How to Choose the Right MRP System
Until recently, small manufacturers had been stuck between a rock and a hard place.
On the one hand was the choice of working with overly complex webs of Excel spreadsheets, and on the other were the expensive ERP systems of the big players.
It’s not been an easy ride.
Thankfully there are now affordable Manufacturing Resource Planning systems (MRP) available to meet the needs and budgets of growing manufacturers.
Most businesses implement MRP software when they want to rid themselves of the back and forth between overly complex webs of spreadsheets.
That doesn’t mean that all the systems on the market are worth your time though.
Here are 8 key factors that you should consider priorities when choosing the right MRP for your small manufacturing business.
1. ERP vs MRP
Before even coming across the term of MRP, often people come to ERP first. It can be confusing to get to grips with when pitting ERP vs MRP systems.
ERP stands for Enterprise Resource Planning and the difference between the two really comes down to the scale of your business. The E for “Enterprise” should be the giveaway that these are systems designed for big businesses with over 500 employees.
They offer solutions that are tailor made for the complexity of corporations that require heavy-duty data management.
So, why not go for what the big players have got? They must know best right?
Well, they might know what’s best for them, but not what works best for you. This software is incredibly difficult to get a hang of and a greater issue is that they cost upwards of 25,000 dollars a year.
As a small manufacturer that’s a lot of money to spend on software.
Which is why you want to stick to MRPs which have been designed for similar purposes as ERP but on a smaller scale, with the features that you really need.
2. Taking Control of Your Inventory Should be a Priority
A good MRP keeps track of your stock.
An exceptional MRP gets your inventory to optimal levels.
What you want is software that’s going to provide you with live inventory control that guides you to making purchases at the ideal times.
This way the benefits of achieving optimal inventory are twofold:
-Excess stock is reduced, which cuts on carrying costs;
-You won’t run out of stock, so no more delayed deliveries.
That means you need to look for software that keeps track of raw materials and products, sets reorder points for when they are low and has the capability to make stock adjustments in real time.
If all these features are present, you’re onto a winner.
3. Strong Production Planning Capabilities is Key to MRP
Planning your production and resources is a two-sided coin.
Both heads and tails need to be balanced to achieve maximum efficiency.
One side of the coin is finding an MRP which will help you schedule your operational and human resources. This means that your team are focused and do not get overwhelmed, mean whilst your machinery won’t be double booked.
Scheduling tasks for your team might not be something you expect from an MRP, but human resources are as critical to your operations as your material resources.
The other side of the coin is prioritizing your productions. A smart production scheduling software will give you the control to rank manufacturing jobs whilst automatically considering the material availability.
Make sure that both sides are covered.
That way you can save money by keeping an efficient schedule and are also able to make changes to your production according to demand.
4. Find Software that Gives You Accurate Costing
One of the most desirable features of MRPs this year was production cost reporting, and there’s good reason too.
Keeping track of your costs can be mission impossible using spreadsheets, especially if the cost of raw materials is not consistently stable.
Finding the right MRP can help you gain accurate costing, and this in turn will allow you to make better pricing decisions that are based on real product margins.
There are two key aspects to look for:
-The capability to create multi-level product recipes with sub-assemblies; and
-Product recipes that track manufacturing costs as well as the cost of materials.
Having both elements will give you complete and up to date bill of materials so that you can sell products at the right price.
5. Get Complete Order Fulfillment Cycle
MRP should make your life easier.
The more elements of your order fulfillment it covers the better.
Look for a software that makes sales, production and inventory one seamless flow. This is going to maximize the use of the system and reduce the amount of work you have to do with it as more features will be automated.
MRP that has a complete order fullfilment cycle is likely going to give you the flexibility to make to order or make to stock depending on your manufacturing needs.
So, if you have a dedicated sales-team for example, they can then use these tools to create orders themselves. On top of that they will know the completion dates without having to be in constant communication with your production team.
The perfect solution is a system that integrates your entire workflow from a single dashboard.
6. Look for the Important Integrations
Most small manufacturers use multiple online services to meet their needs, whether it be for accounting or sales.
Ideally you want to find an MRP that integrates with a solid e-commerce platform like Shopify and an accounting software like Quickbooks.
That’s going to make a critical difference to the manufacturing seller, as it means that you have full visibility of stock, production and sales.
7. Friendly Face Matters
One of the beauties of having an MRP system is that it can be used by different members of your team while reducing miscommunications between them.
That’s why you want software that is understandable by all the people who use it.
Whether you’re someone that uses it every day or only needs to check on things once in a while, the interface should be friendly enough to be accessible to both.
This might seem superficial, but the reality is that if a system looks simple then there’s probably been effort put in to make it easy to use as well.
It will reduce a lot of anxiety in your company if you go for a colorful solution rather than a mind-numbing program that looks like it jumped out of the 90’s.
8. Go for Cloud-Based Software If You’re Looking to the Future
As well as it being user friendly you also want your MRP to be accessible anywhere by anyone. Cloud manufacturing software means that anyone in the business including yourself can have full visibility no matter where they are.
Let's say for example your production manager goes away for a week-long conference. As long as they have internet access, their trip will not disrupt your business workflow.
Remote work is on the rise, and this is a solution which gives your team the flexibility to work away from the office.
Just make sure that you also get an MRP that also offers solid customer support. You want yourself and your whole team to feel assured that they can always get the assistance they need.
Following these criteria should narrow your list of available MRPs quite dramatically. There aren’t too many that are going to nail all of them on the head, so prioritize what is most essential to your business.
It’s important that you choose the system that works for you, and that also has a vision which matches yours.
Ask them questions and see how they respond, that should give you a good sense of if they are the right fit.
The time you send on research will not even be comparable to the amount of time and money you will save after you implement.
Take your time, search for the critical factors, ask the right questions and you should be well on your way to finding the right MRP system for you.