Guide
Manufacturing is where ERP started and where it still goes wrong most expensively. Here is what a manufacturing ERP has to do, how the main platforms compare for UK manufacturers, what it costs and how to choose without being sold to.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
Beyond the finance, sales and purchasing that every ERP handles, a manufacturing system has to run bills of materials and routings, material requirements planning, production scheduling, shop floor data capture, quality and traceability, inventory across sites and stages, costing that reflects how you actually make things, and the integration with machines, warehouse systems and customer portals. The variations matter: make to stock, make to order, engineer to order and process manufacturing need different things from the same module names, and a system that is excellent for discrete assembly can be poor for batch chemicals.
SAP S/4HANA is the deepest and the most expensive, right for large multi site manufacturers with complex costing and global operations, and over engineered for most mid sized firms. Microsoft Dynamics 365 Business Central suits mid sized discrete manufacturers who live in Microsoft 365 and want a wide partner market; Dynamics 365 Supply Chain Management is the larger sibling for complex operations. NetSuite is strong for growing manufacturers with distribution and multiple entities, and lighter on the shop floor. Infor and IFS are built for specific manufacturing sectors and shine there. Sage, Epicor and a long tail of specialists serve smaller or niche operations well at lower cost. None of them is the right answer for every manufacturer, and the vendor demonstrations are designed to make you think otherwise.
For a single site UK manufacturer on a mid market platform such as Business Central, the first year typically costs from around £100,000 to £300,000 all in, covering licences, the implementation partner, data migration, integration and internal time. Larger or multi site manufacturers on Dynamics 365 Supply Chain Management, SAP, IFS or Infor should plan for £500,000 to several million, with partner fees commonly two to four times the first year’s licences. Shop floor integration, barcode and warehouse systems and the cleansing of item master data are the three costs most frequently left out of the first estimate.
Write down the ten things your operation does that a generic demonstration will not show: the way you cost scrap, the lot traceability a customer audits, the planning run that currently takes a weekend. Make every vendor demonstrate those on something resembling your data. Weight fit with your manufacturing model and the quality of the implementation partner above feature lists. Check total cost over five years rather than the first year discount. And keep someone independent at the table, because the reseller presenting the system earns a margin on the licence you choose.
Item master and bill of materials data that was never cleaned, so the new system plans from fiction. Process decisions deferred to configuration, so the partner configures what the old system did. Shop floor users trained last, on a system designed in the boardroom. Go live set for a quiet period that turns out not to be quiet. And nobody on the client side with the authority to say no to the partner. We have implemented and rescued manufacturing ERP programmes on most of the platforms above; the failures were never about the software.
Related reading: process manufacturing ERP, food and beverage ERP, distribution ERP, ERP implementation partner UK, ERP selection consultants, how to choose an ERP system, ERP implementation cost UK, the ERP implementation plan.
There is no best, only best fit. Large multi site manufacturers tend towards SAP S/4HANA or Dynamics 365 Supply Chain Management, mid sized discrete manufacturers towards Business Central, NetSuite or Epicor, and process or sector specific operations towards Infor, IFS or a specialist. The implementation partner matters as much as the platform.
For a single site UK manufacturer on a mid market platform, typically £100,000 to £300,000 in the first year including licences, implementation, data, integration and internal time, and £500,000 to several million for larger or multi site operations. Shop floor integration and item master data cleansing are the costs most often underestimated.
Four to nine months for a single site manufacturer on a mid market platform such as Business Central, nine to eighteen months on the larger platforms or across several sites, and longer again for multi country programmes, which are usually phased by site. Plans that leave no time to test on real production data are the ones that slip.
If your value is in how you make things, probably yes, or at least a mainstream ERP with a strong manufacturing module and a partner who has implemented it in your sector. If manufacturing is simple assembly and your complexity is in sales and distribution, a broader platform may serve better.
If you are choosing or rescuing an ERP for a manufacturing business and want independent advice from people who have done it, a short confidential conversation is the place to start.
There is no single best. Discrete manufacturers with complex bills of materials and production scheduling often shortlist platforms such as Microsoft Dynamics 365, Epicor, Infor, Sage X3, NetSuite and SAP, while process manufacturers need recipe, batch and traceability features first. Manufacturing ERP systems in the UK also need to handle Making Tax Digital for VAT and UK payroll. Choose on your processes, not the demo.