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A guide for project-based manufacturers and secrets for software buyers

Ubiquity, Volume 2007 Issue November | BY Sanjay Kumar Pal 

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Full citation in the ACM Digital Library

Most systems have their heritage in the Material Requirements Planning (MRP) philosophy developed in the 1960s. This concept utilized computer power to calculate time-phased material requirements. It later evolved into MRPII promoted by APICS and Ollie Wight during the 1980s, and further evolved to the Enterprise Resource Planning (ERP) systems available today.

The original premise of all of these systems is that material planning is the center of the universe. The typical manufacturing system was designed with an MRP process at the heart of the system. The emphasis of such systems is on standard bills and routings and standard costs.

Companies in the ETO world have different requirements. Designing and building complex products to exact customer specifications frequently involves long lead times and heavy engineering content. To win business, you must provide accurate estimates and quotations to a demanding customer base. Unlike the majority of manufacturers, capital equipment manufacturers typically purchase material to a specific project or job. You need to do progress billing and collect actual costs to projects. Often, you will not receive payment for a project until it is installed and operating at a customer's site. So, cash management is of vital importance. And after the sale, you need to track warranty information and provide aftermarket services, including the sale of spare parts that may constitute a significant share of your company's business.


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COMMENTS

Very nice summary. I would make one other suggestion: How does the system handle change-orders? Also, can you recommend a good ETO ERP software package? We are considering MS Dynamics NAV 2016 with a Job Costing Add-In. What are your thoughts? Is there something better?

��� Aaron, Fri, 03 Jun 2016 16:27:45 UTC

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��� Aaron, Fri, 03 Jun 2016 16:27:24 UTC

Thank you Mr. Pal, these questions represent depth and understanding about the need to quantify, capture and express activity that is not directly related to product sale. There are potential resource, material, or time conflicts that can be realized from a common data set.

��� Landon Tesar, Wed, 02 Jan 2013 22:50:19 UTC

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