5 minute read • published in partnership with Flowlens
Insight: The benefits small equipment manufacturers get with MRP software
For small manufacturers, the benefits of new systems including MRP software has to be considered carefully. There are risks to be aware of and rewards to reap from more efficient ways of working. Happy customers are profitable customers. They buy more and refer more. But poor systems and processes can get in the way of delighting customers. Rich Dale from Flowlens explores some of the main benefits of adopting cloud manufacturing tools with MRP software for your equipment manufacturing business.
Forecasting material demand and avoiding shortages
The worst outcome is a disappointed customer, and disappointment usually comes because manufacturers miss promised deadlines.
Delays typically occur because vital components are not available at the right stage of the production process. Long lead time items hidden in the bill of materials can play havoc with promise dates, never mind the cash tied up for longer than needed in work in progress.
Cash is king for all companies, but the pain is felt most by smaller manufacturers. The benefit MRP systems bring is the data from your order book and bill of materials that highlights stock/inventory requirements. In particular, these show the components that need to be ordered or made in order to ensure deadlines are met.
Build it right first time
There is nothing worse than delivering on-time, but then discovering there has been something missed in the spec, usually something that was written down or shared verbally.
Manual systems and processes are often ‘fuzzy’ and cause errors and communication problems.
Manufacturing software, linked to sales quotation and order processing functions can help ensure that the requirements offered to and agreed by the customer, and the requirements that make it into production. Manufacturing CRM tools generate the actual bill of materials for a customer order based on the products and options chosen. These requirements feed directly into material requirements planning and production tracking.
You benefit from clear material requirements, your customers benefit by getting the product they ordered!
Order components and materials efficiently and just in time
Many equipment manufacturers struggle to cross reference current stock levels with new demand, as well as lead times for items. This leads to:
• Excessive stock holding of slow moving items, tying up cash and often resulting in write-offs
• Piecemeal ordering of items on a per job basis, resulting in wasted time or overpaying for items that could enjoy bulk discounts
• Paying for expensive components before they are needed, tying up cash unnecessarily
Address these problems and your bottom line feels the benefit. MRP software for small manufacturing businesses usually includes Purchase Order functionality built-in. It can reduce these problems by giving you a clear picture of your current demand versus available stock, overall demand across all jobs, and indicate lead times for items that can be purchased just in time.
A further benefit you’ll find in some small manufacturing MRP systems are Approval Limits and workflows. This enables owners to control the issue of purchase orders to suppliers by person and or monetary value.
Bill of materials management
Many small manufacturers struggle to keep on top of the latest and most accurate versions of their product and sub-assembly bills of materials. In many cases this information isn’t stored, but remains in someone’s head. This is a huge risk, if that knowledge leaves the business, even for a week’s holiday!
MRP systems can benefit small machinery and equipment manufacturers by capturing and maintaining up to date bills of materials for finished goods and sub-assemblies. With version control and historical information you have a record of changes and customer order patterns too.
For example if you need to find orders for a certain version of a product and refer to the bill of materials active at that time, how easy would it be with your spreadsheet based systems?
Benefits of MRP software for small businesses also include traceability of serialised parts and finished products, another task usually handled on spreadsheets.
How often have you had to trace back through emails and spreadsheets to find the serial number of a faulty component? The process of adopting MRP software usually provides the added benefit of structuring your parts, BOMs (bill of materials) and product serial number data to create a clear and consistent method that the business can follow.
Accurate material and job costs & profitability
MRP software will track the materials and labour used on each manufacturing job, dispelling the frequent mystery of how much individual jobs are contributing to the bottom line.
By enabling real-time allocation and stock adjustments, it becomes easier to track actual material usage, rather than relying on after-the-fact manual stock reconciliations.
Parts and supplier management
Keeping on top of parts data is a time consuming job for most equipment / machinery / plant manufacturing businesses. Parts lists are usually spreadsheet based and require a lot of maintenance to avoid the kind of errors and discrepancies that eventually lead to shortages in production.
On top of this, there is very little time left to review and challenge supplier performance. Information about supplier delivery performance as well as price competitiveness is not readily available when manual systems are in play.
Small manufacturing companies benefit from joined up stock management, MRP / requirements planning and purchase order processing which provides supplier performance information, on-time (or not) delivery data, returns etc at the touch of a button. Furthermore, supplier price fluctuations can be hard to track over time, but these variations can also be easily spotted when data is captured in a structured and easy to interrogate way.
Trust your financial data
With sales pipeline, orderbook, purchase ledger and work in progress data often spread over various independent systems or spreadsheets, small manufacturing businesses can struggle to get real-time and reliable information. This leads to cashflow constraints, either because orders are delayed, or cash is committed to inventory for longer than needed.
Modern MRP forms part of integrated suites of tools designed to benefiting owners, managers and team with one centralised business management system. Current order book, future pipeline, purchase orders and work in progress can be monitored live in one place, enabling better budgeting, smarter decisions and less stress.
Release time for more valuable work
MRP Software and related systems provide other less tangible benefits that usually make the difference to business sustainability and growth in the longer term.
Whether it is company directors who still spend hours in manual spreadsheets for operational or reporting reasons, or team members who spend hours every day chasing purchase orders, MRP software saves time across a small manufacturing business.
Not only does this release time for more valuable tasks, it reduces dependence on manual admin resource allowing the business to become more sustainable.
Small Businesses who invest in MRP systems typically benefit from higher morale and job satisfaction. Employees are able to spend more time on valuable activities instead of boring, repetitive and frustrating administration.
Successfully deployed MRP software, often linked to sales and accounting systems, makes it easier for people to do a good job.
Even when things go wrong, the systems and processes that MRP software instils can help the team identify and address problems faster.
And a happier team means happier customers.
Small manufacturers reap many benefits of MRP software
In summary, if you are ready to put old and disjointed ways of working to one side, MRP software has many benefits, transforming small manufacturer’s processes and improving communication. This reduces strain on the owners and team, reduces errors and gives better outcomes for customers.