Contract manufacturing companies, also known also companies that follow an engineer-to-order (ETO) process flow, manufacture a product based on certain specifications of the buyer. Oftentimes, the buyer will have designed the product, bought the raw materials or components, and taken possession of the product for inclusion in final assembly, or marketed the product to the end-user.
The enterprise software requirements for the contract manufacturing industry are distinctly different than other types of manufacturing. The engineering skills of the contracting company are sought after by their customers to design and develop components, end products, systems, installations, or buildings.
The contracting company may have many of the same supply chain needs, but their business processes vary in sales, engineering, product data management, estimating, enterprise project management, and costing.
Contract Manufacturing Software Functionality
Enterprise software vendors for contract manufacturing should have solid and integrated functionality within these offerings:
This includes visibility into the opportunities and activities of the contract and engineer-to-order (ETO) sales process.
Product Lifecycle Management Software (PLM)
The functionalities desired that are commonly found in product lifecycle management software (PLM) include:
- Management of innovation
- Engineering activities
- Product data
- Product development management
- Product data management
- ERP project management
- Document/drawing management
Estimating and Quoting
This includes the creation of a new bills of materials design, production processes, costs of new materials and a cost structure that drive pricing and quotes.
Project Manufacturing Planning
The functionalities desired in project manufacturing planning involves the planning of unique materials and production steps required for the engineered product.
Field Service Management Software
Included in field service management software should be the ability to manage delivery, installation, and post-delivery support.
Costing involves gaining visibility into the profitability of a quote or job.
Critical Requirements for the Contract Manufacturing Industry
Contract manufacturers have different business processes than traditional manufacturers, particularly with respect to:
- Receiving customer materials
- Processing a bill of materials (BOM) with customer materials
- Estimating a job with customer materials
- Toll processing invoicing
These processes require functionality not normally seen in basic ERP or other enterprise systems.
Additionally, these critical requirements should be featured in a contract manufacturing solution:
- Order Processing
- Product Configurator
- Document Management
- Engineering Change Management
- Forecasting and Demand Planning
- Materials Management
- Mixed Mode Manufacturing
- Lean Manufacturing
- Supply Chain Management Software
- Advanced Manufacturing Planning
- Warehouse Management Software
- Plant Equipment
- Fixed Assets
- Human Resources