Selecting ERP for ETO Manufacturing


If you work in the engineer to order (ETO) manufacturing environment long enough, you probably have had some negative experiences with enterprise software. The fact is that most enterprise resource planning (ERP) software was not designed for a project-oriented environment like ETO. ERP and its predecessor, materials requirements planning (MRP) were designed for traditional manufacturing. So how can an ETO manufacturer go about selecting ERP software that truly meets their needs? In this whitepaper, I will share my thoughts, based on more than 30 years in the industry, on how the needs of ETO manufacturers differ from those in more traditional models like make to stock, make to order or even configure to order. I will also discuss the specific functionality ERP designed for the ETO industry will have and how to select software that includes these features. Not every problem with ERP in an ETO environment is the fault of a vendor. Many challenged ERP projects founder because the project owners lack an appreciation of the challenges ETO poses for enterprise software. Moreover, the specific business needs of ETO from a business process and control standpoint are often not well documented, and therefore cannot be replicated in an enterprise application even with suitable functionality. As a case in point, I hope to finish in the weeks following this writing an 18-month ERP implementation rescue at a company in the southwestern United States. Their business model is heavily project oriented, but the core implementation team didn’t understand the project implications of their ETO business. Requirements for things like revision control, contract billing based on completion percentages and other critical needs were not adequately addressed during software selection or the initial implementation. As much as I appreciate business from companies in this situation, I would much prefer to be involved in software selections and implementations that go well, meet business goals within budget and the established timeline. So how do we attain that goal? Following are five essential points to consider for ETO ERP success.

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