Author: ERPNext

1. Why Do Things Always Go Wrong?

Many factories face the same headaches:

• Plans keep changing, workers are stuck doing endless overtime;
• Operators complain about missing materials or missing instructions, so they rely on guesswork;
• The boss checks the daily report but finds it doesn’t match reality;
• Orders are delayed, customers complain, and the same problems keep repeating.

At the core, it’s really an information gap in production management. There are plenty of tables, but they’re not being used correctly. Let’s look at the five key tables:

Production Schedule, Operation Card, Daily Report, Material Requirement Sheet, Piecework Record.

2. The Five Tables Explained with Cases

1. Production Schedule: The “Time Map”

Purpose: Tells everyone what to do and when, ensuring orders are completed on time.

Common mistake: Only scheduling orders without checking if materials, equipment, or manpower are sufficient.

Case:

A packaging factory took three rush orders. The planner evenly distributed them across three lines. But two machines needed repair and materials were missing, so half the tasks couldn’t even start.

Fix:

Check materials + equipment + labor first. Always leave a buffer. Use ERP or APS systems to auto-calculate capacity.

2. Operation Card: The “How-To Guide” on the Shop Floor

Purpose: Instructs workers on how each process should be performed—standards, parameters, quality checks.

Common mistake: Cards are vague, e.g. only saying “welding” without current, temperature, or inspection standards. Workers improvise, leading to rework.

Case:

An electronics plant’s card didn’t specify component orientation for SMT. New workers mounted parts backward, causing thousands in rework losses.

Fix:

Operation cards must clearly list: process name, order, parameters, materials, quality checkpoints. Ideally with diagrams/photos to avoid confusion.

3. Daily Report: The “Thermometer” of Management

Purpose: Summarizes daily output, downtime, issues, manpower, and compares actual vs plan.

Common mistake: Only reporting output numbers without reasons or delays. Some even fill it days later, making it useless.

Case:

A plant reported “produced 300 units today” but didn’t mention “2 hours downtime due to jamming.” Managers thought output was just low, not realizing the machine problem was worsening.

Fix:

Daily reports must be submitted the same day, covering: planned vs actual, downtime, scrap, and root causes. Supervisor sign-off ensures accuracy.

4. Material Requirement Sheet: Avoiding “No Parts, No Work”

Purpose: Calculates materials needed in the coming days based on the schedule, so purchasing and warehouse can prepare.

Common mistake: Plans are made but material demand is ignored. Work starts, then halted by shortages.

Case:

A furniture factory scheduled 1,000 wardrobes for Monday but only had 700 sets of screws. Workers wasted a whole day waiting.

Fix:

Every schedule should generate a material requirement sheet—item name, quantity, delivery date—so procurement/warehouse prepare in advance.

5. Piecework Record: Measuring Efficiency and Pay

Purpose: Tracks each worker’s completed units and hours for performance pay, and to analyze efficiency.

Common mistake: Only recording total output, not distinguishing who produced how much or how long it took. Hard workers and slackers earn the same.

Case:

A shoe factory had no piecework records. Top performers felt underpaid, motivation dropped, and output fell overall.

Fix:

Piecework sheets must record: process, worker, quantity, time. Data helps both payroll and process optimization.

3. How the Five Tables Work Together

These tables aren’t separate—they form a closed loop:

1. Production Schedule → Decides who does what, and when.
2. Material Requirement Sheet → Ensures supplies match the schedule.
3. Operation Card → Guides workers to follow standards.
4. Daily Report → Feeds back real results and problems.
5. Piecework Record → Measures efficiency and rewards.

Think of it as a pipeline:

Plan → Prepare → Execute → Feedback → Optimize.

If any link is missing, production falls apart.

4. Key Takeaways and Suggestions

• Master the basics first: Use these five tables correctly before aiming for “smart factories.”
• Keep it simple: Fewer, clearer tables are better than dozens of complex ones.
• Align definitions: Terms like downtime, scrap, and output must mean the same across teams.
• Timely reporting: Daily and piecework data must be recorded on the same day.
• Data-driven improvement: Use table data to adjust schedules, refine processes, and improve performance.

When these five tables are properly used, factory management shifts from firefighting to predictable and controllable operations.

What is a BOM?

A BOM (Bill of Materials) is basically a product’s “ingredient list,” showing all the parts and materials needed to build it.

But different departments look at it from different angles, so we end up with three types: Engineering BOM, Manufacturing BOM, and Cost BOM.

The Differences

1. Engineering BOM (EBOM)
   
   • Owner: Design team
   • Focus: Which parts are required, with specifications and dimensions
   • Example: A laptop design lists the screen, motherboard, keyboard, battery… but not the assembly sequence or material loss.
3. Manufacturing BOM (MBOM)
   
   • Owner: Production team
   • Focus: How to actually assemble the product, including auxiliary materials, processes, and order of operations
   • Example: A laptop assembly needs screws, glue, thermal paste, plus worker steps and testing processes.
4. Cost BOM
   
   • Owner: Finance team
   • Focus: How much everything costs, including parts, consumables, labor, and waste
   • Example: Screen $500, keyboard $100, plus packaging, shipping, and labor—then calculate the total cost of the laptop.

How They Work Together

• EBOM decides “what to make”;
• MBOM shows “how to make it”;
• Cost BOM calculates “how much it costs.”

Think of cooking:

• Engineering BOM = recipe’s ingredient list;
• Manufacturing BOM = the cooking steps + backup ingredients;
• Cost BOM = food market prices, telling you how much the dish really costs.

Common Mistakes

• Using EBOM directly for production, forgetting glue or packaging, leading to errors.
• Not updating Cost BOM, causing wrong pricing.
• Mixing the three BOMs or poor version control, making departments misaligned.

The three BOMs are just different views of the same thing:

• EBOM cares about design completeness;
• MBOM cares about production feasibility;
• Cost BOM cares about financial accuracy.

When each plays its role, products can be made faster, better, and cheaper.

01 The Boss’s Headache

Mr. Zhang runs a small furniture factory. Orders keep coming in, but headaches never stop:

• The workshop asks: “Which order should we do first today?”
• Workers ask: “Who’s responsible for this task? How should it be done?”
• Finance asks: “What was yesterday’s output? How many were good?”
• The warehouse complains: “We’ve run out of paint again!”
• And when a machine breaks down, delivery dates have to be pushed back…

Mr. Zhang often sighed: “Why does my factory always feel like chaos?”

02 The Old Master’s Advice

One day, an experienced old master who had worked in a big factory patted Mr. Zhang on the shoulder and said:

“Don’t panic. To run a factory smoothly, you only need 8 forms. Each form solves a key problem. Use them well, and everything falls into place.”

Mr. Zhang was doubtful, but decided to give it a try.

03 The Eight Forms Appear

1. Production Scheduling Form → What to do, and when to do it

With this form, workers finally knew: Monday was for cutting wood, Tuesday was for painting. No more random guessing.

2. Operation Card → How to do it, and who does it

The card posted at each station clearly stated: Mr. Zhang cuts, Mr. Li polishes, with detailed instructions. No more vague “experience-based” operations.

3. Daily Production Report → How did we perform yesterday

Every evening, the report showed: output, good products, defects. Now Mr. Zhang could go to bed with a clear picture.

4. Standard Hours / Time Sheet → Is efficiency high or low

Polishing was set at 30 minutes, but Worker Zhang consistently finished in 25. That showed efficiency—and his tips could be shared with others.

5. Material Requirements Planning (MRP) Form → Are materials ready

The system calculated that producing 100 sets of tables and chairs next week required specific screws and paint. The warehouse could prepare in advance, no more stoppages.

6. Equipment Inspection / Maintenance Form → Are machines reliable

The spray machine was inspected weekly. A clogged nozzle was found and cleaned in time. Before, machines often failed at critical moments—now, they ran smoothly.

7. Quality Inspection Form → Are the products good

Final inspection showed 3 scratched tabletops. Tracing back, it turned out the cutting blade hadn’t been changed. Clear responsibility, and customers felt reassured.

8. Abnormality Handling Form → Can problems be closed-loop

When the electric saw suddenly broke, workers immediately filled out the abnormality form. The repair team followed up, recorded the cause and solution. Next time, they knew how to handle it.

04 A New Atmosphere in the Factory

After three months, Mr. Zhang was surprised to find:

• Workers asked fewer questions and did more work;
• The warehouse stopped scrambling at the last minute;
• Machines broke down less often, and customers stopped chasing orders;
• Every day’s production status was crystal clear.

Mr. Zhang exclaimed: “Turns out my factory wasn’t short of people—it was short of these 8 forms!”

05 Conclusion

• Scheduling Form → Clear direction
• Operation Card → Clear responsibilities
• Daily Report → Transparent performance
• Time Sheet → Measurable efficiency
• MRP Form → Materials secured
• Inspection Form → Reliable equipment
• Quality Form → Controlled output
• Abnormality Form → Closed-loop problem solving

These 8 forms are like 8 golden assistants, helping Mr. Zhang turn his factory from chaos to smooth sailing.

Xiao Li works as a planner at a smart home appliance factory. One day, R&D sent over an “urgent change”: replace a power module. But Xiao Li didn’t receive the updated BOM in time, so he ordered according to the old data. The result? Purchasing, warehouse, and production all went into panic—production halted, and managers were fuming.

Why such chaos? The root cause was simple: poor BOM change management. This type of pitfall is all too common. The good news is, with just five words—Accuracy, Speed, Clarity, Control, Traceability—BOM changes can be smooth and risk-free.

1. Accuracy — Information Must Be Precise

Case: An electronics company updated a component version, but due to unclear labeling, purchasing ordered the wrong part. Production came to a halt.

Lesson: BOM data must be precise—part numbers, versions, specifications. A single wrong digit could cost millions; one incorrect version could cut product quality in half.

2. Speed — Response Must Be Quick

Case: An auto parts supplier discovered defective screws from a vendor. If the change wasn’t processed quickly, the entire car delivery would be delayed.

Lesson: Change approvals can’t drag on. An efficient workflow and digital collaboration tools help ensure BOM changes are executed without delay.

3. Clarity — Process Must Be Clear

Case: A medical device manufacturer made a BOM change but failed to communicate it to all departments. R&D, production, QA, and warehouse each used different versions, resulting in rejected products.

Lesson: Everyone involved must be on the same page. Clear processes, explicit notifications, and defined responsibilities keep everyone aligned.

4. Control — Process Must Be Manageable

Case: An engineer at a factory swapped out a plastic part without formal approval. The replacement failed quality checks, leading to penalties.

Lesson: BOM changes should never bypass procedures. Strict permissions, approval workflows, and proper documentation are essential for control.

5. Traceability — Results Must Be Trackable

Case: An electronics company faced a customer complaint but couldn’t trace which BOM version was used at the time. They ended up paying compensation.

Lesson: A robust BOM management system must support traceability: who made the change, when it was made, and why. Clear accountability prevents costly disputes.

Core Message: If BOM Isn’t Managed, Production Falls Apart

As one industry blog put it, the BOM is not just a “parts list” but the “instruction manual” of a product. It links planning, purchasing, inventory, production, and quality.

Many printing factory owners face the same headaches: orders keep coming in, pricing is hard to calculate, production scheduling is messy, raw materials are always short, and customers keep urging for deliveries…

In reality, relying on manual work to solve these problems is nearly impossible. Modern digital factories depend on seven core systems working together like a well-oiled machine, making production run as efficiently as a high-precision printing press.

Let’s take a color packaging printing factory as an example and see what each of these seven systems does:

1. ERP: Enterprise Resource Planning — The Brain of the Factory

ERP manages the entire enterprise: orders, finance, procurement, inventory, and human resources.

Example:

When a customer places an order for 5,000 packaging boxes, ERP automatically calculates how much paper and ink are needed and even provides cost and profit analysis.

2. MES: Manufacturing Execution System — The Shop Floor Scheduler

ERP handles the big picture, while MES focuses on production. It manages scheduling, production progress, and equipment status.

Example:

MES tells you which printing machine should start when, which processes will be completed today, and gives you a real-time view of production progress.

3. WMS: Warehouse Management System — The Smart Warehouse Keeper

Printing factories handle a variety of materials — paper, ink, die-cutting tools, and finished products. WMS makes warehouse management simple and organized.

Example:

When a customer urgently needs a product, WMS can instantly tell you where the finished goods are stored so they can be packed and shipped quickly.

4. SCM: Supply Chain Management — The External Coordinator

With many suppliers for paper and ink, SCM helps manage them by tracking lead times and costs.

Example:

If a paper supplier delays delivery, SCM provides early warnings to prevent production interruptions.

5. PLM: Product Lifecycle Management — The Design Document Manager

Printing factories often work on new packaging designs, with numerous design files and proofing versions. PLM organizes them to avoid confusion.

Example:

When a customer requests three design changes, PLM keeps track of all versions so you always know which one is final for proofing.

6. QMS: Quality Management System — The Quality Control Officer

Color consistency, paper thickness, and product defects are customers’ top concerns. QMS records every quality check detail.

Example:

If a customer complains about color differences, QMS can trace the problem back to the exact machine and batch of raw materials.

7. APS: Advanced Planning and Scheduling — The Smart Scheduling Assistant

APS is even more intelligent than MES. It considers machine capacity, delivery deadlines, and raw material availability to generate the most optimized production schedule.

The Power of System Collaboration

When ERP, MES, WMS, SCM, PLM, QMS, and APS work together, the printing factory gains an “intelligent brain”:

• ERP handles the big picture
• MES monitors production
• WMS manages the warehouse
• SCM secures the supply chain
• PLM organizes design data
• QMS ensures quality
• APS creates smart production schedules

One packaging factory integrated ERP, MES, and QMS systems and saw:

• A 25% reduction in delivery lead time
• A 40% increase in customer satisfaction
• A significant rise in profitability

In manufacturing, a BOM (Bill of Materials) is like the “recipe” for making a product. It tells the factory what materials are needed, how to assemble them, and which processes to follow.

Many factory owners often hear terms like Single-level BOM, Multi-level BOM, Process BOM, Virtual BOM, and even Make-to-Order BOM—but the more they hear, the more confused they get.

Today, using a real case from a smartwatch factory, let’s break down these six BOM models in simple terms so you’ll never get lost again.

1. Single-level BOM: The simplest “recipe”

For a smartwatch, a single-level BOM directly lists all components: screen, battery, motherboard, strap, etc.

It’s like a recipe for fried rice: rice, eggs, scallions, oil—clear and simple.

Best for: Products with simple structures and straightforward assembly.

2. Multi-level BOM: A step-by-step “recipe”

If the smartwatch motherboard itself needs to be assembled with chips, resistors, and capacitors before being combined with the screen and battery, then you need a multi-level BOM.

Benefit: Shows product hierarchy clearly, making production planning easier.

3. Process BOM: Managing materials 

and

 processes

A Process BOM not only lists materials but also details the production steps and timing.

For example: motherboard soldering → testing → assembly → aging test → final assembly.

Best for: Factories with complex production processes that need process control.

4. Virtual BOM: A “recipe” for temporary orders

Sometimes a factory doesn’t want to create a formal BOM for every part. A virtual BOM lets them quickly combine components for a temporary or sample production run.

Feature: Flexible and time-saving, great for prototypes or small orders.

5. Make-to-Order BOM: One order, one recipe

The factory produces exactly what the customer orders, and the BOM changes accordingly.

Best for: Customized production, like special strap colors or unique smartwatch functions.

6. Make-to-Stock BOM: Preparing materials in advance

The factory prepares materials and BOMs based on forecasted sales, so they can start production as soon as orders come in.

Best for: Standardized, high-volume products.

Case Summary:

In this smartwatch factory:

• Virtual BOM is used for prototypes,
• Multi-level BOM for mass production,
• Make-to-Order BOM for custom orders,
• and Process BOM for the complex motherboard section.

By flexibly combining these six BOM models, the factory boosts production efficiency while meeting customer needs for customization.

1. System Roles: Who Does What?

1. ERP (Enterprise Resource Planning)
   ERP is the “brain” of enterprise management, overseeing finance, procurement, inventory, sales, HR, and more. It centralizes data and provides the foundation for other systems to share information.
2. MES (Manufacturing Execution System)
   MES is the “commander” at the shop-floor level, handling production execution, quality control, real-time data collection, and monitoring to ensure plans are executed efficiently.
3. WMS (Warehouse Management System)
   WMS acts as the “warehouse manager,” managing everything from receiving and storage to picking and shipping with precise inventory control.
4. CRM (Customer Relationship Management)
   CRM connects the enterprise with customers, managing customer information, sales support, and after-sales service. Integrated with ERP, it allows sales and supply chain to work seamlessly together.

2. System Collaboration: How Do They Work Together?

1. ERP ↔ MES: From Planning to Execution and Feedback
   ERP generates production orders, BOMs, and production plans; MES executes the shop-floor tasks and reports progress, quality, and output back to ERP for cost analysis and future planning.
   Case Example: ERP sends production orders to MES; MES completes production and sends data back to ERP for cost calculation and performance evaluation.
2. ERP ↔ WMS: Real-Time Inventory Synchronization
   ERP handles inventory planning, procurement, and sales data; WMS manages warehouse operations and real-time inventory status to keep supply chain accurate and efficient.
3. ERP ↔ CRM: Customer-Driven Business Integration
   CRM collects customer orders, feedback, and history; ERP follows up on inventory, shipping, and billing, improving responsiveness and customer satisfaction.

3. Real Case Example: A Smart Home Appliance Company

Let’s take a fictional company, SmartAppliance Co., as an example of how ERP, MES, WMS, and CRM work together:

1. Order Creation (CRM → ERP)
   Customers place orders via the CRM system. CRM sends order information to ERP, which updates sales forecasts, inventory, and production plans.
2. Production Scheduling (ERP → MES)
   ERP creates production plans; MES receives the work orders, schedules production lines, tracks material usage, and monitors equipment status.
3. Warehouse Operations (ERP ↔ WMS)
   MES requests materials; WMS executes picking, shipping, and updates real-time inventory data back to ERP for financial and procurement planning.
4. Production Feedback (MES → ERP → CRM)
   MES reports production status and quality data to ERP; ERP updates shipping plans and costs; CRM synchronizes this so customers can see their order status.
5. After-Sales Service (CRM ← ERP)
   If customers need maintenance, CRM queries ERP and MES for production and quality records, providing accurate after-sales service.

4. Integration Approaches and Key Technologies

• Integration Methods: Middleware or APIs (e.g., Web Services, database sync) are commonly used to connect systems.
• Standards Support: Industrial standards such as ISA-95 guide ERP–MES data flows and interface standardization.
• Modern Trends: IoT integration, PLM (Product Lifecycle Management), and real-time monitoring are enabling smart manufacturing and traceability.

5. Summary & Recommendations

• Summary:
  ERP is the “general manager,” MES is the “shop-floor commander,” WMS is the “warehouse manager,” and CRM is the “customer liaison.” Together, they form a closed-loop management system from order to delivery.
• Recommendations for Enterprises:
  
  • Start with ERP as the foundation, then gradually integrate MES, WMS, and CRM based on business needs.
  • Use standardized interfaces and middleware for reliable system communication.
  • Align system upgrades with process optimization to ensure successful implementation.

In many small and medium-sized enterprises (SMEs), the boss often says:

“As long as we can sell our products and keep track of inventory, a simple inventory management system is enough. Why spend money on ERP?”

At first glance, this sounds reasonable. An inventory management system can handle stock, generate in/out records, and even link with sales data. But as the business grows, problems start to emerge one by one.

Case Study: A Company’s “Inventory Management Dilemma”

Company A is a business dealing in electronic components. In the early days, the business was small. The boss used a basic inventory management system for stock control, Excel for accounting, and WeChat for sales orders. Everything seemed to work fine.

Three years later, sales had tripled, customers had multiplied, the supply chain had grown more complex, and problems piled up:

• Financial closing took 10 days because data was scattered across multiple systems, making reconciliation a nightmare.
• Sales reps oversold inventory frequently, leading to constant calls from customers chasing orders.
• The boss couldn’t get a full picture of how much a customer had bought over the past year due to incomplete data.

At this point, the limitations of simple inventory management became clear. It only handles inventory and sales data, while the company actually needs unified management and real-time collaboration across finance, supply chain, sales, procurement, and even production. This is exactly what ERP excels at.

What ERP Brings to the Table

1. Data Integration: Sales, inventory, finance, and procurement data are all connected, eliminating the need to jump between different software systems.
2. Real-Time Decision-Making: The boss can instantly see the company’s operational status — inventory levels, profits, and more — all at a glance.
3. Standardized Processes: From order placement to delivery to payment, every step is system-driven, reducing human errors.

After implementing ERP, Company A reduced its financial closing time from 10 days to 1 day, improved inventory accuracy to 98%, and gave the boss real-time business reports right on his smartphone. Management efficiency skyrocketed.

In short, inventory systems solve the problem of selling goods, while ERP solves the problem of managing the entire enterprise. The journey of growing a company often goes from “being able to sell” to “being able to manage effectively.”

1. BOM vs. MRP: What’s the Difference?

BOM (Bill of Materials) — “What It Is”

• A BOM is like the ingredient list of a product. It shows all the raw materials, parts, subassemblies, and their quantities needed to make the final product.
• It’s usually structured in levels: the finished product is Level 0, components are Level 1, subcomponents are Level 2, and so on.
• Types of BOMs include:
  
  • Engineering BOM (EBOM): used in the design stage to describe the design structure.
  • Manufacturing BOM (MBOM): used in production, including tooling, packaging, and process information.

In short, a BOM is like a recipe—it tells you what’s inside the product. It’s the foundation for cost calculation and production preparation.

MRP (Material Requirements Planning) — “How and When”

• MRP is a calculation and planning tool. Based on the BOM, inventory, and production schedule, it determines what materials are needed, in what quantities, and when.
• MRP ensures that:
  
  • Required materials arrive on time;
  • Inventory doesn’t pile up unnecessarily;
  • Production is completed on schedule.
• It analyzes demand (from sales orders or forecasts) and, using BOM dependencies, generates net requirements, then creates purchase and production plans.

2. Why Do People Confuse BOM and MRP?

There’s a popular saying:

“In one sentence: MRP tells you how to do it and when to do it.”

Many companies confuse the two:

• Some treat BOM as MRP—only looking at the ingredient list without considering timing.
• Some treat MRP as BOM—only focusing on plans without knowing the actual product structure.

3. Simple Case: Making a Pizza

BOM = Ingredient List (“What I Need”)

To make one pizza, you need:

• Dough: 1 piece
• Tomato sauce: 100g
• Cheese: 150g
• Toppings: 50g

This is the BOM—the recipe of the pizza.

MRP = Action Plan (“How Much, When to Buy/Make”)

Now suppose you have an order for 10 pizzas:

1. Current stock: 6 doughs, 500g tomato sauce, 1kg cheese.
2. You only need to prepare: 4 more doughs. Sauce and cheese are sufficient.
3. MRP will tell you: buy flour for 4 doughs and plan to bake pizzas on Monday to deliver on time.

So: BOM defines the structure, MRP drives the flow and timing.

4. Quick Comparison Table

Aspect	BOM (Bill of Materials)	MRP (Material Requirements Planning)
Essence	Defines what it is	Decides how and when to do it
Purpose	Provides structure, components, quantities	Calculates requirements, schedules execution
Focus	Raw materials, components, product hierarchy	Inventory, lead time, production schedule
Example	Pizza needs dough, sauce, cheese…	Order 10 pizzas → buy 4 doughs, bake Monday

5. Conclusion

BOM is the foundation—it tells you what’s inside. MRP is the execution tool—it tells you how and when to act.

Understanding the difference helps businesses run production with clarity, efficiency, and cost control.

And next time, just remember the pizza:

• BOM = recipe,
• MRP = cooking schedule.

You’ll never confuse them again!

When choosing an ERP system, companies often struggle between three deployment options: SaaS, private deployment, or traditional on-premise. Each option comes with different investment costs, levels of data control, security implications, and future scalability.

This article breaks down five key factors to help you make sense of these choices, with real-world cases to guide you toward the most suitable path.

1. Data Sovereignty and Security Control — Who Really Owns Your Data?

• SaaS: Your data is hosted by the cloud vendor. No need to worry about hardware maintenance, but in industries with strict data privacy and compliance rules (e.g., healthcare, finance), it may fall into a “privacy gray zone.”
• Private / On-Premise: Your company fully controls the data, making compliance audits easier and better aligned with complex legal requirements.

Case: A retail company chose private deployment and, during an audit, was able to provide cabinet photos and hard drive serial numbers. The auditors were impressed — something you could hardly do with a SaaS service.

2. Deployment Costs and Maintenance Burden — Who Will Shoulder the Work?

• SaaS: No hardware costs, subscription-based billing. But subscription fees accumulate year after year.
• Private / On-Premise: High initial investment in servers and an IT team, but long-term cash flow pressure is more manageable.

Case: A 40-user SaaS setup costs ¥60,000 per year — that’s ¥300,000 over five years. Private deployment required a one-time ¥180,000 investment plus smaller ongoing maintenance costs, making it more cost-efficient in the long run.

3. Flexibility in Customization and Business Fit — Can Your Processes Be Changed at Will?

• SaaS: Usually multi-tenant with standardized features, offering limited customization.
• Private / On-Premise: Supports deep customization, such as seamless integration with existing LIMS systems, avoiding repetitive Excel exports.

Case: After private deployment, one company integrated ERP with its clinical trial follow-up module, eliminating the need for repetitive exports and greatly improving efficiency and user experience.

4. Upgrades and Migration Flexibility — What If You Change Your Mind?

• SaaS: Vendor handles regular upgrades, features are continuously updated — but pricing and version access may also increase.
• Private / On-Premise: You control upgrades, but they require budget; migrating data is more complex. Before deployment, ensure that data export mechanisms are smooth.

Case: Many companies ask during evaluation: “What’s the server requirement? Will future upgrades cost extra? How exactly can we export our data?” These operational details are must-clarify items before making a choice.

5. Business Growth and Scalability — Can the System Grow With You?

• SaaS: Quick to launch, good for trial phases. But as the business grows, you may face traffic limits, price hikes, and customization barriers.
• Private / On-Premise: Demands more IT resources, but during peak seasons, you can scale up resources yourself.

Case: A company with over 200 retail stores deployed POS, membership, and inventory systems on a private cloud. During the Chinese New Year rush, they expanded virtual machines themselves to handle the load. With SaaS, they might have faced throttling or price surges.

Quick Comparison Table

Factor	SaaS	Private / On-Premise
Data Control	Relies on cloud vendor, limited flexibility	Full control, higher security and compliance
Cost Structure	Subscription-based, low upfront; long-term cost unclear	High upfront cost, lower long-term expense control
Customization	Standardized, limited customization	Deep customization, system integration ready
Upgrades & Migration	Vendor auto-upgrades, unknown cost changes; data migration tricky	Paid upgrades, migration must be planned
Scalability	Fast to launch, but may hit limits and price hikes	Self-scaling possible, requires IT resources

Conclusion

Choosing an ERP system is not a one-size-fits-all decision. You must decide whether your priority is saving time and money with quick deployment, full control over data and deep customization, or lower total cost with stronger scalability in the long term.

Once your needs are clear, you can match them with the right deployment model, learn from real cases, and make a practical, low-risk choice.