Konstantin Klugman, managing team member of MRPeasy, explains the benefits to be gained by SMEs from cloud-based manufacturing ERP.
It isn’t easy being a small manufacturer, especially one with ambitions for growth. Free cash is in short supply; so are staff, who are multi-tasking all the hours of the day. To break into a market, a company must outperform competitors – not just on price and design, but also on quality, delivery, reliability and agility. There is production to be planned, materials to be ordered and suppliers to be managed. Furthermore, you have to meet all legal, regulatory and contractual requirements with a fraction of the resource available to your larger competitors.
Somewhere among all this day-to-day activity lurks a bigger picture. How is the business really performing? Is the company sticking ‘Band-Aids’ on problems that will only escalate? If bigger orders come in can the company scale up? What does this mean for our growth and development strategies?
In the start-up phase, managing all this is often quite informal. Managers, indeed the whole workforce, can see what is happening and what needs to be done. But beyond some growth point, all this can no longer be carried in people’s heads, on backs of envelopes, or even on simple spreadsheets. And if the company is going to trade at any level much above that of a cottage enterprise then investment in systems is at least as important as manufacturing investment if the company is to demonstrate its credentials as a serious operator to commercial buyers.
For most manufacturers, the backbone of a system is an MRP/ERP platform. This brings together in a single place all the information and activity around production planning and execution, stocks and inventories, customers and orders, suppliers and purchases, costs and finances. It gives management visibility of what has happened, what is currently happening, and what needs to happen in the future.
But many small firms believe that ERP is not for them – it is strictly for the big boys. Notoriously, ERP systems are complex, with functionality that has little relevance to small
users. They require specialist expertise to be tailored to a company’s needs, which may be uncertain in a fast growing business, and staff have to be recruited or trained.
And then there is the cost, which may represent an alternative investment for a company deciding, for instance, to install an additional production line.
However, The State of Small Business Britain 2018 report by the Enterprise Research Centre recently found that, contrary perhaps to popular opinion, small businesses are ‘up’ for technology, prepared to invest in everything from productivity software to accounting and inventory software. It says that the “appetite for new tech is strong – a quarter of SMEs predict an acceleration in spending on new tech. But cost is the barrier to adoption, by a long way and in all cases”.
But in truth, this view of ERP as complex and costly is significantly out of date. Effective manufacturing ERP systems are now affordable, and useable, by all sizes of company.
In large part, this is because ERP is now available ‘in the Cloud’ and chargeable ‘As A Service’. This means that, on the one hand, firms no longer face the upfront capital costs of hosting their own system; on the other, that charges are more closely related to usage. Clients are not paying for features they don’t need (or don’t need yet). Costs are spread across a whole user base rather than separate clients paying for their copy of the software. Updates of the software, including new features, are permanently free of charge and with the software being hosted by the provider, infrastructure and administrative costs for users are eliminated.
Because users now opt-in to additional features as they discover a need, this has led ERP vendors in this class to make their products easier and more intuitive to use for manufacturing specialists. Far less initial staff training is required, and most reconfiguration – from creating a new report to on-boarding a new supplier – can be implemented by end users, without the requirement for an IT department or external consultant.
With the user rather than the ‘ERP specialist’ in the driving seat, vendors have had to create systems that are simpler, clearer, more intuitive and that can be used creatively. Users of MRPeasy, for example, can set it up to suit their company without many restrictions. It provides the ability to generate different scenarios, which gives a company the necessary flexibility to make intelligent choices about the business it takes on.
MRPEasy has been a leader in this sea change, offering systems that relate to the needs of small companies in terms both of costs and functionalities, and have the scalability to grow with the firm as it expands and its needs develop, for a long way into the future.