ERP for manufacturing is a single system that links orders, the warehouse, materials, production and shipment. A sales manager takes an order, and the system shows whether there are enough materials, when the shop floor can make it and what needs to be bought in. You need it when spreadsheets and a CRM are no longer enough: data is reconciled between departments by hand, and material shortages come to light only when the order is already in production.
Below, in plain terms: what ERP is, how it differs from CRM, what you manage in it and why it's best to start implementing it with a single process.
What ERP is, in plain terms
ERP stands for Enterprise Resource Planning, that is, planning the resources of a business. The resources are materials, equipment, people, time and money. An ERP system brings the data on them together in one database, and each department works with its own part of the shared data.
Purchasing sees which materials are needed for the orders accepted. The warehouse sees what has come in, what has gone out and what is reserved for a specific order. The shop floor sees what to make today and by when. Sales sees when an order can really be shipped to the customer.
When people look for an ERP, they often search for "production tracking software". That's close, but not the whole picture: tracking answers the question "what happened?", while ERP also helps you plan — what to make, when and from what. You can keep track of a lot in spreadsheets too, but every change there is carried from file to file by hand, and an error in one place travels further down the line.
How ERP differs from CRM
A CRM is about the customer and the sale: enquiries, quotes, deals, communication history. ERP is about what happens inside the company after the sale: materials, warehouse, production, shipment. In short, a CRM answers the question "what did we sell, and to whom?", while ERP answers "what will we make it from, when and how?"
A small manufacturer can often get by with a CRM that has production stages. We explain how that works in our article on CRM for manufacturing. ERP is needed when, on top of orders, you have to manage the warehouse, purchasing and shop-floor capacity planning. The two systems often work together: an order appears in the CRM, is passed to the ERP, and the production status goes back to the sales manager.
What a manufacturing ERP system covers
The set of modules varies from system to system, but for manufacturing the core is usually the same:
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Orders. What has been accepted, in what priority, by what deadline, and what is already in production.
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Warehouse. Stock levels of materials and finished goods, goods in, goods out, and stock reserved for specific orders. The sales manager sees what is available and what has already been promised to another customer.
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Materials and purchasing. What a product is made of and how much of each item goes into it — for PCB assembly, for example, that's the component list for each board. From this, the system works out what needs to be bought in for new orders, and purchasing buys to plan rather than at the last minute.
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Production. Shop-floor work orders, stages, work centre loading and output of finished goods. You can see where the bottleneck is and when a work centre will free up.
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Shipment. What is ready, what has been picked, what has been shipped and to whom. The sales manager doesn't promise the customer something that hasn't been made yet.
If you're looking for production and inventory tracking software, start with two blocks: the warehouse and shop-floor work orders. That's the core, and everything else is added to it later — management reports, quality control, planning months ahead.
Signs it's time to implement ERP
ERP is rarely implemented ahead of time. Companies usually come to it when spreadsheets start costing them too much: in downtime, rush purchases and shipping errors. Here are the signs that this point is close:
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Materials run out without warning. The shortage is discovered when the order is already in production and the shop floor is standing idle.
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Stock levels in the spreadsheet don't match the warehouse. Before a large order, someone goes to recount the shelves.
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Lead times are guesswork. Nobody can see the shop-floor workload, so the date given to the customer is a sales manager's promise, not a calculation.
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The same data is keyed in several times. Into the sales spreadsheet, the shop-floor spreadsheet and 1C.
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Management reports are compiled by hand. By the time a report is ready, its figures are already out of date.
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Growth is limited by headcount. There are more orders, and reconciling them takes one more person working on the spreadsheets.
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Only one person understands the spreadsheets. When they go on holiday, record-keeping grinds to a halt.
One sign is a reason to tidy up your spreadsheets. Several at once are a reason to think seriously about a system.
Off-the-shelf or custom ERP for manufacturing
Off-the-shelf ERP systems, including those built on 1C, give you a proven structure: the warehouse, purchasing, production and reports have already been thought through. The downside is that you often have to adapt your processes to the system, and any customisation has to be done by specialists in that particular system. If your production is organised in a typical way, an off-the-shelf ERP is a sensible choice.
A custom system makes sense when:
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Your processes are non-standard. Make-to-order production, where every product is costed individually, fits poorly into a standard template.
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You only need part of an ERP. For example, the warehouse and shop-floor work orders, connected to the 1C and CRM you already run.
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The shop floor needs a simple interface. The supervisor marks off stages on a tablet, in Russian or Uzbek, without lengthy training.
A combination also works: 1C stays for accounting and documents, while a custom module runs production and exchanges data with it.
When choosing, look at your own process rather than the feature list. The right system is the one in which your order goes from acceptance to shipment without workaround spreadsheets.
Where to start with implementation
A common mistake is moving everything into the system at once. The implementation drags on, people get tired, and gradually everyone goes back to spreadsheets. It's safer to go one process at a time:
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Pick the process that hurts most. For example, the materials warehouse or tracking orders in production.
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Describe how it works now. Who does what, where the data is kept and where it gets lost.
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Launch that process in the system. Let people work with it and collect their feedback.
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Add the next one. Once the first process has bedded in, bring in production, then purchasing.
You need someone inside the company who is responsible for the implementation. Without them, the system remains "the contractor's project". For a while, spreadsheets will run in parallel with the system — that's normal, but set a date after which data is kept only in the system.
Agree in advance where the master version of your reference data — items, materials, customers — will live: in 1C or in the new system. A CRM is also best implemented in stages — there's a step-by-step plan in the article "CRM implementation: a 30, 60 and 90 day plan".
Checklist
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Materials. You know whether there are enough materials for next week's orders without going to the warehouse.
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Stock levels. The figures in your records match what is on the shelves.
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Lead times. The date given to the customer is based on the shop-floor workload, not guesswork.
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Data entry. Each order is entered once, not into several spreadsheets.
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Reference data. It's clear where the master version of items and customers lives.
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First step. You can name the process you will start the implementation with.
If spreadsheets and 1C can no longer keep up with production, we'll go through your processes and suggest where to start: an off-the-shelf system, a custom one or a combination of the two. We describe how we build such systems on our CRM and ERP development page, and how we work with manufacturers on the "Website for a manufacturing company" page. One example of our work is the website of BOFPCB, a printed circuit board manufacturer.