Ready to Scale? Discover How Enterprise Software Can Streamline Your Operations
Anurag Gupta
Product Development (Ex-Google, Nest, IIT-Kanpur alumni, Senior Member SPIE)
Are you building products involving hardware? Then this article is for you! New challenges arise as the team size, customer base, or product lines expand. How do we scale efficiently, build supply chains, develop manufacturing, deal with quality issues, product stock and distribution challenges, track profitability, and comply with product standards and financial reporting? How do you know your true COGS (cost of goods sold), which includes labor costs and manufacturing overheads? Products with hardware components need various enterprise software to address these challenges.?
These enterprise software consist of Product Lifecycle Management (PLM), Manufacturing Execution Systems (MES), Quality Management Systems (QMS), and Enterprise Resource Planning (ERP).?
While these software solutions boost productivity, their deployment can be costly and time-intensive. Often, companies do not proactively plan for such software; instead, they introduce it as a reactive solution to emerging challenges during development, launch, and change management. If companies strategically plan for the entire software suite early on, it will lead to significant cost and time savings. The first step should be hiring leaders adept at understanding and implementing this strategy.
Now, let's delve into these software solutions. We first discuss the PLM, MES, and QMS software to set the context for the more important ERP software.
Product Lifecycle Management (PLM) Software
Imagine you're at the helm of a growing firm. Every day, you face the challenge of managing complex product information that's constantly changing. You're also coordinating with teams and vendors across different locations. Here’s how a Product Lifecycle Management (PLM) system can make a difference in streamlining these daunting tasks:
Managing Complex Product Data - PLM software stores all your product data - design requirements, simulations, BOM (Bill of Materials), CAD data, resources for testing and manufacturing, processes, approved vendor lists, and quality specifications - in one central location. This isn't just about organization—it means that everyone from your design team in New York to your manufacturing partner overseas is working with the same, up-to-date information.?
?Enhancing Collaboration Across Teams—Imagine your teams collaborating in real-time, no matter where they are. PLM tools are cloud-based, enabling your engineers, designers, and external contractors to make changes, leave feedback, and push progress together.?
Navigating Regulatory Compliance - Consider the regulatory hoops you must jump through, especially in industries like healthcare or automotive or product standards such as FCC, UL fire safety, IEE, or ISO. PLM software helps manage and document every change and decision made during the development of your product. This is crucial when you need to prove compliance with industry standards—a PLM system keeps everything orderly and audit-ready. Some standards, such as ISO26262 (functional safety for automotive), require showing dated proof of documenting the entire process, from requirements to design data to test data and meeting minutes.
Top PLM Software Choices
For Small Firms:
For Mid-sized Firms:
Freeware:
Have you ever faced a situation where your engineering team designed a product with expensive or noncompliant parts to the standards to which you are building your product, or you found that the parts are no longer in stock or, worse, obsolete when you want to make more units? Integrating the PLM software with component databases avoids this situation.?
Here are some of these databases:
So, with PLM, you can track and change your product documentation and have multiple people add or change information asynchronously. But how about tracking your manufacturing and quality? MES software helps you manage manufacturing operations, while QMS software helps you maintain quality. With PLM, you can find the BOM, but what about COGS? How do you track material movement, create purchase orders, and collect payments? The ERP software helps with these tasks.? Let us dive into each of these Enterprise software next.
Manufacturing Execution System (MES) Software
MES software is your control center on the manufacturing floor, providing real-time monitoring and management. It dynamically aligns production orders with available labor, materials, and machinery resources. MES software tracks genealogy and enforces shopfloor instructions, tools, calibration management, and basic quality management, such as incoming material and finished goods inspections (IQC and OQC).
Top MES Software Choices
For Small Firms:
For Mid-sized Firms:
Quality Management Systems (QMS) Software
You know how critical keeping your product quality high and operations smooth is. But keeping up with all the details—especially quality—can get tricky as you scale. That's where a Quality Management System (QMS) comes into play. A QMS acts almost like your automated compliance partner. It stays updated with the latest standards. QMS integrates quality into every step of your production.
Top QMS Software Choices
For Small Firms:
领英推荐
For Mid-sized Firms:
Freeware: ISO 9001 Checklist - Although not a full QMS, it provides a good starting point for companies new to quality standards looking to understand ISO 9001 requirements.
Do we need anything else, having covered PLM, MES, and QMS software? How would you integrate business operations such as Finance, procurement, tracking sales, material movement, and profitability with product development and manufacturing? This is where the ERP software comes in. It is usually the most important enterprise software and the first one to be purchased.
Enterprise Resource Planning (ERP) Software
Imagine integrating all your business functions—from finance to sales and supply chain management—into one seamless system. ERP does exactly that. ERP software stores physical and logistics information tracks sourcing and current and projected sales, enables production planning, shipments, and inventory, and enables change management, procurement, supplier tracking, and material movements. While the PLM software tracks the BOM, ERP software can track the COGS if integrated with PLM and MES software, which helps determine profitability and set correct product pricing.?
ERP software also integrates well with another class of enterprise software called Customer Relationship Management (CRM) to track customer interactions, manage leads and sales pipeline, and execute marketing campaigns.?
Finally, the Sarbanes-Oxley Act (SOX) mandates strict regulatory requirements for financial reporting and data management to protect investors from fraudulent activities and improve the accuracy and reliability of corporate disclosures. Finance teams want ERP because of its robust accounting features that simplify complex financial management and reporting. Choosing an ERP that integrates well with your preferred CRM and PLM software is good planning.
Top ERP Software Choices
For Small Firms:
For Mid-sized Firms:
Freeware:
Integration of PLM, MES, QMS, and ERP Systems
Companies need to put more thought and effort into integrating these four software. They are not even purchased simultaneously; there is no point in paying for the manufacturing software if production is two years away.? Eventually, you will be using all four software, and if these don't talk to each other, it will lead to errors, delays, and the hiring of extra personnel to exchange data between these software. ERP systems typically fall under Finance, PLM under Engineering, MES and QMS under Operations, and CRM under Sales. There is plenty of finger-pointing to go around if systems are not integrated!??
One common problem is incorrect yield information, leading to faulty COGS. This generally leads to goods being sold at a loss without knowing or understanding the reason. Incorrect Yield and COGS data affect the sales team's pricing decisions and their communication with customers on shipment dates. The true yield picture emerges only once all the material is accounted for. For that to happen, ERP, MES, and PLM software need to talk to each other directly and without manual input.
Furthermore, if you hire a contract manufacturer (CM) to build your products, they can access their integrated MES and QMS systems. Without integrating the ERP and PLM with the MES, the information flow regarding production schedule and underlying issues is limited to manually entering details, which is error-prone and cumbersome.? ERP, PLM, and MES software integration are thus necessary to ensure bidirectional real-time data exchange and synchronization.?
So, how do you develop a strategy to integrate these systems when you can’t always buy them simultaneously or even have a choice on all systems?
First and foremost, there should be a clear directive early on that all four (five if you include CRM) systems must be integrated as they are brought in so that data transparency exists across organizations. The earliest system brought in by mid-stage firms is typically ERP because it helps with payroll, billings, creating Purchase orders, and issuing payments to vendors.?
Early-stage firms tend to avoid ERP (cost and complexity) and instead opt for business payments (e.g., Bill) and accounting software (e.g., Quickbooks). However, this limits scalability and leads to errors, missed time, and cost savings opportunities. If affordability and complexity are issues, choose a low-cost option, including freemiums. Work out a deal with the software vendors that lets you use the software at a low cost for a few years or until you reach a certain headcount.
Early-stage firms also tend to forego the PLM software that can be used to track BOM, design, and product datasheets. Instead, they use manual entry via a network of spreadsheets where information is often duplicated and not updated simultaneously. They depend on the CM to provide MES and QMS when they go in for early production, and for in-house prototyping, they forego MES and QMS altogether.?
Regardless, investing in PLM from early on is uncommon but strongly recommended.? If cash conservation is paramount, choose a freemium version, but choose something. Although painful, changing the PLM software later is much better than not having any PLM. You can integrate it early with the existing component databases to get the best out of your PLM. This integrability should affect your choice of PLM.
Choose your ERP and PLM simultaneously, even if not purchased together. Select the ERP that can work with your PLM via a direct connection between the two software, API calls, or third-party middleware. Why does this not happen in practice, however? Different organizations within the company purchase the software they need independently without talking to each other. The CEO or COO must drive the teams to select PLM and ERP and plan on the overall Enterprise suite and its mutual integration.
Next, we have the manufacturing systems—MES and QMS. MES and QMS systems need to be linked via APIs or natively integrated. It is simpler to use natively integrated MES/QMS systems. MES systems can be integrated with PLMs via APIs or native integration. Suppose you want to track the COGS correctly and determine the reasons behind overhead, material wastage, and other yield issues. In that case, it is necessary to integrate the MES and ERP systems automatically without requiring human intermediaries.
For companies aiming for comprehensive compliance and governance, a well-integrated IT environment where ERP, CRM, MES, QMS, and PLM systems communicate effectively can provide a robust framework for maintaining the transparency, accuracy, and accountability required by SOX.
Software Integration Examples:
Conclusion
PLM, MES, QMS, and ERP software bring efficiency, scalability, quality, compliance with product standards, and SOX compliance for financial reporting. Early planning can make integrating such software cost-effective and time-effective. If done right, GAAP profitability will be achieved much earlier!