Why should even small manufacturing companies use Cloud ERP?

Traditionally good ERP systems have been too complicated and expensive for small and micro companies to use. The move to cloud computing changed all that. There are now powerful systems available that scale both upwards and downwards and are beneficial to smaller companies.

First of all, what is ERP?

It is the computer system that integrates all of a companies transactional activities into one system. For a manufacturing company this is sales quotes and orders, work orders, purchasing, inventory control and invoicing. Perhaps accountancy should be included under the umbrella, but in the cloud world accountancy is normally provided by a generic accountancy system such as Xero.

Why should a small company use a cloud ERP system?

Many small companies start by using an accountancy system because they need to do their tax returns. If starting now, they will typically start with a cloud accounts system.

The next step is to get a grip of order processing and inventory control. There are three quick steps to this, all of which are imperfect:

  • Enter data to a spreadsheet – complex to maintain, probably the use of them is reliant on a single person
  • Use the simplified, generic order forms in the accounts system – do not have the features needed to meet even simple manufacturing processes
  • Develop their own, for instance using Access database – expensive in the long run, will get more and more complicated, often reliant on one person.
  • For an older company, continue using a legacy desktop system inherited from the 1990’s – lacks interconnectivity, needs server and software upgrades

None of these options are beneficial in the long run for three main reasons: they are not scalable, they do not give sufficient automation to the business processes to be of benefit and they tie up management time in unnecessary administrative tasks.

How would a cloud manufacturing system work in my company?

It is best to take a process-orientated approach. A small company may have a single or several different processes. Start by considering the main product groups in sales. For instance, if there are standard products and custom products, then there are probably two different processes. For each process consider, and hopefully document, each step from contact with the customer to final completion of the order cycle. This would include actions with quotes and sales orders, manufacturing and manufacturing steps, purchasing, shipping and receiving and invoicing. In some cases there is a tight connection between steps such as making to order, and in other cases there is a loose connection such as making in batches and selling from stock. Consider also data connections to other systems.

A cloud manufacturing system will make these processes work faster and with less administration. These two benefits are particularly important for growing companies because it makes the company scalable.

What about micro-companies?

The arguments for automating processes become even clearer when considering micro-companies for instance with less than 10 employees. The reason for this is the proportionally high cost of administration in comparison to a larger company. Typically resources are more limited in very small companies so it is even more imperative that where possible resources i.e. the time of key staff, is given over to sales, marketing and customer services rather than manually calculating and recalculating procurement plans.

We have seen companies with as few as 5 staff relying on the Manu Online Enterprise Edition simply because it takes the load of of the few people working to focus on more beneficial activities.