Top 5 Myths About ERP Systems

Enterprise Resource Planning (ERP) systems are powerful tools designed to streamline business and manufacturing processes, yet they are often misunderstood. Below, we debunk five common myths about ERP systems and reveal the truth behind these misconceptions.

Myth 1: An ERP System is Only Useful for Large Companies

Fact: No Business is Too Small to Benefit from an ERP Solution

ERP systems are not just for large-scale enterprises: Small and mid-sized manufacturers can greatly benefit from ERPs as they streamline operations and integrate all business processes and data into one cohesive platform, enhancing efficiency and competitiveness.

ERPs help small and medium-sized manufacturers automate time-consuming tasks such as order processing and production planning, improve accuracy in job quoting and reduce shop floor bottlenecks. ERP systems also provide comprehensive tools for accounting, CRM, inventory tracking, task management, shipping, production planning — and so much more. No matter the size of your business, there is an ERP solution out there that can meet your specific needs and help drive growth and increase overall productivity.

Myth 2: ERP Systems Are Too Expensive

Fact: ERPs Vary in Price, and You Can Find One That Fits Your Budget

We aren’t going to lie, an ERP system does require a significant investment — but, the belief that they are all prohibitively expensive is misleading. In today’s marketplace there are many different types and tiers of ERP systems available at different price points. The cost of an ERP system will vary depending on the size of your business, industry, and specific needs, with factors such as the level of customization, number of users, and complexity of business processes affecting the overall price.

Although initial costs can be high (depending on the type of system you choose), it’s important to remember that a well-implemented ERP system eliminates repetitive tasks and lowers operational costs by streamlining processes. Additionally, many ERP vendors offer scalable solutions and flexible payment options, such as subscription-based models, to accommodate the budget constraints of smaller businesses.

Manufacturers should evaluate their unique circumstances and determine their potential ROI to make an informed decision about investing in the right ERP system for them, one that aligns with their financial objectives and long-term growth strategy.

Myth 3: An ERP System Takes a Long Time to Implement

Fact: A Short Timeline is Possible (and Preferable)

The idea that ERP systems take a long time to implement is persistent but inaccurate. While the ERP implementation process requires careful planning, it doesn’t need to be as lengthy or laborious as some might imagine.

An implementation timeline will vary based on a project’s scope and a business’s specific requirements, but typically, it takes four to nine months or even less for small businesses.

Regardless of your business’s size, we recommend implementing your system in a phased approach, focusing on top priorities that your team can realistically accomplish in four to six months, to ensure a high ROI and manageable progress. After the initial implementation phase, you can continue to add more ERP modules, allowing for continuous improvement and successful project completion, without overwhelming your business.

Myth 4: ERP is the Same as MRP

Fact: ERP and MRP Are Different (and Manufacturers Need an ERP)

Many manufacturers mistakenly believe that ERP is the same thing as MRP, but they are not equivalent. MRP stands for Material Requirements Planning, and is a system that focuses on calculating the precise materials needed for production, scheduling, and shop floor control, and also usually includes capacity planning and performance analysis.

In contrast, an ERP solution encompasses a broader range of manufacturing and business processes. A typical manufacturing ERP includes everything that an MRP can do, but also has additional functionalities such as sales, CRM, accounting, shop floor management, and project management.

ERPs integrate all aspects of a business into one database, streamlining tasks and sharing error-free information across an organization, offering a comprehensive solution that goes beyond the capabilities of MRPs, more suited to the needs of today’s manufacturers.

Myth 5: All ERP Systems Are the Same

Fact: ERP Systems Come in a Wide Range of Options, Allowing You to Find One That Suits Your Specific Needs

Not all ERP systems are equal — which is a good thing. Significant variation exists amongst ERPs regarding features, industry focus, scalability, user-friendliness, and vendor support.

Generic ERP systems, which include many of the biggest and well-known ERP brands, offer a wide range of features and can adapt to various situations, but often require extensive customizations and add-ons.

On the other hand, industry-specific ERP systems are designed to meet the unique needs of particular industries. Industry-specific ERPs are developed by niche companies with deep industry expertise. These systems are often better suited to small and medium-sized businesses as they offer tailored functionalities (without requiring long and expensive customizations), shorter implementation timelines, reduced costs, and greater efficiency.

For most custom manufacturers, a manufacturing-specific ERP solution provides the features they need, like product engineering, quoting, job costing, and shop-floor scheduling, giving a higher level of functionality at a lower price point than a generic ERP system.

Manufacturers should thoroughly research and compare the various ERP systems available on the market to identify the one that best aligns with their operational requirements and business goals.

Conclusion

Understanding the truth behind these common misconceptions about ERP systems can help small to mid-sized manufacturers make better decisions and find the right ERP system for them. By recognizing the flexibility, affordability, and comprehensive capabilities of modern ERPs, manufacturers can streamline their operations, improve efficiency, and stay competitive.