Five Reasons Small Manufacturers Should Consider MOM Software

Despite the manufacturing industry rushing to align with Industry 5.0 – the next generational leap in automation – innovation often seems to take considerably longer to reach smaller companies. At least half of the world’s small manufacturing businesses (1-200 employees) are estimated to still be using paper-based systems or spreadsheets for production planning, accounting, and inventory management.

Here, we delve into why digital innovation is slower to reach SMEs and how small business-focused manufacturing operations management (MOM) software could be a short path to efficiency.

Why are small manufacturers slower to implement digital innovation?

There is no getting around the fact that digital innovation requires investments of time, money, and attention to leverage – three resources small companies constantly need to juggle to maintain competitiveness.

Ironically, great solutions often address the very issues that managers use to justify their reluctance, e.g. we don’t have the time or money to implement this time and money-saving solution. Here are a few common reasons many SMEs are hesitant to innovate.

• Inertia to change and false perception of efficiency. Many feel that their current methods “work just fine” and tend to underestimate how much time is lost to small inefficiencies. With no way of quantifying the time and effort lost on things like manual data entry or the daily back-and-forth between purchases and production, there’s no sense of urgency to embrace change. Many also think that their bespoke solutions, evolved through trial and error to get a system running, are perfectly fine, not realising its inefficiencies.
• Change management concerns. Implementing new systems can be intimidating, as rethinking workflows and retraining staff take considerable effort. This problem is often exacerbated the deeper into the “bespoke dilemma” a firm has gotten. Many don’t realise that the change management required to adopt productivity software, while considerable in scale, is largely a one-time affair, after which operational efficiency can see hockey-stick improvements.
• Reluctance to seek expertise. Many SMEs shy away from external advice, either because of cost concerns or the belief that their unique processes cannot be understood or improved by outsiders. This mindset not only misses opportunities for growth but also compounds stagnancy.
• Worries over added complexity. Smaller manufacturers often also assume that advanced software solutions are designed for large enterprises and will be too complex, time-consuming, or expensive for their operations. They don’t consider that SME-oriented software is purpose-built to simplify operations and solve problems created by the lack of centralised data management.

Unique challenges for SMEs in modern markets

In addition to the above issues, small manufacturing faces some unique challenges that can further hinder the capacity to seize innovation opportunities.

Chief among these are resource constraints. Most small manufacturers work in small teams whose members often wear many hats. Leading a research and implementation project for new software is rarely successful as a side project – it takes commitment. Then, there are also cash restraints. SMEs often have a lot of their money tied up in inventory, and the list of required expenditures on equipment, payroll, maintenance, etc., tends to be long.

Next to internal pressures, competing with larger multinational companies and supply chain complexities also present challenges for SMEs. Large supply contracts are often out of reach for small players, as are expensive marketing campaigns that can boost sales and enable speedy adjustments to shifting trends.

Navigating regulations and maintaining traceability can also be arduous for smaller players, especially those with limited traceability systems in place. Compliance audits and certificates, often prerequisites for trading, can be time-consuming and usually cost considerable money.

Finally, many SMEs find it difficult to grow. The above issues can be a considerable burden that requires constant balancing and scaling the business can seem like a pipe dream. This goes double for SMEs still using spreadsheets or paper-based systems, as these are usually stretched to their limit in accommodating complexity, leaving management over-encumbered to take on the idea of expansion.

Manufacturing operations management software explained

Manufacturing Operations Management (MOM) software is the central operations hub of a manufacturing business. It aggregates all essential manufacturing and inventory functionalities into a single system, instead of having to rely on scattered, disconnected data points to manage purchases, work orders, stock, workstations, quality control reports, etc. MOM software enables managers to plan and schedule production activities, track inventory and processes, ensure quality on the shop floor, and much more.

They bridge the gap between traditional manufacturing practices and the demands of a modern, digitally connected industry. SME-focused MOM systems further consider many of the abovementioned restraints that small firms face, combining user-friendliness and affordability with robust and scalable functionalities.

The SME-oriented production and inventory software market has undergone a major evolution in recent years. Today, dozens of software providers offer solutions that focus on the diverse needs of companies with different sizes and requirements.

Five reasons why SMEs stand to gain from adopting MOM software

Here are the top reasons for small manufacturing companies that have yet to start on the path of digitalisation to shortlist the essential step of adopting MOM software.

1. Improved production planning and scheduling

Production planning can be complicated even with good tools. The manual or spreadsheet approach is bound to lead to bottlenecks, missed deadlines, or underutilised resources. This limits operational efficiency and ultimately impacts customer satisfaction.

MOM software unifies all production processes using real-time data to schedule and plan production activities. Whether it’s a sudden rush order, a delay in raw material delivery, or a workstation needing emergency maintenance, MOM systems detect issues as they appear and enable on-the-fly adjustments to ensure minimal disruption. They also optimise resource utilisation and production calendars, accounting for things like machine and workforce capacity, delivery lead times for materials, etc.

2. End-to-end traceability

Traceability has become a critical requirement in modern manufacturing. It’s indispensable in managing compliance, allowing businesses to maintain detailed records and respond to audits. For small manufacturers, achieving sufficient traceability without a robust system in place can be daunting. Traceability also helps to detect issues, uncover root causes, and identify affected batches. This greatly increases production control and translates into a competitive advantage.

MOM software offers real-time tracking of every material, process, order, and product, accurately logging data at every step of production. It simplifies compliance but also considerably boosts production and inventory efficiency from the added visibility.

3. More efficiency, less human error

Although tried and tested manual tracking methods and workflows are familiar, they are often inherently prone to errors and can disrupt operations. From data entry mistakes to miscommunication, the consequences of human error can snowball into significant production issues. MOM tools address this by automating workflows and data movement, helping to ensure consistency and reliability across the shop floor.

For example, routine tasks like order updates, booking materials, shop floor reporting, etc., can be largely automated to free up valuable time and allow managers to focus on strategic goals. Since the system truncates all production data, everyone using it is always on the same page, essentially negating miscommunications.

4. Perpetual inventory accounting

Another key benefit of most MOM software is a perpetual inventory system that fully integrates cost tracking and inventory accounting into the mix. Thanks to this, not only are changes to inventory levels and production operations recorded to ensure effective production control and visibility, the costs involved are also continuously tracked.

Perpetual inventory systems enable deeper insights into profit margins and cost structures. Unlike periodic inventory systems that rely on intermittent updates, a perpetual system ensures that every stock movement – whether it’s a raw material being consumed, a purchase order being confirmed, or a finished product being shipped, is immediately recorded and reflected in the system.

This greatly increases accounting accuracy, simplifies overhead estimation, keeps metrics like the cost of goods sold continuously up to date, and ensures easier financial reporting and inventory valuation.

5. Scalability and cost-effectiveness

As previously noted, small manufacturers often face challenges when scaling their operations. This is because as businesses grow, the complexity of managing more orders, bills of materials, or production lines can overwhelm existing systems.

Production software is purpose-built to accommodate shifts in capacity. Moreover, great software providers offer tiered functionality, unlocking more advanced functionalities or larger order or BOM limits depending on the user’s requirements.

Many modern MOM systems are designed for small and medium companies. They offer flexible pricing structures that allow customers to start small and expand as needed. The cost savings the software generates over time deliver a strong return on investment. This makes production software one of the best ways to modernise operations without overstretching resources.

Conclusion

MOM software can be a potential game-changer in terms of modernisation and efficiency for small manufacturers trying to remain competitive in an evolving industry. It simplifies operations, improves outcomes, and equips small companies with simple yet effective tools that boost revenue. MOM systems bridge the gap between traditional methods and next-gen manufacturing tools, empowering small businesses to compete on a larger stage.

For small manufacturers hesitant to embrace digital innovation, the transformative potential of production software has never been this easy to leverage. It isn’t so much about keeping up with the times but setting your business up for sustained growth and success in the future.

FAQs: MOM Software for Small Manufacturers

What is MOM software?
It’s a centralised platform that manages production planning inventory traceability and shop floor operations

Why is digitalisation slow in small manufacturers?
Limited time money and expertise often make SMEs hesitant to invest in new systems

Is MOM software too complex for small businesses?
No SME-focused MOM solutions are designed for ease of use quick setup and scalability

How does MOM software help production planning?
It uses real-time data to optimise schedules handle disruptions and allocate resources efficiently

What traceability benefits does MOM software offer?
It tracks every process order and product for compliance quality control and root cause analysis

How does it reduce errors?
Automation minimises manual data entry and ensures consistent real-time communication across teams

Can MOM systems help with inventory and cost tracking?
Yes perpetual inventory features update stock levels and costs in real time for better financial visibility

Is MOM software expensive to implement?
No most providers offer tiered pricing models that let SMEs start small and scale affordably

Does MOM software support business growth?
Yes it’s designed to accommodate increased complexity as a company scales

Why should SMEs consider MOM software now?
It offers immediate gains in efficiency compliance and scalability at a low barrier to entry