High-tech and electronics manufacturers have industry-specific business requirements that demand specific ERP software functionality to support their ability to cost-effectively design, market, sell, produce, distribute, and service innovative products. And, if those requirements aren’t sufficiently complex in and of themselves, many high-tech and electronics manufacturers are now implementing service-oriented business models that involve subscription services, maintenance contracts, and extended warranties.
If a high-tech and electronics manufacturing company acquires an ERP system that fails to satisfy its requirements, it runs a risk of developing informational and transactional siloes that necessitate inefficient manual workarounds or complex and difficult-to-maintain programmatic interfaces.
Exploring 6 Must-Have Features for a High-Tech and Electronics Manufacturing ERP System
Whether your company is a low-volume / high-mix electronics equipment manufacturer or a high-volume PCB/PCBA manufacturer, you likely have certain common critical requirements.
1. Engineering, Product Structures, and Costing
Change is the one constant with your complex product structures. The finished goods and their components – mechanical, electrical, firmware/software, etc. – are subject to routine revisioning. You need your ERP system to support complex product structures with multi-level bills-of-material and a tight engineering control process.
And, to support profitable and efficient product design and manufacturing, you need to be able to run costing and manufacturing simulations that involve alternate components and manufacturing routings.
In ERP, you can think of project functionality as a glue that binds together various data and business processes, including: engineering, sales, planning and scheduling, supply chain, warehousing, manufacturing, service, and finance and accounting.
Many engineer-to-order high-tech and electronics manufacturers – particularly low-volume / high-mix manufacturers – apply significant resources to manage customer-specific orders. For these types of companies, it becomes critical that they manage resources and profitability on a project-by-project basis. These companies need projects functionality to plan, schedule, track, and account for many of the associated activities. In addition to evaluating actuals against budgets and estimates on schedule, cost, and profit dimensions, they can avail themselves of project invoicing methods (e.g. milestone and percentage of completion billing) and project revenue recognition policies.
3. Management of Complex Supply Chain
The semiconductor shortage has exposed significant weakness in global supply chains for critical electronics components. In our article, 5 Steps to Build a Resilient Supply Chain, we offer 5 tips to solidify your supply and minimize the impact of disruptions, notably:
- Identify alternate sources of supply
- Spread your purchases across multiple vendors
- Update your lead times
- Implement a supplier scorecard
- Implement a customer dashboard
In addition to the above functions, you might want your ERP supply chain functionality to include request-for-quotation (RFQ) functionality that systematizes your sourcing from multiple vendors. An ERP-based RFQ module allows you to (a) submit a request to multiple vendors, (b) have vendors input their pricing, lead-times, quality, and other information on a bid, (c) select a winner, (d) generate automated purchase order suggestions, and (e) automatically send rejection notices.
4. Tracking and Improving Quality Control
The cost of failure of PCB/PCBA and other electronics components can be significant. Whatever your testing regimen – whether burn-in, functional, visual, optical, probe, or other – it is critical that your ERP system support inspection and test plans that allow you to capture quality data, generate non-conformances, and manage corrective and preventative action plans to remediate defects.
At a minimum, your system should support basic quality control test plans that allow you to establish acceptable quality tolerances against product attributes and capture the quality data against those attributes (both quantitative and pass/fail). For many, it is becoming increasingly important that their quality modules integrate into test jigs and other test instrumentation to automatically record the data and reduce inefficient manual data entry.
When assessing an ERP system’s quality modules, it is important to consider functionality for:
- Testing and control plans
- Quality hold and inventory segregation
- Material review board and non-conformance management
- Dispositioning, such as rework, use as-is, scrap, return to vendor
- Managing corrective and preventative action plans
5. Industrial Internet of Things (IIoT) and Industry 4.0
Increasingly, high-tech and electronics manufacturers are looking to integrate their ERP and EAM (enterprise asset management) software systems to manufacturing execution systems (MES) and production equipment. The objective is to create an agile, closed-loop system capable of making quick shifts and responses to operating conditions (read our detailed Industry 4.0 guide here and an article on cloud, edge, and fog computing here).
Near real-time integration to ERP systems for material consumption, work order completion, and production schedule changes can help make business more operationally responsive. For example, one of our automotive OEM clients is allowing its customers to configure their cars as those cars roll down the assembly line! Similarly, tight integration to EAM solutions can help manufacturers drastically improve equipment maintenance operations and reduce the impacts of unplanned outages (read our article on predictive maintenance here).
Depending on the functions you are looking to integrate, it is important to consider the functionality of ERP modules for production scheduling, production control, enterprise asset management (EAM), and materials management.
6. After-Sales Services
Customer retention is critical. From preventative maintenance services to software subscription services, high-tech and electronics manufacturers are increasingly turning to servitization models to develop stickier customer relationships and drive high-margin recurring revenue streams. For example, Tesla allows its customers to subscribe to self-driving car software updates for $199 (US)/month.
To successfully deploy a strong after-sales service business model, high-tech and electronics manufacturers should consider ERP functionality for:
- As-maintained BOMs that track the service history of sold products
- Service contracts and warranties
- Subscription management, including associated invoicing and revenue recognition
- Field and technical service management
The Bottom Line: A Cohesive ERP System is Critical to High-Tech and Electronics Manufacturing Companies
Complex high-tech and electronics manufacturers require sophisticated end-to-end functionality to support their business operations. Whether your business is project based and engineer-to-order or high-volume and repetitive, you need to select the right-fitting system to support your short-term and long-term business needs.
Pemeco Consulting can help you make the right strategic technology decision for your company. For decades, we have been helping global market leaders such as Tokyo Electron and Curtiss Wright Corporation successfully deliver their ERP-centric digital transformation programs. All told, we have helped clients select, implement, and optimize more than 140 different enterprise technologies.
Take the first step to successfully executing your ERP project by contacting us today.
Or, if you’re looking for templates and tools to accelerate your ERP selection project and apply a disciplined, proven methodology, download our guide – the Ultimate ERP Selection Guide: Templates, Checklists & Scorecards.