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6 Reasons Why ERP Software Makes Sense for Small Job Shops

Greg Tracey - Director of Channel Sales
ERP diagram with a laptop computer

Of all the reasons I hear from job shops as to why they’re not using a manufacturing software package, the most common one is that they think it will cost too much. Especially for the small shop, I am here to tell you that ERP software is not as costly as you might think. Not only is it cheaper than you think, I suggest that it’s more costly for you not to use job shop software to help run your shop.

What’s more, for reasons other than some misconceptions about cost, ERP software is not just for the big companies.

Much like any other capital investment for a small business owner, the decision to implement software to reliably guide your manufacturing operation is admittedly a very difficult one. Particularly when what you’ve been doing until that point has been good enough. But what if what you’ve been doing all along, while on the surface may appear to be all you need, is the cause of you constantly hurdling the barriers to running your shop more efficiently and profitably?

For you small manufacturers, I’ve compiled the most compelling reasons why you should stop thinking that your operation is too small for an enterprise-wide solution. Here are six reasons why ERP software for small job shops makes sense.


1. ERP Software Is Affordable For Job Shops

 ERP software doesn’t have to break the bank.

Let me debunk the first myth. ERP software doesn’t have to break the bank. Many job shop owners expect that all the additional functionality that is part of manufacturing software packages comes with a very high price tag. This is not necessarily the case. Some base packages are well under $10K, some even under $5K.

For tracking jobs, tracking inventory, generating quotes quickly, generating key reports, etc, you can get into an ‘entry-level’ software package for cheaper than you might think. Many of the ERP systems will then allow you to add additional functionality as you grow.

Even if the price tag is higher than you were hoping to spend, don’t let this prevent you from a full investigation of the real ROI from an ERP system. In fact, we find that the typical ROI is less than 6 months!


2. It’s More Than Just Glorified Accounting:

A good software solution transcends the general ledger and is a true production planning and scheduling partner in your operation.

Many shop owners confuse accounting for their business with actually running their business. Most shops use a combination of Excel and an accounting system (Sage, Xero, Quickbooks). A good software solution transcends the general ledger and is a true production planning and scheduling partner in your operation.

It’s important for the job shops that wish to grow, that they look at the bigger picture. They need to understand that it’s not just about payables and receivables, but an integrated solution that addresses quoting, labour tracking, materials, scheduling, inventory, equipment, shipments and much more. You need to know more than just did I make money? at the end of the month. Don’t confuse ERP software with an accounting program, even if it is a sophisticated accounting program.

Also, just because you are getting a new ERP system doesn’t mean you have to switch accounting programs. Many companies would prefer to stick with what they currently have and not disrupt that side of the business. Most solutions allow you to keep Sage 50 (or Xero, Quickbooks, etc) and just integrate the programs. This way you get the best of both worlds!


3. Competition

More and more job shops are beginning to use ERP software.

If you look around, there’s a good chance you’re up against another shop that is using some sort of job shop software package. That could explain why your quotes aren’t turning into orders, or why - when it’s all said and done - the true margins you’re getting on your jobs aren’t what you expected. More and more job shops are beginning to use ERP software. Don’t be left in the dust by that shop around the corner who’s using it to grow their business.

We all know that there are many factors that can affect profitability such as job conditions, labour allocation, raw materials availability, inventory, other jobs in the shop, etc. Striking that balance between getting a fair price for what you produce for your customers and leaving money on the table shouldn’t be left to guesswork.


4. There’s Way Too Much Uncertainty In Your Workday:

ERP software helps eliminate some of that unpredictability in your day.

Speaking of uncertainty, the day in the life of contract manufacturer can sometimes be very unpredictable. It has got to be one of the most stressful businesses going. It takes a jack of all trades to skillfully manage everything from the shop floor to the front office, customers and vendors, hiring, training - the list goes on.

You’ve got enough on your plate to worry about, so why not explore comprehensive tools that help you leave it all at the shop and not burden you away from work? ERP software helps eliminate some of that unpredictability in your day.


5. Size Really Doesn't Matter:

Just like the larger job shops, the kinds of issues you face usually come back to the product you’re producing - not the size of your company.

Even if you run lean and may not be as big as some other manufacturers, your shop has many of the same problems as the larger companies.

Just like the larger job shops, the kinds of issues you face usually come back to the product you’re producing - not the size of your company.

While the bigger companies sometimes enjoy economies of scale and land larger orders than you might, their business is no more complicated than yours. One can make the case that larger shops can often absorb setbacks on jobs better than the small shop. The smaller the shop, the more stretched you and your co-workers probably are. The more stretched all your resources are, for that matter. All the more reason for you to be smarter about how you operate.


6. It’s Not As Complicated As It May Appear:

 If you’re worried that putting an ERP software solution in place is going to be complex and confusing, that’s not necessarily the case.

The whole point of using software in the first place is to make you more efficient and profitable. You don’t want to be bogged down in having to stay on top of the technology through constant learning and training. If you’re worried that putting an ERP software solution in place is going to be complex and confusing, that’s not necessarily the case.

A certain degree of computer literacy is necessary, of course, to implement a software solution at your shop, but software providers have come a long way in creating user-friendly solutions. With point-and-click ease and basic understanding of what it is you’re doing – generating quotes, reviewing sales orders, checking inventory, ordering materials - anyone can get up to speed fast. When you stack up the quick learning curve of ERP software against a manual paper-and-spreadsheet-driven shop, you’ll soon reach your own conclusion about what is and isn’t complicated.

If you think your shop is too small to be able to afford and utilize ERP software, I hope these reasons might make you reconsider. There are a host of options out there to help you. Just because you can count your number of employees on one or two hands shouldn’t keep you from evaluating whether ERP software is right for your business.


About Shoptech

Established in 1984, Shoptech Software is a leading provider of Shop Management Software for SME manufacturers. Shoptech has been honored by Inc. magazine as one of the fastest growing companies in the U.S. for eight consecutive years.  Shoptech has over 8,500 customers worldwide and is growing fast. Shoptech has forged strategic alliances with business partners, garnered recognition in business and shop trade magazines, and gained a reputation as consistently being on the forefront of technological innovations to best serve the various manufacturing markets.

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About Greg Tracey

Greg is the Director of Channel Sales for Shoptech Software

Shoptech’s E2 Shop System has helped thousands of engineering & manufacturing companies to control all aspects of their business.  E2 allows companies become more efficient and profitable.

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