I’ve been working with several of my New York Institute of Technology MBA students in various practicums I’ve setup. I’m finding a lot of them have extensive backgrounds and studies in supply chain management. For someone who consults with many corporations, both large and small, I must admit that when they started using terms like ERP and MRP, I had to look them up.
All manufacturers, big or small, need Material Requirement Planning or MRP software. An MRP system intends to simultaneously ensure raw materials are available for production and that finished products are available for customers. MRP systems also help production managers maintain the lowest possible levels of raw material as well as products in-store. MRP systems also plan manufacturing activities, delivery schedules and purchasing goals.
According to Wikipedia, Joe Orlicky developed the first Materials Requirement Planning system for Toyota in 1964. The first company to use the system was Black and Decker. This computerized inventory system must have seemed like rocket science to those companies still using paper management.
In my offices, I use Mac software. When I recently upgraded my operating system, none of my Adobe and Microsoft programs worked. Even though I had purchased them outright, I was told I would be forced to use a cloud-based system with a monthly charge. I suppose this is how these guys make a living. But like everything, life is not always a bunch of roses. I remember having two staff members try to find me an affordable Customer Relations Management (CRM) package that would fit my investor backend needs. There are lots of them out there, but they are expensive. I’d have to fire both of my assistants to pay for the customized implementation. Seriously?
Now, my situation requires me to do some workarounds, cobbling together software. It gets the job done – but poorly.
But I had to ask myself: what MRPs and CRMs do small manufacturers use to manage their sprawling networks? I knew it would become a maze of customization as soon as I started to investigate.
I specifically focused on the small guys. I can relate to them better and figure if my CRM nightmare cost tens of thousands, how much would a robust MRP cost? If you go by the numbers, Fishbowl and Oracle NetSuite are at the top of the list. Command Line Corp’s (CLC) MRP lists a ‘starting’ license at $100,000. Active ERP charges $6,000 per user, and Acumatica ERP bills you a princely sum of $12,000 a year. According to the MRP Software Buyers Guide, MRPeasy ranks very high on the list as a popular, easy to use and inexpensive MRP software starting at $49/month. MRPeasy, a software-as-a-service production, planning and warehouse management tool, is popular among small and medium-sized organizations. The main goal of this solution, as well as other MRP options, is “What is the actual production cost, and when will the order be ready?”
The vast number of complex solutions in the industry is based on the complex nature of manufacturing. Take the garment industry. It has different sizes and colors that cry out for a unique matrix to handle it all. The food industry has different SKUs plus ‘Best Before’ issues. MRPeasy relishes facing these issues.
I spoke to MRPeasy CEO Konstantin Klugman about their product and others in the manufacturing industry. I asked him about add-ons, and whether consultants needed to install what had to be a complex array of parameters. Mr. Klugman said the software ‘out of the box’ is ready and intuitive to use. He said anyone could use the full software as a trial, and once the trial is over, stay with the full version. There’s no ‘lite’ version to try; you get the real thing.
MRPeasy is dedicated to small businesses. Their vast client base covers over 30 industries. They were one of the first to embrace cloud-based software and realized that listening to their customers was essential to the software design. Mr. Klugman said most MRP software is too complicated for the average company, requires third-party contractors to configure the add-on modules and the price? Well, it’s obvious.
I’m told that some of these programs take years for users to get comfortable using effectively. Oracle developed its software for larger companies, but third-party developers created the add-ons. This adds plenty of confusion. Reviews of Oracle NetSuite illustrate its lack of user-friendliness, with one customer saying, “Everything seems to need customization, it’s daunting.” Reviews of Fishbowl are no better. People feel its menu and navigation is “convoluted.” Some users say it “works well until you try to customize it.”
MRPeasy told me the core team comes from a financial and administrative software-as-a-service development background, which helps them understand customer demands. The company is well respected for its software development, so when customers approached them for MRP solutions, they “decided to look into it,” according to Mr. Klugman. A Microsoft solution they looked at in 2012 was around $60,000 for the cheapest license and, at a minimum, the same amount of money to the local distributor for customization and implementation. There had to be a better solution.
In 2013, they met with numerous manufacturers and brainstormed a prototype that would fit their needs exactly. Their first customer became their first investor, and the company hasn’t looked back. I find it very useful to talk to real users of the product. California-based Papa & Barkley, which produces and distributes THC- and CBD-licensed medical products, was becoming a victim of its success.
The company has grown from a staff of four in 2017 to its current level of 200 in 2020. In the government-regulated cannabis industry, Papa & Barkley’s COO Boris Shcharansky and supply chain system director John Schoenbeck realized that “nickels and dimes were being added to the length of production cycles,” and that increased business created several supply chain challenges.
Since working closely with MRPeasy, the ERP/MRP software helped reduce Papa & Barkley’s production cycle from 3 months to 2 months, and the accuracy of inventory from 60-70% to 99%. The 99% accuracy level may surpass most companies’ requirements but is necessary for California, where a 95% minimum accuracy level is needed per California cannabis regulations. Anything at 95% or below would require a justification report and reconciliation with the state.
One of the reasons for the company’s success with the software is MRPeasy’s ease of use. The MRPeasy system runs the firm’s entire supply chain on just four basic commands, according to Schoenbeck. “It’s the first time all of the staff are using a system like this,” said Schoenbeck. “We started with 30 people on MRPeasy in the production department, and it’s grown to 90, including procurement and logistics.”
Mr. Klugman thinks like a small business owner. He says he’s always been one, and he understands their needs. He says he has a mission to make life easier for manufacturers. They still listen to their clients for ways to improve their business and are quick to point out that they have always tried to create inexpensive software with no frills.
MRPeasy runs lean like its software, and with a top-down management style that is very much hands-on, the company is easily able to pivot and adapt to new customer demands. When you talk to this guy, you know he is for real. No nonsense and down to earth. He says his “team doesn’t do it for the money, and we get money anyway.” If only the big guys listened to their customers.
Gary Bizzo is CEO of Syphon Nanotech Inc., Bizzo Management Group Inc., and Bizzo Integrated Marketing Corp. in Vancouver. London-based Richtopia placed Bizzo on the Top 100 Global Influencers in the World for 2018. He is an Adjunct Professor of Integrated Marketing & Communications as well as Consumer Behavior at the New York Institute of Technology, MBA School of Management (Vancouver Campus).
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Equities Contributor: Gary Bizzo
Source: Equities News
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