Do I need an MRP system and what type of system is best?

There comes a time with your current manufacturing system where you have to sit back and say, ‘is this really the best that we can do?’.

This thought process is often reached after a particularly painful experience, derived from one of three possible scenarios:

You are using a collection of spreadsheets and/or paper-based, manual systems
You have created and subsequently outgrown a bespoke system
You have invested in a ‘packaged’ system which is no longer fit for purpose.

Here we describe the initial benefits and drawbacks with each.

The limitations of spreadsheets

Almost every small manufacturer starts out by collecting and organising data in spreadsheets. And this is understandable because they’re easy to set up and in a format that most people can understand and use. However, keeping the information in them current can be time-consuming, and it’s challenging to ensure that everyone has access to and is working from the latest version.

Multiply this by the number of departments in your business that are creating similar spreadsheets, and you end up with complete fragmentation and open up plenty of room for error. Juggling multiple spreadsheets also makes traceability and forward-planning somewhere between difficult and impossible.

Imagine trying to perform an audit for a quality assessor. You need to prove when something was made, how, by whom and with what components. If your processes are manual or you use spreadsheets, then this information is likely scattered across your company, perhaps residing on individual hard drives, or at the very least buried across folders on your server.

The cost of using paper

We've established that electronic documents have their issues but move onto paper-based systems and the problems get even worse. Aside from the obvious issues such as paperwork getting lost, many lose sight of the fact that it takes a lot of manpower to 'push' paperwork around a factory.

Like spreadsheets, paper is only as up to date as the electronic file that it was produced from, so keeping documents in sync requires further resources.

Documents such as Works Orders often exist in multi-part format, with one copy destined for admin and the other for accounts. Obviously, this has an environmental impact and can often add a considerable cost over time.

One 123Insight user managed to remove several printers from their offices and factory because of the reduction in paper usage, while another moved from expensive bespoke pre-printed paper to 123Insight's customisable documents.

Many customers cite a 50% or greater reduction of paper after going live, as all staff can view documents such as quotes or works, sales and purchase orders online. Furthermore, any other document type can be automatically attached to these items, so you could send a product brochure PDF out with a quote, or a Certificate of Conformity (CoC) with a despatch note.

The pitfalls of going down the bespoke route

Companies often go down the bespoke route because they have already experienced the pain caused by spreadsheets and a member of staff has the capability to write something themselves. This will generally be highly customised to meet their needs.

Bespoke systems on the surface appear to offer the best solution – they are tailor-made to match every aspect of the company, its products and their methods of manufacture, but for many it's a case of reinventing the wheel and coming up with a square.

Production management systems often perform very complex tasks under the surface. As your business and its product range/methods of manufacture grow, the system needs to be able to expand to cope. That's fine if you have a team of competent programmers that can dedicate the time to code, test and roll out new features in a controlled manner and provide a level of redundancy and support going forward.

In the real world, of course, this is not how it happens. It'll often be one person within the company that already has a role (often quite senior), that has enough experience to develop something usable. It might cover stock control, quoting or basic production management, but rarely does it cover the realms of true MRP.

Maybe it was designed in the days when your company focussed on small batches, but now you're into mass production with a wide range of components and complex bills of materials. Purchasing becomes a nightmare and processes that were fine when there was only a small order to deal with gradually become extremely time-consuming.

Bespoke MRP software may meet your needs but will be more difficult to upgrade or replace.

The MD of an electronics company had developed an Access database to handle purchasing. After rapid expansion, the company won an order which subsequently took two weeks to raise all the purchase orders for using the bespoke system. 'I'm never, ever doing that again' were his comments, as he started to research MRP, found 123Insight and was live just seven weeks later.

When packaged MRP/ERP systems fall short

A packaged system is essentially an off-the-shelf product that should meet most of your needs. Traditionally, you would purchase the software and then spend a considerable sum on consultancy to bend it to meet your needs. You can also expect to add an additional 15-20% of the software cost every year for maintenance/support.

Companies often then find they need to pay extra for additional customisation, plus whenever a major new version appears there will be an upgrade fee plus engineer time associated with installing it.

As companies implement these package solutions, they find they must modify their processes, sometimes with detrimental effect, just to accommodate the system, rather than the other way round. A good system is designed to meet the needs of its users with minimal or no customisation.

There is also the 'rusted handcuffs' problem. Companies implement a system only to find that the product is discontinued a few years down the line or, worse still, the vendor has gone out of business.

Suddenly you find yourself tied to a system with no prospect of an upgrade and potentially no support for any problems. If there is a new version – perhaps based on an entirely new platform – the cost often compares to buying an entirely new system, and of course you can expect to pay huge consultancy fees to migrate your system over.

Packaged MRP/ERP systems can require companies to modify their processes to fit the system, not the other way around.

An electronics company had been working with a DOS-based MRP system since the 1990's. They upgraded to the latest Windows version in the mid-2000's (at considerable cost) only to be told a few months later that the product would be discontinued. They were only able to select 123Insight due to its subscription model, having already spent a large amount on the previous system's update, and were live in just 7 weeks.

The solution is 123Insight

In today’s competitive manufacturing landscape, outdated systems—whether spreadsheets, paper-based methods, bespoke solutions, or inflexible packaged software—can create serious bottlenecks that hold your business back.

If you've recognised some of these issues within your own company, then it's time to start considering a new system.

123insight MRP software helps manufacturers move beyond outdated, manual processes to a more efficient, scalable, and adaptable production environment. It falls into the 'packaged system' category but differentiates itself through its flexibility and core functionality tailored to meet the needs of modern manufacturers.