All aspiring manufacturers will be familiar with the tale. They set up their company with QuickBooks since it’s inexpensive, user-friendly, and does all the basics for their bookkeeping well. However, as the number of products manufactured increases, problems arise. They find that they have too many spreadsheets. The inventory is not matching the general ledger anymore. They find that what they require now is manufacturing software.
As soon as they begin looking into options, they encounter a crossroads. Do they get a regular manufacturing/ERP system or a QuickBooks-focused manufacturing one? Here is how to make that decision.
Why Generic Manufacturing Software
Generic manufacturing software that includes mid-tier ERP systems as well as specific MRP software systems is custom made only for the manufacturing shop floor.
Advantages: Generic manufacturing systems are robust solutions. They deal with complicated multi-level BOM’s, advanced routing, shop floor controls, quality management systems, and forecasting of supply chains. If you engage in complicated process or discrete manufacturing processes, generic software will do fine. Moreover, these solutions are extremely scalable, and they can adapt to your needs when you become a large company.
Disadvantages: There is an issue with the “rip and replace” approach. The accounting solution is built in with the software, so you should give up on QuickBooks. In other words, you must change an entire accounting solution that your finance department has learned. Plus, it is expensive, needs special IT staff, and takes a lot of time to install.
Reasons for Using QuickBooks-Based Manufacturing Solutions
QuickBooks-based solutions refer to specialized manufacturing software that is meant to easily integrate into your existing QuickBooks file. It does the manufacturing math upfront and exports the completed financial data to the backend.
The Benefits: The most important one is the continuity. The accounting department of your company will not be required to master some new software; it will continue doing its best in QuickBooks. These solutions are usually much quicker to deploy, have a lower total cost of ownership and eliminate the horror of double data entry. Thanks to the automatic synchronization of the inventory and WIP (Work in Progress), your accounting will be precise.
The Drawbacks: There is an obvious limitation associated with the architecture of QuickBooks. Although the solution can easily handle basic or moderate manufacturing, it may struggle with very sophisticated and multisite manufacturing processes. With the growth of your transactions, you may hit the limits of QuickBooks’ capabilities.
How to Choose
It all boils down to three criteria:
Manufacturing Sophistication: If your products only require simple assembly and have a simple BOM, then a QuickBooks-focused approach solution like x2x Lite Manufacturing will always be sufficient for your needs. On the other hand, if you have 10-level deep BOM’s, by-products and complex routing, it would make sense to go with the generic solution.
Accounting Sophistication: If the controller/CFO insists on working within the QuickBooks system, you should not impose a generic ERP solution on him/her. Otherwise, the internal resistance will become your major obstacle in implementation.
Financial/Time Constraints: If your goal is to deploy an adequate solution in a month with limited resources, you clearly understand what path to take. Otherwise, if you can afford a one-year investment in digital transformation, it would make sense to go with the generic ERP solution.
Bottom Line
There is no silver bullet here. Generic manufacturing systems provide incredible flexibility and scalability, yet at a high price and disruption of your back-office operations. The QuickBooks approach allows you to create a practical solution to address your shop-floor problems.
