Thursday, September 21, 2006


ERP Software for manufacturer in Malaysia

One of my friend who is a furniture manufacturer come to ask me : "One provider offers me ERP, another one saying its ERP come with CRM, then another one said ERP is obsoletes, now people are using SCM. I am so confused, what are the differences ? "

I asked him what are his core business processes and what are the major problems they are facing and what are the objectives they are trying to achieve for using the software.

My friend is a manufacturer of chemical product. He told me that his main concern is to make sure his production schedule is accurate, the materials stocks and the finished goods information is up-to-dated. His sales is doing excellent, but the production and the stock is a mess.

I told him : " Well, actually what you need is a ERP that strong in production module, which include : Material requirement planing (MRP), Master Production Planning (MPP) , Inventory control (IC) , Bill of Material (BOM) , Shop Floor Control (SFC) and other related production module."

I also advise him , make sure the BOM has multiple levels and have the option to substitute the materials with other compatible material ( it is normal in chemical industry), and one more important issued needed to confirm with the provider : Make sure the production module is linking properly to the Accounting module, especially in the calculation of the production cost, cost per unit, material cost etc....

From the above example, it is quite common in the Malaysia that there are many manufacturers confused on what they want when purchasing ERP software. Many manufactures think that more features are better, but in fact, more features mean more confusion. And worse, some features are not utilized at all and the manufactures are bound to pay it as a bundle ERP software.

If a manufacturer is doing well in the sales, and its customers are not many, then for what the manufacturer needs to go for CRM ? if the manufacturer's is not one of the appointed and authorized OEM of its customer, then what for go for SCM ?

Remember, ERP is not as simple as A-B-C, there are many hidden costs when implementing ERP. I still remember a manufacturer who has less than 20 workers come to ask me what is the best ERP for his manufacturing environment, and he is never use computer software before. I ask him go and get an accounting + inventory software to manage and get used to the software first before go for ERP. :-)

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