian regulations.

6. Bank Format Expertise

If you plan to integrate with Canadian customers or suppliers, they might have unique messaging requirements that are compliant with Canadian regulations.

Also, if you plan to integrate with banks, the EFT message files must be structured as required by Canadian banks. The consultant must be familiar with messaging formats and EFT messages, or they will require more time for their own training before they can help you.

7. Grant Application Expertise

The Canadian government offers several programs to help small to medium-sized businesses. Most of these programs have unique requirements for their eligibility. Based on our experience, a lot of applications get rejected due to a misunderstanding of program requirements. Our partners have deep expertise and are always updated with the programs that may be offered by federal, provincial, or local governments.

A local consultant would be handy if you are not able to ship your orders or invoice your customers due to hardware or training issues.

8. Requirement for Grants

If you plan to apply for government or tax benefits for your ERP implementation or training, most programs mandate working with a Canadian company as the Canadian government is trying to maximize the benefits they are offering to local small businesses.

The consultant may also have special pricing promotions for Canadian ERP consulting companies as they might be getting tax benefits from the government to work with Canadian customers. Working with a Canadian company will solidify your chances of being eligible for these benefits and promotions.



ERP Selection Requirements Template

This resource provides the template that you need to capture the requirements of different functional areas, processes, and teams.

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Top Distribution ERP features

Top Distribution ERP features

Leave a Comment / Blog, Consumer Goods, Distribution, Retail / By / December 28, 2024

Have you been thinking about implementing an ERP for your business? Your first task would be to research distribution ERP features and craft a plan aligned with the future state of your business. While similarities exist, each distributor’s business model is unique (as well as their transactions and operational capacity considerations). The common dilemma typically is to focus on similarities. Instead, most businesses end up following their industry peers, with the assumption that peers’ working practices might be equally suitable for their unique context. Although a great approach, it generally fires back because of differences in transactions and operational capacity needs. So what do you need to do? You need to identify your unique processes and then select an ERP solution that supports them.

“Understanding of the standard features would help you identify the unique features for your business and prioritize your requirements”



The 2025 Digital Transformation Report

Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.

Download Now

Standard Distribution ERP Features

The main challenge with ERP implementation is that most systems seem very similar due to their standard features. However, these standard features don’t necessarily highlight the distinct characteristics of each system. By setting aside these commonalities, you can concentrate on the unique features, simplifying the comparison process and avoiding overwhelm.

The financial processes would be one example of standard features, which are likely to be the same for distributors. But here is the kicker: some distributors might require features such as consolidated invoicing depending on the type of customers and industries they might target. The account payable process may present challenges, such as accepting pre-payment or partial payments from international vendors. Not to mention Pro-forma invoices. So here are the most common standard finance features for distributors.

Finance
  • Accounts Receivable (AR)
  • Accounts Payable (AP)
  • General Ledger (GL)
  • Cash Management
  • Currency Management
  • Multi-entity Accounting (If you have more than one location or entity)
  • Fixed Assets
  • Tax Management
  • Financial Reporting
  • Invoice Consolidation
Inventory
  • Inventory Management
  • Warehouse Management
  • Barcode Reading Capabilities
  • Pallets or container management (if you ship or receive as a pallet or container)
  • Storage Restrictions
  • Cycle and Physical Counting
  • Wave and Batch Picking
  • Cross-docking and 3PL warehouses
  • Carrier, UPS, FedEx, and 3PL integration
  • NAFTA documentation (if you ship cross-border)
  • Kitting (if you perform re-assembly, disassembly, or light manufacturing of your products)
  • Vendor and customer inventory
  • Vendor part number, cross-reference
Order Management
  • Salas Order Processing
  • Purchase Order Processing
  • Purchase Approvals
  • Customer and Vendor Management
  • Pricing and Discount Management
  • Sales Quotes
  • Vendor Price Matrix
  • Customer and Vendor Contracts
Integrations
  • E-commerce integration

Critical Success Factors

The critical success factor is what makes or breaks an implementation. They are also your differentiator for your business model. Understanding critical success factors will help you identify the unique features of your business and prioritize your requirements. So you don’t run out of time, missing the features that matter.

Included out-of-the-box with some ERP products, these unique features collectively are also called industry-specific features. Integration and ecosystem for your specific micro-industry are what differentiate ERP products.

“Your least risky option would be to find an industry-specific ERP product that is designed for distributors.”

Unless you have a unique business (a very large IT team and a budget), your least risky option would be to find an industry-specific ERP product. An ERP product designed to support products and planning cycles for distributors. Otherwise, you will not only end up spending more but also increase the implementation failure risk.

The standard features form the foundation of your selection criteria (and priorities). However, once your executive team agrees on core features, unique features will demand the most attention during your evaluation process. We recommend the 80-20 rule. 80% of the time is spent on the industry-specific features, while 20% is spent on the core ERP features.

“We recommend the 80-20 rule. 80% of the time on the industry-specific features while 20% on the core ERP features.”



ERP Selection: The Ultimate Guide

This is an in-depth guide with over 80 pages and covers every topic as it pertains to ERP selection in sufficient detail to help you make an informed decision.

Download Now

Conclusion

ERP evaluations are typically overwhelming because of a steep learning curve. This is especially true if you have negligible experience implementing an ERP. Also, since ERP implementations are expensive and risky, they only aggravate the pain further. The best way to soothe would be to master prioritization in the ERP context. Knowing the standard features for distribution is the first step toward your ERP evaluation journey.

Top Retail ERP features

Top Retail ERP features

Leave a Comment / Blog, Consumer Goods, Distribution, Retail / By / March 10, 2025

If you are a retailer or an e-tailer (commonly known as an e-commerce company), customer experience must be your top priority. Your website or the e-commerce portal is obviously the first touch for your customers. And you may have invested tons of time thinking and executing ideas so that your consumers feel welcome when they first interact with your company. But is ERP equally important for your customer experience? And if so, what are the most critical retail ERP features?

Yes, ERP is equally critical to enabling the customer experience. The success of your ERP implementation will set the tone for the kind of experience provided for your customers. The very first task would be to research the features needed, followed by crafting a plan aligned with the envisioned future state of your operational processes. Defining how that would impact your business’s customer experience would be the next step. While you may want to get inspired by other retail businesses (and their experience with an ERP), identifying your unique processes is not optional, ensuring that the selected ERP solution supports them.



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ERP Features for Retailers

The majority of ERP solutions available in the market would support the most common out-of-the-box features required by retail companies. They are listed below for your reference:

Finance
  • Accounts Receivable (AR)
  • Accounts Payable (AP)
  • General Ledger (GL)
  • Cash Management
  • Currency Management
  • Multi-entity Accounting (If you have more than one location or entities)
  • Tax Management
  • Financial Reporting
Inventory
  • Inventory Management
  • Warehouse Management
  • Barcode Reading Capabilities
  • Cycle and Physical Counting
Order Management
  • Sales Order Processing
  • Purchase Order Processing
  • Purchase Approvals
  • Customer and Vendor Management
  • Pricing and Discount Management
  • Discount Approvals and Sales Commission
  • Coupons, Promotions, and Loyalty Management
  • Customer and Vendor Contracts
  • Customer Notifications
  • Order and Payment Status Portal
  • Return Management
  • Customer Service Portal
Integrations
  • E-commerce integration (if you sell over the web)
  • POS integration (if you have a physical outlet)
  • Marketing Automation Platform Integration
  • CRM Integration

Critical Success Factors

Awareness of these standard features would help you identify the unique features, which typically are more important for your implementation, as well as prioritize your requirements so you have sufficient time to explore the features that matter most.

These unique features collectively are also called industry-specific features, which, as well as integration and ecosystem for your specific micro-industry, is what differentiates ERP products.

The standard features are what forms the foundation of your selection criteria as well as priorities.

Unless you have a very large IT team as well as a budget, which is generally uncommon for SME retailers, your least risky option would be to find an ERP product designed for retailers. Otherwise, you might not only fail to achieve your customer experience goals but also end up wasting your time and money.

We recommend the 80-20 rule. 80% of the time on the business-specific features while 20% on the core ERP features.

The standard features form the foundation of your selection criteria (as well as priorities). However, once your executive team is aligned on the core features, you should be spending the most time discussing the unique features during your evaluation process. We recommend the 80-20 rule. 80% of the time is spent on the business-specific features, while 20% is spent on the core ERP features.



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Conclusion

If you have negligible experience implementing an ERP, the evaluation process could feel overwhelming due to the steep learning curve, as well as because these purchases are expensive and risky. One way to ease the transition would be to understand how to prioritize and where to focus. Awareness of standard features is the first step of your ERP implementation journey.

Top Manufacturing ERP Features

Top Manufacturing ERP Features

Leave a Comment / Blog, Consumer Goods, Distribution, Retail / By / December 28, 2024

Tasked with researching an ERP solution for your manufacturing business? Understanding manufacturing ERP features is the first thing you need. Awareness of their implications is equally critical. While each business needs certain specific features, there are a few common features that most manufacturing companies need, generally offered out of the box with popular manufacturing ERP systems.



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Among manufacturing ERP systems that are likely to contain the most generic manufacturing features, Industry-specific functionality (also known as last mile functionality) is what differentiates ERP products. If you are looking at larger solutions such as Microsoft Dynamics, SAP S/4 HANA, or Oracle ERP products, these last-mile features might be provided by add-ons (built by system integrators) because these products are meant to be slightly technical in nature. The primary audience for these systems is larger companies with higher implementation budgets. Unless you have a very large IT team, your best bet would be to find an industry-specific ERP where most such features (tailored integrations) are provided out of the box for specific industries.

Compared with vanilla systems, manufacturing ERP systems have the natural support for BOM layers, scheduling, and costing, with the ability to report fixed and variable overhead separately for machines and operations. The non-manufacturing ERP, on the other hand, would not have the costing layers, including scalable overhead layers. The manufacturing ERP systems will also likely have features such as replacing a component across all BOMs. Also, features such as swapping out an operation for all BOMs might be limited. Developing such features on vanilla ERP might take forever. The manufacturing ERP, on the other hand, can perform them with one click.

ERP Features for Manufacturers

Manufacturing

The manufacturing features are likely to differ most in ERP systems. While several ERP systems might claim (or pretend) to be manufacturing ERP systems, genuine manufacturing ERP systems typically have a tighter correlation between the materials and operations, as well as the operations and skill sets. These correlations help manufacturing companies have precise control over their operations and reporting.

  • Bill of Material (BOM)/Formula
  • Material Requirement Planning
  • Production Order Management
  • Labor and Material reporting through mobile
Finance
  • Accounts Receivable (AR)
  • Accounts Payable (AP)
  • General Ledger (GL)
  • Cash Management
  • Currency Management
  • Multi-entity Accounting (If you have more than one location or entity)
  • Fixed Assets
  • Tax Management
  • Financial Reporting


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Inventory
  • Inventory Management
  • Warehouse Management
  • Barcode Reading Capabilities
Order Management
  • Salas Order Processing
  • Purchase Order Processing
  • Purchase Approvals
  • Customer and Vendor Management
  • Pricing and Discount Management

Conclusion

Knowing these standard features and what differentiates ERP solutions is critically important. In order to establish accurate selection criteria as well as priorities. Otherwise, you may end up selecting the wrong ERP product, which typically results in failed implementation and budget overruns.

What is an ERP?

What is an ERP? Enterprise Resource Planning?

Leave a Comment / Aerospace & Defense, Automotive, Blog, Chemicals, Consumer Goods, Distribution, Food and Beverage, High Tech & Electronics, Industrial Manufacturing, Life Sciences, Retail, Service Companies / By / March 26, 2025

As with any buzzword, you might find varying opinions (and thousands of definitions) of ERP systems. Some people call it an accounting/financial system, primarily because you can’t implement an ERP without a finance module. Others refer to it as an order management system (just because product-centric industries use it primarily). Finally, if you ask an ERP vendor, they might claim that it’s the ultimate software — you will ever need to run your enterprise. But how true are these claims (or interpretations)? Is an ERP system really that capable? Are there any limitations?

While it is true that an ERP system can run the majority of business processes for several industries, ERP is not always the best choice in every scenario. Based on the experience of our management team implementing ERP software for various industries for the past 20 years, this is how we define it:



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a Management Information System

A modern ERP enables managers (and executives) to use the appropriate real-time information (and data) needed to make key decisions on devices of their convenience. An average small business employee wears more than five hats, while founders (or owners) might shoulder the remaining responsibilities. Since owners are typically the longest-serving employees, their heads generally contain the most tribal knowledge. As they grow and hire more managers, the owners and managers will have limited information available to them. This is due to the added responsibilities and their limited bandwidth. It’s also due to the “filtering” in cascading information from middle management to executive circles (intentionally or unintentionally). Filtering might exist for several reasons, including their fear of being penalized (or tailoring the message to what they like to hear).

This generally leads to erroneous decisions because of misleading information, leading to high failure rates of their strategic initiatives. Because of this experience, owners and managers become highly risk-averse, avoiding ideas outside of their comfort zone. A modern ERP system provides an integrated view of the organization at managers’ fingertips. This view helps them tap into opportunities with confidence (without biased information).

A “Buy-vs-Build” decision

An ERP is meant to be a packaged product that you buy. So you don’t have to build it yourself. Unless you plan to run your business manually, you will require business software to host your processes, such as Finance/Accounting, Sales/Marketing, HR, and Operations. Most small businesses might start with a basic accounting system such as Quickbooks or Xero (or a small CRM such as Zoho or Hubspot). The other technical-savvy businesses may have in-house developers who might write a system on their own.

While developers may have differing opinions here, sponsors with prior experience funding a software development project would define it in three terms: Difficult, expensive, and risky. Your least risky option would be to find off-the-shelf, already-built software. That is most commonly used in your industry or micro-industry. While not always possible, as each business has some uniqueness to it, your best bet would be to evaluate the closest option. Generally, these options are tailored for your micro-industry, supporting most current and future business models and transactions (as well as geographies). Despite these options containing tailored processes for your industry, you still need to plan for some level of customization, which needs to be articulated and mapped with great detail before signing any contracts.

From the perspective of manufacturing or operations management, this is also the same-old “buy-vs-build” concept. This is a topic that management schools have been coaching for decades, and it is generally also familiar to most executives. When you buy an ERP, you make a conscious choice to buy an already-built product as opposed to building it on your own.

To illustrate it further, making a decision to implement an ERP is like buying an iPhone. You buy it because you appreciate the way the iPhone works. Customizing it to make it look like your old Nokia would not be a smart choice. In fact, it may turn out to be difficult, expensive, and risky.



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single source of truth for the entire organization

An ERP eliminates departmental (and functional silos), providing unifying access to information across the enterprise without conflicts (or duplication). While the concept of a single source of truth has been prevalent in various contexts, the true essence is rarely understood, let alone implemented. If you are not familiar with this concept, the best analogy would be to compare it with our human brains. Imagine if our body parts controlled their own tiny “brains” and the problems associated with federated intelligence and control systems.

An average business uses more than ten systems (or “brains”), such as a payroll system. It could also be an accounting system or a reporting system. Ignoring all other “brains,” such as millions of spreadsheets sitting on each employee’s desktop (and don’t forget the real brains of your key employees as they contain tribal knowledge as much as other siloed systems do). This problem of multiple “brains” causes several issues: 1) duplication of efforts. 2) slowed processing. 3) inefficient onboarding of new resources. 4) added costs of maintaining each system. 5) lack of control. An ERP system provides the very same “glue” that our human brains do. It helps us organize information without a second or conflicting source of truth.

the most strategic investment without fail

An ERP always turns out to be a strategic investment for most businesses. Done right, it is a key enabler for most other forms of investments, such as human resources or IP. While successful business owners (and executives) may have differing views on strategic investments, some regard it to be their key employees. Others view the product, idea, opportunity, or brand to be their strategic assets. However, in our view, it is the culture that attracts key employees and enables long-lasting processes, which has the potential to create an assembly line for generating product ideas.

The key ingredients of culture typically consist of clearly defined roles and responsibilities. They also include fair measurement and recognition of their contributions. Access to information is key to enabling this culture. The other major factors include a career path (the traceability of how their contributions would lead to success in their careers), helping create a differentiating culture. Implemented effectively, this is exactly what an ERP does to your business, which is why it’s one of the most strategic investments ever.



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a journey

While several industry-specific ERP options exist to expedite the process, an ERP journey is never finished with implementation. In fact, managers with experience implementing several ERPs suggest that the ERP journey typically starts with a successful implementation.

To understand this, think of an ERP as modular components that are available to construct different buildings for various use cases. Pre-built modular components are likely to provide an immediate ROI as you don’t have to invest your time and resources in constructing them from scratch. Once you own a house, you will have a better understanding of your needs, which are likely to grow over time. While there are several methods available for need realization, such as Phase 0 (Zero) — which will be very similar to creating a model house or a blueprint before starting construction — there will always be gaps in your expectations vs what you would get in the real world. So, living an ERP life often leads to superior processes and a better understanding of what works for your specific context, which evolves over a period of time.

With time, as with houses, ERPs advance with superior capabilities (and technologies). So, once you install an ERP, you are setting yourself up for a very exciting and rewarding journey. A journey that enriches as time passes and as your experience grows using it. Be open-minded with an ERP project — and treat it like a journey as opposed to a trip.

How do ERP systems work

How do ERP systems work?

Leave a Comment / Aerospace & Defense, Automotive, Blog, Chemicals, Consumer Goods, Distribution, Food and Beverage, High Tech & Electronics, Industrial Manufacturing, Life Sciences, Retail / By / March 26, 2025

ERP is such a broad and deep subject that understanding how ERP systems work is really challenging. ERP stands for Enterprise Resource Planning. Historically, the whole idea was to plan the resources for an enterprise (or a company). And make them available for various users and business processes in a centralized manner. But which resources?

The resources could be human resources, machines, products, or assets. While some resources are common in most industries, such as human resources and assets, some industries, such as banking or service companies, may not have products or machines. On the other hand, other industries, such as manufacturing or distribution, may not sell services.

While the ERP term captures the true essence, it misses an “F.” “F” stands for finance. If we included an “F” in the term ERP, it would become “Enterprise Resource Financial Planning.” This is great as the foundation of any ERP is the finance module. In other words, if you are trying to find software that could automate your sales process but can’t replace your current accounting software, it means that you probably don’t need an ERP. You might just need LOB software such as a CRM (read what is a CRM?).

The term ERFP does a great job of capturing the fundamental assumption of capturing the finance/accounting piece, even though it is slightly misleading. Why? Because ERPs help with several other planning activities such as operations, sales, inventory, warehouse, etc. That’s probably the reason why they called it an ERP to begin with.



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The Importance of Finance Module with ERP Systems

But why is the finance module always required in the case of an ERP? If the finance/accounting dept was completely siloed, as it is common with businesses that use software such as QuickBooks, Sage, or Xero. They would miss important financial insights to make key decisions, or they would be required to fetch and duplicate data and reports across departments. Some of the key decisions organizations typically make with the help of an ERP are:

  • How much inventory do they need to ensure that their sales team is not missing opportunities without overstocking?
  • Which items need to be purchased or produced in order to ensure that production is never halted?
  • How much cash do they need in each month and quarter? This is to prevent cash flow shortages and ensure that the company can run its operations, even if customers don’t pay timely.

As you can imagine, these decisions can’t be made without financial data. Now that we agree that ERPs embed accounting and finance processes across the enterprise. Imagine how your salesperson would react if they needed to learn accounting as part of their job responsibilities. This is why ERPs are also very good at encapsulating accounting. This helps with connected operations with accounting performed in an automated fashion in the background. This also helps generate real-time financial statements and insights for critical transactional business decisions. While this could be a great convenience for business users, it might not be as comfortable for a finance person who relates to journal entries more than core operational transactions because of their background. This is where reality kicks in: there is always a bit of a learning curve for every user. A successful ERP implementation requires that users forget their old habits and learn new ways of doing things.



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ERP Systems Automate Enterprise-wide Workflows

ERPs are also very good at automating enterprise-wide workflows, improving inter-departmental communication and collaboration, and enhancing customer experience. For example, when you get an inquiry for a quote from your customer, your sales team will look into inventory. They can check if the order can be fulfilled from a nearby warehouse. If not, they might book the order from this warehouse. Or, they might alert the other distribution center to ship the product directly from there or transfer it to this location in order to ship from here.

Your sales users–and, in some cases, customers–might be able to review inventory levels and shipping times, identifying the most cost-effective distribution center to fulfill the order. As a manufacturing business, you might want to know whether producing goods internally may be more cost-effective than sourcing from a vendor. Once goods are shipped, the finance team may be alerted to invoice the customer and ensure that the revenues are collected timely so that you don’t lose money because of delayed receivables. While these features sound promising, an ERP is far deeper with capabilities in what it can do to automate processes. And gain efficiencies.



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ERPs are so versatile and customizable that there is not a single industry that can’t benefit from an ERP. Small companies and large enterprises all take advantage of an ERP. If you are not using an ERP today for your operations, most likely, you are using siloed and disparate systems. Or you have added additional staff to perform routine and mundane tasks. That could easily be automated using an ERP.

Conclusion

ERPs have evolved so much that it’s hard to keep track of the advancements. Modern ERPs provide a consistent experience across devices, whether a user is using an ERP on their phone or on a barcode reader. On a machine prompt or on a desktop. Traditional ERPs were archaic in their look and feel due to technical limitations, but modern ERPs have modernized their platforms. Sometimes, they could be as easy as using Facebook with real-time KPI widgets on each user’s homepage as well as notifications about the tasks they are expected to perform throughout the day on their phone. Plus, intuitive workflows without remembering thousands of commands or screens.



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Top 8 ERP Features for Frozen Food Manufacturers

Top 8 ERP Features for Frozen Food Manufacturers

Leave a Comment / Blog, Food and Beverage / By / February 15, 2025

While there are plenty of ERP options out there for manufacturers, most tend to be fairly generic. To fit the needs of frozen food manufacturers. If you are an SME frozen food manufacturer, all options may appear reasonably promising. But none might resonate with you. So what are the top ERP features for frozen food manufacturers?

The reason: frozen food manufacturing is unique and irrespective of how small your business might be, you need to ensure that the ERP you select supports your critical processes. Here are different frozen food segments whose business processes are typically similar. If you are one of them, read on to learn more about the critical features you would require in an ERP:

  • Frozen specialty foods manufacturing: fruits and vegetables; meals; pizzas; frozen bakery products such as bread, waffles, and pancakes; gluten-free food items; snacks and bars; desserts; manufactured ice; ice creams
  • Frozen pet food manufacturing: raw meals, cooked meals, packaged frozen food, kitted products, and re-packaged products.

Most popular ERP systems would probably provide the majority of the standard features. That may be enough for a ton of manufacturing companies. However, not as sufficient for frozen food manufacturers due to their specific needs.



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1. Process Manufacturing Management

While discrete ERP vendors might argue that there is not much of a difference between process or discrete manufacturing, that’s not true at all. Process manufacturing differs significantly, especially with their BOMs and product management processes.

The biggest difference between process and discrete would be in the structure of their BOMs (bill of material or manufacturing). Discrete manufacturing UOMs (units of measure) are relatively simpler. And the quantities of the materials don’t necessarily follow a dependency formula. On the other hand, process manufacturing formulations could be quite complex. Like a mathematical formula such as Z = 2X + Y where material Z is dependent upon the quantities of materials X and Y. While discrete manufacturing has its own challenges, the challenges related to process manufacturing don’t exist for them. This is perhaps one of the most essential ERP features for frozen food manufacturers.

2. Production Management

The process of manufacturing frozen food is complex. Similar to other F&B counterparts, you are likely to perform operations such as grinding/cutting, mixing, pouring, baking/cooking (if you are in the cooked-food segment), quality control, and packaging as part of your shop-floor operations. However, you may have additional steps, such as blast-freezing or thawing. As well as temperature-controlled picking, packing, and shipping. These operations could pose unique operational challenges to frozen-food manufacturers. Such as long-standing processes due to blast freezing, segregation of batches on the production line, etc.

The other production challenges could include having a two-step production process where part of the process is formulation-centric to prepare a batch of a base. The other part is the packaging of the base in different product configurations, similar to discrete processes. An ERP that can’t support both formulation and discrete processes simultaneously may not be sufficient for a frozen food manufacturer.



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3. Pre-assigned Lot Numbers

While the lot-control feature is required in many industries, these requirements are unique to frozen food manufacturing. Why? Due to the need for recall management as well as HACCP compliance. There are very few ERP systems out there that would have features such as pre-assigned and intelligent lot numbers. If the pre-assigned lot numbers are not supported by the ERP system, your end-to-end traceability is likely to fail. Why? Due to the mixing of batches or the manual tracking of lots on the production line. In addition, the manual process might require printing a temporary number (which may not be recognized in the system)–defeating your automation and traceability goals.

4. 3PL Process Support

Most frozen food businesses also use a 3PL frozen storage facility. Because building the same capacity as part of the production site is challenging and expensive. Also, since the shipping of frozen raw materials is expensive, you might not be able to capitalize on vendor discounts if you solely relied on your internal warehouses. If your 3PL vendor allows you to use your ERP system for them to receive the goods, allocate lot numbers, and assign expiry dates, one option could be to treat your 3PL warehouse as just another warehouse.

However, 3PL warehouses are typically large. And it’s hard for them to accommodate the preferences of every customer due to the training and management overhead. Because of this issue, you require an ERP system that supports the 3PL processes natively. And a consultant like ElevatIQ who understands this space deeply to help with these unique challenges.



ERP Selection: The Ultimate Guide

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5. HACCP Compliance

If you plan to attain Hazard Analysis and Critical Control Points (HACCP) certification for your products, the Food Safety Modernization Act (FSMA) requires you to develop and implement an HACCP plan to address food safety by analyzing and controlling several hazards, including biological, chemical and physical. The plan must be comprehensive to include all processes, starting from the traceability of the origin of raw materials. And their production, procurement, and handling. To production, distribution, and consumption of finished goods.

HACCP aims to minimize the negative consequences associated with the release of contaminated products to consumers as well as with their recall. This requires companies to incorporate thorough quality processes across the enterprise along with a material review board. HACCP also drives the need for detailed documentation due to audits and reporting. Unless the ERP has a built-in quality management module designed to cater to the needs of the frozen food business, complying with HACCP is nearly impossible. This compliance also requires a comprehensive document management system to record, implement, and monitor standard operating procedures (SOPs). As well as support for both forward- and backward traceability to attain end-to-end traceability management goals,

Finally, HACCP requires your suppliers to be audited and the records about their performance to be maintained. So, only the highest quality raw materials are consumed through the process. The ERP solution for frozen food must support the audit and performance recording of suppliers. This is among the top two essential ERP features for frozen food manufacturers.

6. In-house Fleets

It’s very common for frozen food manufacturers to maintain their own in-house fleets, as the 3PLs might not carry their load due to their MOQ requirements. They might also struggle to work with 3PLs due to the unique requirements of how frozen food needs to be distributed. The frozen can’t stay out for a very long time. So, they have unique requirements for route planning. As well as how much load each truck might be able to carry.



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7. Document Management

The document management needs are not only applicable to HACCP needs. They may need them for managing versions of their packaging and marketing materials. As well as any documentation required to maintain quality and compliance.

8. Electronic Signatures

The solution must also support record keeping and electronic signatures if you may be carrying food and beverage products where you might need to comply with the FDA-compliant inspections.

Conclusion

In conclusion, process manufacturing is hard. Frozen food manufacturing, with the added burden of compliance, is even harder. Having a consultant who has a mastery of the nuances of frozen food manufacturing and a system that supports your critical processes is vital to selecting the right ERP for your business and its successful implementation.

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