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Selection Process Should Be Methodical

Manufacturing software packages have traditionally focused on the basics of accounts payable and receivable, general

ledger management, and payroll processing. Today, however, these functions are only a fraction of the total “enterprise solution.”

Modem manufacturing software offers the ability to tie accounting with sales management, production management, inventory and production control, quality control, engineering management, electronic data interchange (EDI), document imaging, the Internet, wide-area networks, E-mail, workflow and other applications.

Determining how these elements interact, and how software can make them work for your company, is not an easy task.

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Some common challenges complicate the decision to implement a manufacturing software system. Many companies have suffered software failure, or found that programs they selected didn’t meet their expectations. Some companies have found themselves trapped in “paralysis by analysis” , endlessly analyzing options and unable to reach an informed decision supported by all their functional departments.

Other companies are facing the reality that their existing software isn’t Year 2000 compliant or doesn’t help them implement ISO 9000 standards or Activity Based Costing (ABC). Some small companies may not even have a software system, and try to manage business systems manually or with spreadsheets.

The software selection process should be as methodical as its implementation. These steps are critical in properly selecting manufacturing software:

& #711; Establish A Selection Team. Purchasing and implementing a manufacturing software package will be one of the most important tasks your company will undertake. Because it will necessitate organizational change and financial commitment, it’s critical that the selection process involve your top management.

Establish a cross-functional selection and implementation team. Include no more than six people who share knowledge of the company, its processes and strategic plan and recognize the impact of the upcoming changes. Establish and propose a preliminary budget. Include the cost of software, hardware, training, licensing and implementation as well as an additional amount to offset any unanticipated expenses.

& #711; Develop A Needs Analysis. Start with a clear set of goals and objectives. What problems do you want the new software to correct? Examples might include resolving scheduling concerns, improving cost data, developing financial reports, integrating sales and production and accepting orders electronically.

Analyze your data requirements. What files, records and other intelligence will your company need to maintain in order to operate efficiently? How will the data be collected? Who will have access to it? Who can modify it? Determine the desired features and functional requirements of the software.

Include the hardware and operating system to be used, the price range and type of manufacturing operations it will support (job shop, repetitive process, mixed). Also include any specific programs of interest such as, Advanced Planning and Scheduling (APS), Materials Resource Planning (MRP), or a complete Enterprise Resource Planning (ERP) package.

& #711; Consider Process Redesign. The process of selecting a new system is the right time to examine your business processes and consider changing them. Study each existing process to be sure it’s truly needed and if improvements can be made.

You’ll miss opportunities for growth and improvement if you simply automate current processes without reevaluating their effectiveness. Prioritize your requirements. Software costs will increase with each item on the “must have” list.

Justify costs. A solid cost-justification exercise that weighs expenses against benefits can help set priorities. Determine what additional hardware, software and training will be required. Measure direct and indirect benefits by how they’ll affect your business.

A direct benefit of new software may mean better control over inventory and receivables, while indirect benefits may mean quicker turnaround time and fewer errors.

& #711; Research Software Options. Identify software packages for evaluation. Look to trade associations, industry groups, and colleagues for ideas and suggestions on the most reputable providers. Obtain bids from several suppliers. Software costs will typically vary, depending on the number of concurrent users, the number of “modules” installed and your company’s sales volume.

When possible, obtain an independent third-party review of the software packages you’re considering. Most software vendors will provide references , check them thoroughly. Check whether there are user groups in your area and industry.

These user groups will be a valuable resource as questions surface during implementation, and can offer industry-specific insight the software supplier may not be able to provide.

Schedule vendor demonstrations, but don’t rely on the vendor to show you how everything works. Ask the vendor to demonstrate how its software can meet your specific needs. Make your final selection. Some bids may be very detailed, with complicated matrices that inhibit the ability to distinguish between products. If you need help interpreting quotes and comparing products, call the San Diego Manufacturing Extension Center (SanMEC).

In addition, SanMEC employs a software selection tool that can provide manufacturers with dependable, unbiased information to help them select the right product from hundreds of software packages.

& #711; Implement. Prepare an implementation plan, including a time line for completion of key tasks. Convert existing data after testing 5-10 data sets for format and output. Upgrade hardware as required. Train staff on the new system. Training is key to successful implementation. Select your internal and external support system.

& #711; Evaluate. After implementation, it’s critical to measure how successful you have been in meeting your initial goals. Successful implementation will save money, facilitate access to critical business information and support more efficient business processes. Your return should be far greater than your investment.

& #711; Avoid Common Pitfalls. Some of the common pitfalls include: Not properly identifying your current and future information needs; not identifying the most appropriate software packages; leaving too little time between software selection and final live implementation; not testing software thoroughly before converting to your new system; insufficient time or expertise to convert files; leaving top management and key staff out of the planning and selection process; failing to structure codes that will provide management with key business information; not thoroughly training all staff in using your new system; losing continuity when staff changes occur; and the inability to see the process through to a successful conclusion.

Implementing the right manufacturing software can significantly improve your company’s use of available information, as well as increase productivity and profits. To be effective, however, it will require interdepartmental cooperation and vision , and a carefully executed plan.

Schultze is director of client services for the San Diego Manufacturing Extension Center, a private, not-for-profit company affiliated with the National Institute of Standards and Technology, Manufacturing Extension Partnership and the State of California’s Trade and Commerce Agency. SanMEC is dedicated to providing professional consulting services to assist San Diego manufacturers increase productivity, profitability, and to become more globally competitive. For more information on SanMEC, call (858) 530-4890.

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