Questions a Shop Should Ask about Cloud Computing

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Investment in cloud-based software for small manufacturers has soared, and there’s no reason the trend shouldn’t continue. Implementation is generally much easier because no hardware has to “live” at your shop. This drives down cost of ownership. You don’t have to wait as long to start using it because you can plug into it via any device that can connect to the Internet. No tech reps need to descend on your shop for implementation. And it can bring all the power of your old on-premise solution—with more flexibility—at least on paper.

Cloud computing fundamentally divorces your production software from the realm of products and sells it to you as a service that can be accessed via the Web by all members of your team. This saves you time and money on implementation. Upgrade processes that were once nightmares become much simpler to manage. In short, you spend more time focusing on what you do best and less time worrying about your technology.

There are several advantages that result in better ability to find efficiencies, please your customers, view end-to-end processes in your plant, and spot improvements—all while helping your team work better together.

But just because something is “in the cloud” doesn’t mean automatic benefits or a solution to the pain that made your look for a better way in the first place. As you consider ways to use technology to run your shop better, here are four questions that should be front of mind:

 

1. Does it fit the way we want to work?

Software makers ranging from massive to small push their solution as an ERP (enterprise resource planning) and/or MOM (manufacturing operations management) solution that will handle your business end to end. However, no solution will cover everything you want to do, exactly how you want to do it. It may have an inventory and materials application, but it may not let you catalog parts and supplies the way you need to.

Every solution requires some level of adaptation and training to get the most out of it. But here is the danger: If working with the software is too disruptive, too difficult, and changes the way your company works overnight, the implementation is headed for trouble. No two manufacturers or machine shops do things the exact same way, and often there’s a good reason for your unique processes. Look for the solution that supports them without requiring you to change your entire business model to fit the way software programmers think your company should work.

 

2. Do we have team buy-in on what problems we need to solve?

The software is here to work for you, not the other way around. Long before you engage with a potential vendor, you should have a meeting with your key players. During this meeting, you should outline where your pain points are and specifically what software could do to fix them. Just because you’ve been having slowdowns because your estimating is disconnected from the shop floor doesn’t mean you should pick up the phone and start scheduling demos.

The clearer an idea you have of how a solution should support your operational and profit goals, the better armed you’ll be against a vendor who wants to start “blue skying” the process, taking you off course and setting you up for a more robust (and more expensive) solution than you really need.

What is your strategy? What are your goals? What specific processes do you need to improve to attain them? Having a clear picture of this will make your search shorter and more rewarding.

 

3. Can we customize it?

Every vendor will make claims that their solution is customizable or configurable. Look closely into what these claims really mean.

Following the “Goldilocks” principle of “too hot, not hot enough, and just right,” know that too little configurability means you’ll only be able to make cosmetic changes to how the software works. Examples include customized views or moving around fields in a report. If this is all you need to do, then you’re in the right place. But that 20- and 30-percent gap in functionality may hurt down the road if you find the solution is too rigid to be extended and fill critical off-the-shelf gaps.

Then there are “too much” systems that are so wildly customizable that you’ll be lost in the details for months as you pay for your vendor to practically build a custom system on top of the one you bought. This means recurring costs and the exhaustion of constant training cycles. We want to run our shops better and not be distracted with constantly managing and paying for our software.

The right level of configurability means you dodge the heavy customization expense while being able to implement no-nonsense tweaks at reasonable cost and on reasonable time frames. Get very specific with your vendor about just what configurability means and how it can benefit you.

 

4. Does it deliver the functionality we need?

An industry-specific solution is going to cover a lot more of your bases than a legacy system that is being presented as a “manufacturing” solution. Here are the areas where small manufacturers and production machining outfits usually need to have covered:

Estimating and quoting: Improvements in estimation/quote turnaround time and accuracy are usually high on the list. You want to be able to create quotes in minutes, not hours, based on up-to-date labor and material data either from scratch or from a company template.

Shopfloor control: Getting high-quality jobs out on time and cutting waste is the whole idea here. You want the whole team to be able to see up-to-the-minute data on work orders, status, schedules and resource allocation to maximize your capacity. Because Cloud systems can be accessed by anyone with a mobile device, this increased ability should cut down on extra phone calls or mad dashes across the shop floor.

Cost control: Production machining shops are waking up to the fact that having all job cost tracking on one person’s spreadsheet may not be the best idea. Your new system should automatically collect actual costs on the work order, such as material, labor, burden and outside process costs, make real-time inquiries into estimate versus actual costs and aggregate job cost data to easily adjust cost standards.

Marketing and sales: Your new system should help you spot opportunities, manage your prospect list, follow up on sales leads and see what is or isn’t working in marketing and sales. Bringing in new business (and winning more from existing accounts) doesn’t require heavy extra investments in expensive CRM solutions that are overkill for your needs. Your cloud solution should supply the required capability.

Supply chain management: Managing inventory levels and material costs are important aspects of creating profitability. You want to tie inventory and purchasing together to reduce customer lead times and manage inventory in real-time. Automatic balancing of inventory, streamlined purchase order generation, vendor management and MRP (material requirements planning) are all advantages.

Accounting and financials: Integrating your financials into your new system is a must. This way, all business transactions (invoices, receipts, inventory changes, and much more) flow directly into your current accounting system, which includes accounts payable, accounts receivable, general ledger (GL), budgeting, financial reporting and payroll. Your company benefits from the elimination of dual data entry, reduced time to close financial periods and better visibility into financial status.

There’s a lot to be gained in the cloud for production machining shops. Keeping these questions in mind as you consider alternatives to your current situation will help give you a shortcut to the efficiencies and profit gains that will put you—and keep you—ahead of the game.