Custom manufacturing means that a unique product is designed or engineered to order for a single customer. For the manufacturer, this involves a lot of estimating and requires fluidity throughout the entire production process, as the design is honed into a final product. Thus, custom manufacturers place a premium on ERP systems that bring them flexibility and agility. With an ERP system for custom manufacturers, you start with access the customer’s design, integrate it into their manufacturing system, order materials, and enable the production process.
Master the digital transformation and benefit from the customization boom:
- Small series
- Build to order
- Mass customization
ERP for Custom Manufacturing Reference: Beckwood PressLearn how abas ERP customer, Beckwood Press, located in St Louis, MO, has used abas to improve their custom manufacturing business.
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An industry-specific ERP solution enables manufacturing companies to strengthen their market position through maximum customer orientation
Integrated product development
Order-related design is typical of custom manufacturing. A CAD (Computer-Aided Design) system that is coupled directly to the ERP software facilitates seamless communication between business departments and designers and supports costing, procurement and production planning.
Make-to-order manufacturers need to prepare bids based on empirical values and rough estimates. An ERP system for manufacturers provides data on suppliers, resources and similar projects in one simple step. It also facilitates pricing and constantly compares the actual costs against the cost estimate. Needless to say, accurate costing matters for the customer and manufacturer alike.
Small batch sizes hamper the efficient use of the production facilities. Industry 4.0 offers great potential here. Through intelligent networking of ERP, PPS (Production Planning Systems), and equipment, it can strategically control production and drastically reduce setup costs and throughput times – provided the software solution is compatible with smart factories.
While serial manufacturers have complete BOMs (Bills of Material) at their disposal, make-to-order manufacturers plan dynamically from project step to project step. An ERP system for custom manufacturers that can easily manage growing BOMs is therefore important for timely and cost-optimized procurement with minimal inventory.
There are two ways to extend a business. Take inventory of what you're good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backwards.
Why ERP systems for make-to-order manufacturers are different
In custom manufacturing, nothing is as constant as change. No two jobs and no two products are the same; change requests from the customer for an ongoing project are increasingly seen on a daily basis. Structures, processes and calculations need to be thought through again and again, which means a major investment in design, development and production planning. Without a modern, industry-specific ERP for Custom Manufacturing, it is impossible for make-to-order manufacturers to obtain a complete overview of costs, resources and schedules.
From standardization to customization - ERP for Custom Manufacturing
The challenges of Batch size 1 are no longer only a concern of traditional make-to-order manufacturers within mechanical and plant engineering. The trend toward customization of products and solutions has also reached industrial series production.
"Any customer can have a car painted any color that he wants, so long as it is black," Henry Ford’s famous standardization strategy, would be unthinkable in today's world. In order to remain ahead of their competitors, manufacturers of mass products are increasingly forced to fulfill customer expectations regarding differentiation and customization. An increase in the number of variants often leads to a complexity trap, so serial manufacturers are seeking new customer orientation options.
The solution: mass customization. Standard, off-the-shelf products are giving way to mass goods made to measure. It is becoming rare for two completely identical cars to roll off the assembly line, and custom creations are becoming as normal as designing your own brand name sneakers. The goal is to produce customized products as efficiently as serial production. So many series manufacturers are suddenly faced with the classic problems of make-to-order manufacturers: how to be efficient and profitable while customizing. If you want to do just that, to gain the agility to customize efficiently and drive profitability, consider a specific ERP system for Custom Manufacturing.
Digitization as opportunity
Even if the degree of customization varies – ranging from configuration, which uses a range of predefined options, to developing a completely new product based on customer requirements – customization makes process optimizations more complicated and reduces profit margins. Which make-to-order manufacturers will manage to remain competitive in the face of globalization? And how can series producers link the benefits of mass production to the demands of customer-specific production? The consistent use of new technologies is a must: trends such as 3D printing, robotics or augmented reality increase speed, quality and agility – critical success factors for custom manufacturing. Future-oriented, make-to-order manufacturers and mass customization pioneers are not only leaders in innovative technology, but also demand uncompromising flexibility from their ERP systems. Consider a specific ERP for Custom Manufacturing.
abas ERP for Custom Manufacturing
Successful make-to-order manufacturers make planning for the unpredictable possible
In custom manufacturing, the customer is always right. An industry-specific ERP system helps manufacturing companies respond flexibly to customer requests and transforms the challenges of Batch size 1 and Industry 4.0 into a competitive advantage.
Master the diversity!
The most important ERP functions in the ERP for custom manufacturing include:
- Customer and project files for a comprehensive overview, for example, of revenues, outstanding items, outstanding processes and tasks, notes, archive documents from the document management system, service devices, and current service processes
- Project orientation for procurement planning and vendor management
- Flexible project costing: Preliminary, concurrent and final costing
- Sales order/Project related production list; growing, project related production lists; editable order production list
- Device file with lifecycle BOM (Bills of Material) and spare/wear parts list
- Project center
- Production/Assembly planning with graphical console
- Capacity planning
- Key figures and evaluations for custom manufacturing, for example, key figures accumulated for all projects (particularly hour analysis vs. degree of completion), project risks, capacity bottlenecks (particularly in construction, production, assembly and service), Project forecast / sales pipeline (particularly key account customers), evaluations of the profit situation (completed and current projects/total company)
- Mobile applications, for example, for sales, purchasing, service, warehouse
With abas’ project cost accounting, costs are estimated and planned in the form of a budget, which helps with the scheduling and planning of your project. Budget compliance is then monitored throughout the entire project and project-related evaluations are made available to help you manage your projects.
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ERP systems for make-to-order manufacturers: prepared for surprises
What criteria are relevant for selecting a software solution for make-to-order manufacturers? Many common ERP systems for the manufacturing industry are developed for classic series production. Similar to the mass customization processes orientated toward custom manufacturing, the processes for contract manufacturing in mechanical engineering are also not considered. Nothing goes by the book, but manufacturers need to be able to keep responding flexibly and quickly to unforeseen changes and adjust planning and production to new circumstances - without compromising their profitability. Make-to-order manufacturers also require such agility from their business software:
To help ensure timely and trouble-fee production, the ERP system must provide updated BOMs. This means Purchasing can order materials with long delivery times in a timely fashion and Production can create work plans for released components at short notice. Advantage: this makes it possible to significantly reduce costly express deliveries, downtimes and extra shifts. With more lead time, you can buy and receive materials at a lower price.
Scalability and internationalization
The production planning and production control also needs to be able to map and efficiently manage complex production processes. Interfacing an APS captures deviations between planning and the existing situation through short-term detailed planning. The ERP system uses predictive planning and simulations to continuously match capacities and customize the order sequence.
Costing and analytics
Keeping costs and deadlines under control is a continuously challenging (but absolutely “core”) task for make-to-order manufacturers. Offers must be priced properly, despite all the uncertainties, and it should be possible to counteract deviations in a timely manner. The sophisticated analytical tools of ERP systems not only assist with precise pre- and post-calculations and monitoring the progress of the project, but also with strategic corporate management: Which projects pay for themselves? Which suppliers are cheap and reliable? Where do costs regularly spiral out of control? Which processes have untapped efficiency potential? An ERP system for custom manufacturers resolves these pressing questions.
Custom manufacturing is a consultancy-intensive business requiring close and seamless interaction with customers and suppliers over the entire project period. Mobile apps, as well as clearly bundled information in customer, project and vendor files makes the process of communication much easier by readily providing the latest available data. That not only drives quality production, but quality customer experiences that keep customers coming back for more.
The way to the smart factory inevitably leads to the cloud: partners, machines and workpieces must be networked via a common technology platform that manages the growing volume of data. To be ready for Industry 4.0, ERP systems for make-to-order manufacturers should also be available as an SaaS model.
Everything fits, but you’re still unsure?
Then think about which software vendor you trust to join your company on the path to Industry 4.0. Because only an IT partner that understands the challenges and offers a specific ERP for custom manufacturing can provide tailor-made solutions.