Are you on a hunt for a new manufacturing ERP system or are you considering changing your current system that does not answer your requirements? We have a guide for you to make your life easier.

1. 7 STEPS TO CHOOSING THE
RIGHT ERP FOR A SMALL
MANUFACTURING BUSINESS

2. Running a successful manufacturing business often means being able to adapt
new technology fast to sustain strong competitive advantage.
This is a complicated task when it comes to selecting the right ERP/MRP
(Enterprise Resource Planning / Manufacturing Resource Planning) software
considering a wide range of ERP/MRP software differing in price, functionality,
and complexity.
This short guide will save your time if you are on a hunt for a new
manufacturing ERP or are considering changing your current system that does
not answer your requirements.

3. It is true, that there are solutions which can charge hundreds of thousands for a license and
implementation, but this does not mean, that small and midsize businesses cannot afford an
ERP. However, the chance is high that expensive systems used by big corporations will be
useless to SMB’s.
How to define the budget?
The rule of thumb is to calculate all the costs (both direct and indirect) associated with an
ERP for two years of operation. Read more about ERP software cost estimation.
Number of users
Another variable that defines the budget is the number of expected users, which can be
calculated by taking the number of people in your office and adding one additional user per
shift.
Step 1. Budget

4. There are two main pricing options to select from when deciding on the budget:
1. Buying a license, or
2. Sticking with a monthly (or annual) subscription plan. Both options have cons
and pros.
For example, on-premises software providers usually offer licensing. If selecting
this option, one must be aware, that on-premises vendors often have several
fees which are not always obvious at the beginning (setup, software updates,
software maintenance, additional infrastructure, customization, support, or
privileged support, etc.).
Whereas the subscription model is popular among Software-as-a-Service
solutions where you pay only if you use the software. Usually, in this case, the
pricing policy is more transparent (also means predictable) and also flexible.
Step 2. Buy-Out (Licensing) vs Subscription

5. During recent years we have witnessed a trend of SaaS solutions reasonably
becoming increasingly popular. The advantages are obvious:
• No need to install anything (and pay for the installation)
• You can access your ERP anywhere, from any device, which allows mobility
• No need to keep the software up-to-date
• No need for additional infrastructure (own servers)
However, there are some scenarios where on-premises software is still the only
option since:
• Having the software and database on own servers could be more secure if
you have your own highly professional IT specialists
• Internet access is still not always available in rural areas
Step 3. The Platform: SaaS(Cloud) vs On-Premises

6. Apparently, if you are a manufacturer then not every ERP will suit your needs
and not every ERP claiming to have a focus on manufacturing can offer
functionality particularly required in manufacturing, such as production planning
and scheduling and equipment load charts, as an example.
No one knows your business as well as you do, so think of functions which are
of primary importance for you, make a list and start searching for a
manufacturing ERP which meets these requirements.
You can also put down some good-to-have features (like integration with the
accounting software you already use) – these will help you out when you already
have a list of candidates offering the same main functionality.
Step 4. Functionality

7. When you follow the steps above, then you will get a list of 4-5 ERP vendors
which answer your basic needs in terms of main functionality, platform and
pricing model.
You may also like infographic of Top 7 Mistakes When Searching ERP Software.
Now this list should be brought to 2-3 options at most since this is the most
reasonable number in terms of time resources spent for evaluation.
To filter out the companies that are not worth your time, contact each software
provider with questions regarding functionality or similar and evaluate their
speed and quality of response. Remember, this will be your strategic partner
for several years and slow communication already from the start is not a good
sign.
Step 5. Pre-selection process

8. Now that you have a final list of 2-3 candidates for becoming your next new and
shiny ERP system, you should try them out first. Unfortunately, this is not always
possible if we talk about on-premises systems, but the most cloud/SaaS
solutions offer a free demo.
When testing the software try to make a simplified emulation of your product’s
production process which covers the use of features that are crucial to your
business (test task).
After having tried to fulfil this task with the remaining ERP software vendors, you
should have a clear winner and your next partner.
Step 6. Final selection

9. Assuming, that you have selected the software that seems to answer all your
requirements and meets your budget, be prepared that you will have to adapt
your business processes to a certain degree.
However, you might still find that some important functionality is missing or is
not working the way you expect, and changing your business workflow is not an
option, then make sure that your vendor offers customization.
Knowing this in advance will help you better understand if the provider is
flexible and what is the software TCO (Total Cost of Ownership).
Step 7. Customization

11. https://manufacturing-software-blog.mrpeasy.com/7-steps-choosing-right-erp-
small-manufacturing-business/
https://www.mrpeasy.com/