Manufacturing2 min read
Manufacturing ERP Guide: BOMs, MRP, Shop Floor and Costing
A practical guide to manufacturing ERP: modelling BOMs and routings, making MRP trustworthy, shop-floor data capture, costing, quality and traceability.
Industry · Manufacturing
ERP for engineer-to-order businesses where every order is a project
Engineer-to-order companies — special machinery builders, process equipment makers, systems integrators — do not have a product catalogue so much as a portfolio of past projects. Each order begins with design, involves long-lead procurement and ends with installation and commissioning.
- M01Project
- M02Manufacturing
- M03Purchasing
- M04Inventory
- M05Timesheets
- M06Accounting
Context
ERP in engineering
Standard manufacturing ERP assumes the BOM exists before the order. In ETO, the BOM evolves during the project. The system has to support that while keeping costs, commitments and progress visible.
01Operational challenges
What usually breaks before the ERP project starts
01
BOMs that evolve mid-project
Long-lead items ordered before the design is complete, while the rest of the BOM is still being engineered.
02
Project cost overruns found late
Costs are only totalled when the project closes, long after anything could be done.
03
Cash flow on long projects
Milestone invoicing tracked in spreadsheets, so billing lags behind progress.
04
Document control
Drawings, specifications and customer approvals scattered across email and file shares.
02Core flows
How the ERP should handle each part of the business
- Sales flow
- Proposals built from engineering estimates and similar past projects; won proposals become projects with budgets by phase — design, procurement, manufacture, installation.
- Procurement
- Long-lead items purchased against the project early; remaining items purchased as BOM sections are released. Commitments shown against budget immediately.
- Inventory
- Project-specific material held against its project to prevent it being consumed elsewhere; common stock items drawn from general inventory.
- Warehouse
- Material kitted by project section and shipped to site in staged deliveries for installation.
- Manufacturing
- Manufacturing orders created per assembly as engineering releases each section of the BOM; in-house fabrication and outsourced work tracked against the project.
- Accounting
- Costs collected by project and phase; revenue recognised by milestone or percentage of completion; WIP and billing positions visible monthly.
- CRM
- Opportunities with technical requirements, proposal versions and customer approvals tracked through to project award.
03Industry workflows
Workflows specific to engineering
01
Staged BOM release
Engineering releases BOM sections progressively; each release triggers procurement and manufacturing for that section.
02
Budget vs commitment vs actual
Project managers see budget, committed purchases and actual costs by phase in real time.
03
Milestone billing
Invoices generated as milestones such as design approval, factory acceptance and site acceptance are signed off.
04
Commissioning and handover
Site work, punch lists and as-built documentation captured against the project.
04 — Reporting
Reports that should come out of the system, not a spreadsheet
- Project budget, commitment, actual and forecast-at-completion
- Unbilled work in progress
- Engineering hours by project and phase
- Long-lead item status
- Gross margin by project at close vs estimate
- Resource load for engineers and assemblers
05 — Compliance
Compliance considerations
Machinery and pressure equipment often require CE or other conformity documentation, design calculations and inspection records. Keeping these documents attached to the project and its deliverables simplifies certification and handover.
Regulatory requirements vary by jurisdiction. We configure the system to support your obligations; confirm specific rules with your auditor or compliance advisor.
06 — Integrations
Systems the ERP needs to talk to
CAD and PDM systems for BOM release, project scheduling tools, document management and timesheet systems are the typical integration points.
07AI opportunities
Where AI is genuinely useful here
Practical uses that sit on top of clean ERP data. None of them replace getting the core transactions right first.
01
Proposal drafting
Assemble first-draft proposals from similar past projects and standard sections.
02
Specification review
Extract requirements from customer specifications into a checklist for engineering review.
03
Overrun warnings
Flag projects whose cost or hours trajectory suggests an overrun before it becomes certain.
08ERP modules
Modules a typical deployment includes
- M01Project
- M02Manufacturing
- M03Purchasing
- M04Inventory
- M05Timesheets
- M06Accounting
- M07Documents
- M08Sales
09Roadmap
Implementation roadmap
- 01
Project structure
Standard phases, budgets and cost codes for all projects.
- 02
Procurement and costing
Project-linked purchasing, commitments and timesheets.
- 03
Manufacturing integration
Staged BOM release into manufacturing orders.
- 04
Billing and reporting
Milestone invoicing and forecast-at-completion reporting.
10Common mistakes
Mistakes we see repeatedly
01
Forcing a fixed BOM up front
Requiring a complete BOM before any purchasing delays long-lead items and the project.
02
Not tracking commitments
Only looking at actual costs hides overruns that are already committed through purchase orders.
03
Skipping timesheets
Engineering hours are often the largest cost; without them, project margins are guesswork.
04
Separate project and finance systems
Reconciling a project tool with accounting every month wastes time and invites disagreement.
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FAQ
Frequently asked questions
Can we purchase before the BOM is complete?
Yes. Long-lead items can be purchased directly against the project and later linked to the released BOM section.
How is revenue recognised on long projects?
Milestone billing or percentage-of-completion approaches can be configured depending on your accounting policy and contracts.
Can engineers log time against projects?
Yes, through timesheets by project, phase and task, which feed project costing directly.
Similar industries
Industries with related workflows
ManufacturingBOMs, routings, MRP, shop-floor control, costing and traceability for discrete and mixed-mode manufacturers.Metal FabricationJob-shop ERP for quoting, nesting-driven material planning, routings, heat numbers and job costing.Plastic ManufacturingERP for injection moulding and extrusion: resin and regrind, tooling, cavities, cycle times and scrap.
Next step
Every order a project?
We will map your ETO process onto project, procurement and manufacturing in one system.