Author: ERP Consultant

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.

Easy-to-Understand Explanation with a Real-Life Analogy

1. BOM (Bill of Materials) — “The Recipe”

• What is it?
  Like a cooking recipe, a BOM lists all the raw materials needed to make a finished product, including quantities, hierarchy (main vs. auxiliary materials), versions, and possible substitutes.
• Why is it important?
  It ensures that purchasing buys the right materials, the warehouse delivers the correct items, costing is accurate, and tracking is possible.
• Example:
  To cook braised pork, the BOM would specify 5 pounds of pork belly, 2 ounces of rock sugar, 1 stalk of scallion, etc. It may also mention that brown sugar can be substituted for rock sugar.

2. Routing — “The Step Card”

• What is it?
  Like a step-by-step cooking guide, routing lays out the manufacturing process in order—such as stamping → welding → painting → assembly—and details the equipment, methods, and time required for each step.
• How does it work with BOM?
  Each material from the BOM is tied to a process step. Routing defines the sequence and dependencies that help determine when to begin each process and when materials need to arrive.
• Example:
  For braised pork, the routing might say: marinate for 2 hours → stir-fry for 30 minutes → simmer for 20 minutes. This ensures the dish is cooked properly and on time.

3. Production Plan — “The Schedule”

• What is it?
  Based on sales orders or forecasts, the production plan determines what will be made, when, and how much—essentially, “how many dishes to cook today.”
• What does it do?
  It turns demand into actionable schedules. Together with the BOM and routing, MRP (Material Requirements Planning) calculates material needs and task timelines, coordinating purchasing, material picking, and work orders.
• Example:
  Imagine the kitchen gets an order for 200 servings for dinner. The production plan would say: “Start cooking 10 dishes at 6 PM, then cook the rest in batches by 6:30 PM,” and make sure ingredients arrive by 5 PM.

Quick Comparison Table

Concept	Real-Life Analogy	Main Purpose
BOM	Recipe	Defines materials, quantities, structure, substitutes
Routing	Step Card	Defines process sequence, time, equipment
Production Plan	Schedule	Sets “what, when, how much” to produce

Full Example in a Kitchen Analogy

Imagine you’re running a restaurant kitchen:

• BOM (Recipe):
  Tells you what ingredients you need, their quantities, and possible substitutes. For example, use brown sugar if rock sugar is unavailable.
• Routing (Step Card):
  Describes the cooking steps, how long to marinate, cook, or simmer, and which tools or appliances to use.
• Production Plan (Schedule):
  Tells you how many dishes are needed for dinner service, what time to start cooking, and when everything must be ready.

In the manufacturing industry, those who embrace digitalization early will run faster and last longer.

But when it comes to digital systems, many factory owners feel overwhelmed—ERP, MES, WMS, PLM, SCM… they all sound impressive, but what do they actually do? Do you need all of them? In what order? Are they expensive? Are they worth it?

Don’t worry—today, let’s use a simple factory case to clearly explain what each of these five systems does and how they work together.

The Story of a “Smart Factory”

Let’s say you run a factory that makes rice cookers. As orders increase, you want to boost efficiency through digital systems. A consultant recommends five core systems:

✅ 1. ERP: The “Central Brain” of Your Business

ERP (Enterprise Resource Planning) is the most essential system—the “housekeeper” of your company. It manages finance, procurement, sales, inventory, and production planning, integrating all departments.

Example: When a customer orders 500 rice cookers, ERP automatically creates a sales order, triggers raw material purchasing, schedules production, calculates cost, and generates the invoice.

? Keywords: Planning, finance, orders, resource integration

✅ 2. MES: The “Control Center” for Production

MES (Manufacturing Execution System) focuses on the shop floor, helping you track every step of the production process. It connects planning (ERP) with real-time execution.

Example: ERP says to produce 100 inner pots today—MES tells you how many have been made, how long it took, whether machines malfunctioned, or if a worker is underperforming.

? Keywords: Real-time execution, monitoring, work order tracking

✅ 3. WMS: The “Smart Warehouse Keeper”

WMS (Warehouse Management System) manages your raw materials and finished goods storage—solving inventory inaccuracies.

Example: After receiving 500 heating plates, WMS tracks their quantity, location, and shelf life. When issuing materials, it uses barcode scanning to prevent mistakes.

? Keywords: Inbound/outbound, inventory accuracy, bin management

✅ 4. PLM: The “Engineering Data Hub”

PLM (Product Lifecycle Management) manages the product’s journey from design to prototyping to mass production. It’s your R&D team’s best friend.

Example: When developing a smart rice cooker, everything from CAD drawings to BOMs and version changes are stored in PLM for easy reference and traceability.

? Keywords: R&D, BOM, engineering documents, version control

✅ 5. SCM: The “Collaboration Hub” with Suppliers and Customers

SCM (Supply Chain Management) connects your business with external partners—suppliers, customers, logistics—becoming your “information highway” beyond the factory walls.

Example: You have 10 suppliers. SCM allows online bidding, supplier evaluations, and demand forecasting—so you can see who delivers on time and who consistently delays.

? Keywords: Collaboration, forecasting, supplier management, lead time

In Summary: There’s an Order to Digital Transformation

Some businesses try to implement everything at once, but end up wasting money and seeing no results. In reality, digital transformation is a step-by-step journey. A recommended order is:

? Start with ERP as the foundation → Add MES to control production → Use WMS to stabilize inventory → Adopt PLM for R&D management → Implement SCM for supply chain collaboration

Of course, the sequence may vary based on your company’s size and management maturity.

Final Thought

Digital transformation in manufacturing isn’t just about installing software—it’s about upgrading your management mindset and processes. Understand these five core systems, and you’ll already be ahead of 90% of your competitors!

In many manufacturing companies, when you walk into the production floor, you’ll often see this: messy material piles, long machine idle times, recurring quality issues, and plans falling apart after every change. The boss is anxious, the production manager is stressed—but no one knows where to start fixing things.

In fact, the root cause of these issues isn’t that workers are lazy. It’s poor shop floor management. So how can you bring order back to production? The answer lies in four key actions: Spot, Fix, Clear, and Control.

Step 1: Spot the Blind Spots — Identify the “Invisible” Issues

Many production problems aren’t immediately obvious, such as:

• A corner filled with unused materials;
• A production line that breaks down every afternoon;
• A team with consistently high scrap rates that no one investigates.

These “blind spots” are like hidden illnesses in your operation. You must walk the floor and look closely to uncover them.

Case Study:

At an electronics parts factory, the owner was working overtime every day but profits remained low. After a deep inspection, they found two entire rows of expired inventory that had been sitting untouched for two years. The ERP system still showed them as usable stock, leading to repeat purchases. After addressing the issue, the company instantly saved hundreds of thousands.

Step 2: Fix the Weakest Link — Strengthen the Bottlenecks

Like the classic barrel theory says: your production efficiency is limited by the weakest part. It could be untrained staff, chaotic processes, or aging machines.

What to do? Fix the right problem:

• Skills gap? Provide training.
• Old equipment? Plan for upgrades.
• Messy process? Redesign and streamline.

Case Study:

A food processing plant often delivered late. After investigation, they found that the bottleneck was in the packaging section—finished goods were piling up. The company invested in automatic packaging machines and trained workers. On-time delivery improved by 30%.

Step 3: Clear the Backlog — Get Rid of the “Historical Baggage”

In many companies, the ERP system is filled with unclosed work orders, unprocessed returns, and unchecked inventory. These might look like data issues, but they reflect deeper management problems.

Don’t be afraid of the mess—clean it up.

Once you clear out the old “backlog,” everything becomes more accurate, and planning gets smarter.

Case Study:

An auto parts company’s ERP system showed inaccurate “WIP” data for years. Upon inspection, dozens of old work orders were found still open from years ago. Once cleared, they realized they were actually running low on inventory—fixing it just in time to prevent a major production halt.

Step 4: Control the Variables — Reduce Unplanned Changes

What’s the biggest enemy of a stable production line? Constant changes: shifting plans, sudden orders from management, last-minute customer requests…

The more variables, the more errors and delays.

Control what you can, such as:

• Fixing production rhythms;
• Locking order schedules in advance;
• Avoiding last-minute rush orders;
• Using Kanban boards to track progress.

Case Study:

A furniture manufacturer used to deal with constant insert orders. Workers worked overtime but still fell behind. After introducing Kanban boards, all orders had to be submitted 48 hours in advance. The result: smoother workflow and on-time deliveries doubled.

In Summary: Managing Production Isn’t About Shouting Orders — It’s About Having a Method!

As long as you:

✅ Dare to spot the blind spots,

✅ Are willing to fix the weak points,

✅ Don’t shy away from clearing the old mess,

✅ Know how to control the variables,

You can turn a chaotic factory into a well-oiled machine.

Even the smallest workshop can run with big efficiency!

Many business owners and IT managers in China share a common belief: “Chinese ERP systems are hard to use.” Complicated interfaces, slow processes, painful implementations, and endless training… It seems like the software is always the problem.

But what if the real issue isn’t with the system, but with the people using it?

Let’s take a closer look, and you might discover that most ERP failures are caused by misconceptions and poor execution, not the software itself.

1. Bosses Don’t Know What They Want: Treating ERP Like a Punch Clock

Some business owners adopt ERP systems simply because “everyone else is doing it” or “it’s what big companies do.” But they never take the time to clarify why they’re implementing it or what problems they want to solve.

Take a hardware trading company, for example. The owner treated ERP like an attendance tracker—just checking if employees entered sales orders. He didn’t care whether the data was useful or whether it could support decision-making. Naturally, the system failed, no one used it properly, and he blamed the “bad software.”

2. No Clear Goals: ERP Becomes a “Cure-All Pill”

ERP isn’t a magic bullet that fixes all business issues. Many companies start implementation without clear objectives, hoping to “figure it out later.” That’s like building a foundation without a plan for the house.

A manufacturing company, for example, wanted ERP to “fix their chaotic production scheduling.” But they never defined what “chaotic” meant or set any measurable KPIs. After implementation, nothing improved, and they concluded the ERP system was ineffective.

3. Refusing to Change: Old Habits vs. New Systems

ERP systems are designed to enforce standardized workflows. But many companies operate with informal practices: approvals over WeChat, supplier selection based on personal contacts, and handwritten inventory slips.

Once ERP is introduced, it forces people to follow structured processes. Employees often find this “inconvenient” and push back. When the boss sees resistance, they retreat from change. The result? The system gets shelved, and the old ways continue.

4. No Ownership: ERP Becomes a Blame Game

Successful ERP implementation needs clear ownership—a project manager, data owners, process leads. But in many companies, it’s left to someone “who also handles IT,” and no one takes real responsibility.

Consultants keep asking, “How does this process work?” and the client says, “You figure it out for me.” When things go wrong, everyone blames each other, and the project quietly dies.

5. Inexperienced Consultants: It’s Not the ERP, It’s the People Deploying It

Some ERP vendors assign consultants who lack real-world experience. They don’t understand the industry but still advise clients on how to run their operations.

A food company, for example, hired an ERP team that had never dealt with food manufacturing. They didn’t understand batch tracking or expiration date traceability. The result? A poorly designed system that didn’t meet basic regulatory needs—and the client, again, blamed the software.

6. Incomplete Data: ERP Becomes an “Information Island”

ERP success depends on real, complete data. But many companies only partially use the system—sales records are entered, but purchase orders or financials are left out. The system becomes an isolated island of incomplete data.

One company diligently recorded sales, but ignored warehouse inputs. Inventory was always off, and when customers asked for urgent shipments, chaos ensued. Unsurprisingly, everyone said “the ERP system is useless.”

✅ Case Study: It’s Not the System, It’s the Strategy

Let’s look at a successful example. A company called “Mingchuang Home” implemented ERP with clear goals: improve on-time delivery and optimize inventory turnover. The CEO personally participated, assigned a project team, reviewed workflows, cleaned up data, and led training sessions.

In just six months, their on-time delivery rate jumped from 60% to 92%, and inventory turnover improved by 40%. Same ERP software—different results.

✅ Final Thoughts

Chinese ERP systems aren’t inherently bad. The real issues often come down to:

• Not understanding why you’re using ERP
• Not aligning processes and people
• Not leveraging data properly
• Not hiring the right consultants

ERP is just a tool. Whether it works depends entirely on how you use it.

Many companies, after implementing an ERP system, often sigh and say: “We spent hundreds of thousands—or even millions—on the system, but we haven’t seen much value.” There are many reasons for this, but one of the most overlooked—yet absolutely critical—is material coding.

What is Material Coding, and Why Is It So Important?

Material coding is basically assigning each raw material, component, or finished product a unique “ID.”

For example, your company uses two types of screws—one 10mm long and the other 15mm. If both are simply called “screw,” the system has no way to tell them apart.

An ERP system is essentially a data-driven platform—it “calculates” based on data. If your material codes are messy, it’s like keeping a ledger where every client is just labeled “customer.” Of course the books won’t add up!

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A Real Case:

A Manufacturing Company’s ERP Failure Traced Back to Bad Coding

This was a company producing electronic components. They invested heavily in ERP implementation. The initial planning and process design were done properly. However, once the system went live, they noticed persistent issues: inventory records were always inaccurate. The ERP showed stock, but nothing could be found in the warehouse—or vice versa.

After investigation, the consultants found the root cause: the company had over 300 types of resistors, but many of them were simply named “resistor.” The codes lacked consistency—some were based on Pinyin abbreviations, others used supplier numbers.

As a result, the same item had multiple codes in the system. Inventory data was scattered across duplicate entries, making it appear that there was sufficient stock, when in reality there wasn’t enough of the actual items needed for production. This led to constant material shortages, emergency purchases, and significant waste.

If Material Coding Is Poor, Your ERP Will Face the Following Problems:

• Inaccurate Inventory: The system tracks codes, not your team’s intuition.
• Duplicate Entries: The same material might be entered multiple times, scattering stock.
• Confused Purchasing: It becomes unclear who to buy from, what specs are needed, and what price is correct.
• Incorrect Costing: Items are grouped wrongly, causing cost miscalculations.
• Production Delays: APS scheduling fails due to inaccurate material availability data.

So, How Do You Code Materials Properly?

1. Establish Clear Rules: For example, use a format like “Category-Spec-Model-Version” to ensure structure.
2. Ensure Uniqueness and Stability: Each material must have one—and only one—code that doesn’t change.
3. Avoid Redundant Names: Standardize naming conventions to prevent confusion like “Screw,” “SC,”
4. Regularly Audit and Clean: Prevent “zombie materials” from accumulating due to careless data entry.

ERP systems are meant to standardize, streamline, and digitalize enterprise operations. Material coding is the foundation that supports all standardized data.

If you can’t even clearly define “what’s what,” your ERP will struggle to deliver value.

It’s like building a house—ERP is the structure, but material codes are the foundation.

Without a solid foundation, no matter how beautiful the house looks, it’s bound to collapse.

To many, ERP (Enterprise Resource Planning) is just a piece of software—for entering data, managing inventory, or creating orders. But truly mastering ERP is like becoming a martial arts master: you need not only the techniques but also the internal strength behind every move.

Let me tell you a real story—about Mr. Zhang.

From IT Support to ERP Expert

Mr. Zhang was an IT support staff in a manufacturing company. His ERP journey started passively—he was assigned to manage the system, handling user access, fixing errors, and constantly calling consultants for help.

But problems started piling up after ERP went live: inventory numbers were off, finance couldn’t match books, production was a mess. The boss was frustrated.

Zhang wasn’t willing to give up. He started learning from different departments—studying financial reports, watching warehouse operations, even wearing a helmet to walk the shop floor daily. Slowly, he saw:

• Sales couldn’t create orders—because they had no visibility into inventory.
• Inventory was wrong—because material handling was inconsistent.
• Material handling was a mess—because planning was disconnected.

It turned out the root problem wasn’t the system, but the business process.

The “18 Skills” of an ERP Master

Through practice, Zhang realized: to be great at ERP, you need to understand business, not just software. He summarized his journey into key skills:

1. Business Understanding – Know what sales, finance, warehouse, purchasing, and production are really doing.
2. Process Mapping – Be able to draw out the entire workflow chain.
3. System Configuration – Know how to implement rules inside ERP.
4. Data Analysis – Use reports or BI tools to support decision-making.
5. Cross-Department Communication – Mediate between conflicting departmental needs.
6. Training and Adoption – Teach others how to use the system effectively.
7. Continuous Improvement – ERP go-live is just the start—keep optimizing.

Each of these skills may sound ordinary, but together, they define a true ERP expert.

Conclusion: ERP Reflects a Company’s Management

ERP is like a mirror—it amplifies what’s already there. If a company is well-managed, ERP enhances it. If it’s chaotic, ERP makes the chaos visible and faster.

Today, Zhang is the company’s Head of Information Systems, leading not just ERP but MES, WMS, and PLM projects. He always says:

“An ERP expert isn’t just a tech guy. He’s someone who uses technology to solve business problems.”

If you’re also on the ERP journey, start by understanding what each department does—and why. The deeper your understanding, the easier ERP becomes.

As China’s manufacturing industry undergoes digital transformation, more and more enterprises are investing millions—sometimes even tens of millions—into ERP systems. Yet many business owners find that even after spending the money and completing the system rollout, no one actually uses it. Data is messy, processes are more complicated, and the ERP ends up becoming just another “showpiece.” Unfortunately, this is not an isolated issue—it’s a widespread dilemma.

But there are success stories. For example, a packaging manufacturer in Jiangsu with an annual output of 500 million RMB saw an 18% boost in production line efficiency and a 30% increase in inventory turnover within the first year of ERP implementation. How did they do it? The key lies in following these five critical steps:

1. From “Boss Wants It” to “The Team Owns It”: Executive Support + Middle Management Engagement

One of the most common pitfalls is when a boss simply decides to go with ERP on a whim and then hands it over to the IT department. In reality, ERP is a management project that requires full participation across the organization.

Case Insight: At the Jiangsu company, the CEO personally announced at the kickoff meeting that the ERP project was a company-level strategic initiative. Each department had ERP-related KPIs tied to data quality. This top-down emphasis laid the groundwork for success.

2. Don’t Blindly Pick a System—Understand Your Business Needs First

Some companies choose ERP systems based on price alone, or just follow what others are using. This often leads to misfits that require costly customizations.

Case Comparison: A garment factory chose an ERP that didn’t support flexible production. As a result, order processing constantly broke down and had to be manually patched. In contrast, the Jiangsu packaging company spent two months mapping out internal processes and brought in consultants to assess system fit. They ended up selecting a suite that matched their needs with almost no need for custom development.

3. Go Beyond “Go-Live”: Data Cleansing and Process Refinement Are Crucial

ERP launches often look lively on day one, but fade into disuse a few weeks later. Why? Because flawed processes and dirty data frustrate users, who then return to Excel.

Success Practice: Before go-live, the Jiangsu team spent a full month cleaning data and rehearsing workflows—standardizing customer records, BOMs, and warehouse codes. They understood that ERP isn’t about moving Excel into a system—it’s about rebuilding through standardization.

4. Don’t Just Teach “How to Click”—Explain “Why It’s Done This Way”

Why do employees resist ERP? Because they don’t understand why they need to change.

Borrow This Idea: During training, the project manager used concrete examples: “If you don’t enter complete material data, the warehouse can’t prepare inventory, and delivery deadlines will be missed.” When employees understand the logic behind ERP, they’re more willing to cooperate.

5. Keep Optimizing—There’s No Such Thing as “One-and-Done”

ERP implementation isn’t a one-time deal. It’s merely the “first mile” of digital transformation.

Real Case: Post-implementation, the Jiangsu company held quarterly review meetings to adjust workflows in line with changing business needs. For instance, after launching overseas operations, they streamlined export documentation processes, doubling efficiency.

In Summary: The “5-Step Method” for ERP Success

1. Leadership-driven, organization-wide involvement
2. Pragmatic system selection, tailored to the business
3. Focus on process standardization and data governance
4. Explain the “why” behind system use during training
5. Establish a culture of continuous improvement

ERP is a magnifier. Companies with solid processes and strong management will thrive with ERP—it becomes a force multiplier. But without that foundation, it simply automates the chaos.

Still struggling with ERP adoption after go-live? Maybe it’s time to ask yourself: Did you truly follow these five critical steps?

In the wave of digital transformation sweeping through China’s manufacturing sector, more and more business owners are investing millions—sometimes tens of millions—in ERP systems. Their hope? To boost management efficiency, reduce costs, and drive business growth through information technology.

Yet in reality, many ERP implementations end up as expensive showpieces: rarely used, filled with inaccurate data, and plagued by chaotic processes. Eventually, the project is abandoned, and the investment goes down the drain.

So where did it all go wrong? Let’s analyze this through a real-world case study.

Case Background

A mid-sized machinery manufacturing company in Jiangsu, with around 300 employees and annual revenue of 200 million RMB, decided in 2021 to implement a well-known ERP system. The CEO encountered the vendor at a trade show and was deeply impressed by their vision of a “digital factory,” believing it to be the key to upgrading the company.

He promptly approved a nearly one-million-RMB investment in the system and instructed all departments to cooperate.

One year after go-live, the outcome was disappointing:

• The finance department still relied on Excel for bookkeeping.
• The procurement team only used the system to go through motions—no real data analysis.
• The shop floor ignored the system entirely, continuing to rely on handwritten work orders.

The CEO lamented:

“We spent so much money, and we’re back to square one.”

The Root Cause: Five Fatal Misconceptions

1. Treating ERP as a “Cure-All”

Many business leaders believe that buying a top-tier ERP system will magically solve all management issues. But ERP is a tool, not a magic wand. It cannot replace sound management thinking or processes—it can only support them.

2. Lack of Internal Driving Force

Even with the CEO’s buy-in, project execution was left to the IT department. Business departments were disengaged or even resistant, turning the system into an isolated island. With no real business flow, the data was meaningless.

3. Unclear Management Logic

ERP requires standardized processes, but many companies still rely on person-driven management rather than system-driven approaches. Without process reengineering before implementation, ERP simply doesn’t stick.

4. Inadequate Training and Change Management

Most ERP vendors focus on “go-live delivery” rather than business transformation. Employees don’t know how to use it, are afraid to use it, or outright reject it—leading to a system that’s virtually useless.

5. Overemphasis on Price, Neglecting Fit

Many CEOs are drawn to big-name vendors, but fail to consider whether the system suits their current management maturity. Misaligned solutions are like putting a luxury car into a muddy road—it just doesn’t work.

Conclusion: ERP is a Mirror—and an Amplifier

ERP systems don’t automatically bring efficiency. They amplify the existing level of management and execution. For poorly managed businesses, ERP only exposes more chaos. For well-managed ones, ERP can be a powerful booster.

Before implementing an ERP system, business leaders must ask themselves:

• Are our processes standardized and well-defined?
• Can departments truly collaborate and drive change together?
• Is this system really a fit for our current capabilities?
• Are we ready to shift from person-driven to system-driven management?

ERP is not a one-time purchase—it’s a systematic transformation. Only when leaders grasp these key truths can ERP become a genuine force for business growth, rather than an expensive “digital ornament.”