What is warehouse management? How can your company benefit from warehouse management? What is the difference between inventory management and warehouse management? 

Warehouse management is increasingly important for companies to fulfill the promises they make to their customers and to be able to save more time and allocate money to other areas of the company. Let's start from the essentials:

What is warehouse management?
It is the logistics process that is responsible for receiving, accumulating, moving and maintaining any type of material, such as:

  • Raw material
  • Semi-finished products
  • Processed products
  • Safeguard machines and equipment  


In addition, warehouse management is also responsible for planning the storage of these products in a location, planning the movement, the supply and keeping the exact control of the stocks that are so important to produce more and sell more.

Is there a difference between warehouse management and inventory management?
Actually, both are based on the same idea with the difference of complexity, that is, the size of your company:

If you have a small business, inventory management tells you how many units of the product you have a place. If, on the other hand, you have a slightly larger company or you are a manufacturer, you will have to deal with more complex tasks such as knowing how many products are finished and how many are in half, knowing how many are defective, doing maintenance work on the site where it is stored and all the tasks related to it. Inventory management is also known as stock management or stock management.

As the company grows, the need for multiple locations grows as well and the inventory management tasks for each of the locations becomes more and more complex. That’s where warehouse management comes into place.

The general tasks of warehouse management are:

  • Input and materials, supplies and products 
  • Supply to production 
  • The exact location of the product in the warehouse 
  • State of the product or material (finished, almost finished, etc.) 
  • Product characteristics (Size M, green color, version 40 GB, for example) 
  • Identification and labeling of the product 
  • Product photos 
  • Movement of operators 
  • Machines commissioned (forklifts, cranes, etc.) 
  • Connected with the sales department to update availability 
  • Distribution of products inside and outside the warehouse 
  • Quality management 
  • Warehouse maintenance plan 
  • Security plan 
  • Control of expiration dates


The task of warehouse management ends when the item leaves the warehouse (even if they take data like who, when and where they took it).

What does the management of a warehouse do for your company?

In a simple way:

  • Prevent you from spending a lot of time looking for a product and making faster deliveries 
  • You control all the movements of the product in your warehouse to avoid damage, theft or expiration of your stocks 
  • Control of production so as not to saturate the warehouse 
  • Send updated information to sellers, e-commerce store, ordering system to suppliers, production, etc. 
  • Avoid mistakes when identifying products 
  • Avoid hiring staff for these types of tasks 
  • You reduce time and money that you can use for other value-added activities.


The problem with warehouse management is that it represents a cost that does not add final value to the product. So optimized management is vital so you can have more competitive prices in the market. To achieve this task, I recommend you use ERPAG, an inventory, manufacturing and warehouse management software, that enables you to have multiple locations and manage your stock in each one of those locations!



To read more about what falls under the warehouse management side of Erpag, refer to the following links:
https://learn.erpag.com/project/products-and-services/untitled-3/warehouses
https://learn.erpag.com/project/create-new-product-1/move-inventory
https://learn.erpag.com/project/create-new-product-1/untitled-4/basic-definition/minimum-purchase-quantity/transfer-fulfillment




ERPAG 5.1

Make-to-order vs make-to-stock

What is the difference between make to order and make to stock?
Which business model fits better?
When should we use one or another?
What are the pros and cons of using make-to-order and make-to-stock?


Few introduction words...

These are just some of the questions that we ask when planning our manufacturing process.
In the startup phase more or less everything goes based on intuition and experience, but later we need to wisely choose between two models. At first sight, there is no obvious difference but when we analyze more deeply, we can see very important differences that can save or lose a lot of money during the curse of time. First, let us explore the features of each approach.



MAKE TO ORDER

We are sales beasts. We optimized all our sales channels and marketing is driving our sales. Numbers are skyrocketing and orders are just pouring into our sales module. Everything is bright and shiny.

Except in manufacturing.

Our shop floor guys are stuck in production. Raw materials slots in the warehouse are empty, and work order queue on our CNC center is longer than a black-Friday rush in front of our favorite high-tech fruit logo store.

As you can see from this disaster scenario, there are some pre-requirements that need to be meet up in order to run our manufacturing smoothly. Don't get me wrong - fortunes are made when built to order process is fine-tuned.

And what do we need to ensure in order to keep things under control? Okay, it is not a top secret and we like to share knowledge - isn't that the reason why we are writing this in the first place? :)

So, here they are - the top 5 must implement features if you wish to run your "build-to-order" manufacturing smoothly.

First, (Orwell would like this one) - Monitoring, monitoring, and monitoring.
You need to have eyes and ears in each corner of your shop floor. You need to know exactly where are you standing with your inventory levels, are machines operational, and to manage your supply chain on the top level. Why? Because you don't want to disturb your manufacturing process, especially if you are a small business and your resources are on a high demand level.

Second, Flexibility.
You need to have flexibility built into the DNA of your manufacturing process.
You need to be able to shift gears, speed up one order and put on hold another.

Third, the Fulfillment process.
Your procurement team backed with the help of an MRP/ERP Software should be able to react quickly on new demands and deliver goods on time and in right places, of course, with demanded goods, so your RMA is not overheated.

Forth - you still need Safety stock to ensure JIT (just in time) delivery of goods. And that's a touch of art. Too much can put you in the trouble by tying up financials and producing an unnecessary cost, on another side - not enough can produce additional cost in transport and brake the deadline.

And at last - the last one - fifth, Synergy between the dynamic components of your manufacturing system.
This one is about building a team that likes to work in dynamic conditions, that is fast to respond and whose team members are ready to jump in for one another.

Benefits:

  • Customer satisfaction
  • Optimized costings for transport and warehousing
  • Fast reaction to market terms

Risks

  • Inefficiency
  • Wastage
  • Deadlines 



MAKE TO STOCK


Okay. If "make to order" is for acrobats, then make to stock is for the fortune tellers.
This is the perfect manufacturing process if you have a crystal ball and you know how to use it.

Joke aside, yes, that is just what you need in order to successfully run your make-to-stock manufacturing. If you are wondering why - I'll tell you why:

This type of manufacturing is driven by FORECASTING. Which means that you need to have strong capabilities to predict the demand based on previous sales. Usually, from the small business perspective, these are monthly, quarterly, half-term, and yearly cycles.
It is achievable, but you need to take into account a lot of variables and you need to work in a stable economy.

If the economic terms are fluctuating then you need to guess when and what to expect (and if you are good at guessing, then you better move to Wall Street ;) ).
In order to have good forecasting, the software system must have great reporting.
"Statistical data", "business intelligence" and "AI-driven" are just some of the terms that you will get used to.

You need to possess the right assets, in terms of knowledge, to really understand trends and set your goals.

And, the last but not least, is your art of seduction - for the great relationship with your vendors.
You depend on them, usually, these are long term contracts and you need to choose the right suppliers to keep your shop floor running



Benefits

  • cost decreasing using blanket PO and other long-term suppliers contracts
  • cost consistency
  • more stable environment
  • predictive machines maintenance cycles
  • overall less stressful environment
  • better efficiency

Risks


  • stockpiling caused by bad planning
  • manufacturing interruptions
  • slow "market" response time

Now, once you have all the facts, it's up to you to decide: which member of the Circus are you?














Magento & ERPAG integration


The era of the overall digitization and crossing of business from paper to digital media has brought many benefits and accelerated the development of companies. The phenomenon of the CLOUD Internet service and the enabling of business without the physically present borders additionally contributed to that development. Sales on the Internet have been growing for years, and the number of services that enable this kind of sales every day is growing. Magento is one of these services.

In order to enable ERPAG users to sell through Magento services, ERPAG has made it possible to connect between these two services using the Magento API (Application Programming Interface) version 2.3. Therefore, to securely connect ERPAG and Magento, you need to have Magento version 2.3 or higher installed.

By connecting ERPAG and Magento, the user receives the following benefits:


  1. Complete Inventory Management (Sales, Procurement, Stock Status, Production, Ordering, Packaging and Shipping) on the ERPAG page
  2. ONLINE sales from Magento
  3. Updating items in Magento (sending from ERPAG)
  4. Updating quantities (stock) in Magento (sending from ERPAG)
  5. Update items in ERPAG (download from Magento)
  6. Download Sales Order from Magento to ERPAG

In the synchronization process, ERPAG relies solely on the SKU. So, if you already have items defined in Magento, check that each product and its variation have a unique SKU.

Preparing and setting up Magento

The first step for successfully connecting ERPAG and Magento is to create a new Integration (an account that will have access to the Magento API). Open the browser and log into your Magento. Then click on the "System" link as shown in the picture and select the "Integrations" option.


The next step is to create a new integration by clicking the "Add New Integration" button.


Enter a name (the name may be arbitrary, but it is a recommendation to enter a name that will refer to the application for which you are creating the new integration). You must also confirm the new integration by entering your password.


In the same form in the API - Available APIs option in the dropdown list, select the "All" option, then save the changes and activate the new integration.


Then activate the Allow button.


After creating a new integration, Magento will generate tokens from which ERPAG needs only the Access Token data.


Record the text file with Access Token somewhere because you will need it to enter ERPAG.


Preparing and setting up ERPAG


In order for ERPAG to communicate with your Magento store, you must enter the previously obtained Access Token in ERPAG. Log into ERPAG using your ERPAG account and activate the "Web Shops" option from the "Sales" menu.


The next step is to open a new Web Shop.


In the following form, besides entering Magento Access Token, you need to set up the synchronization mode. How data synchronization will take place depends on your business process and varies from case to case. That's why we will explain each option in detail and you will decide for yourself which model suits you best.


Panel – DOCUMENT HEADER

In the Description field, enter the name of your Shop. This name will later be displayed through the synchronization process, and in this way, you will know which Magento account you are synchronizing with.

In the Synchronized field, enter the starting date and time from which ERPAG will begin to download Sales Order. Later, upon each synchronization, ERPAG will correct this information on the date of the last Sales Order taken over.

In the Status field, you can turn on or temporarily turn off the sync with Magento.

In the Update qty to webshop field, select whether you want ERPAG to update the stock status in your shop.

Panel – API-SETTINGS

Enter the Access Token, and the URL, and then press the VERIFY button to verify that the API data is entered correctly. It is recommended that you use a secure URL, or that the URL starts with https: // instead of http: // in order for the communication between ERPAG to your Shop to be encrypted. At the same time, if your Shop works through an unsecure http: // protocol, there is a possibility that certain options will not work.

Panel – CONFLICT RESOLVER

At the beginning of this instruction, we said that ERPAG is synchronizing with Magento by searching products based on their SKU. When the SKUs are different, the following processes will be performed:

  •           In case the SKU exists in Magento and does not exist in ERPAG, ERPAG will download and create a new Product in the Product and Services list
  •           In case the SKU exists in ERPAG and does not exist in Magento, ERPAG will create a new product in your Magento

Conflict resolver is essential in the situation where identical SKUs are found on both sides.

In the Product field, you can choose which side to win, or which data will be valid:
  • ERPAG win - means that the product found in ERPAG will be considered valid and the product in Magento will be overwritten with the one from ERPAG
  • Webshop win - means that the product in Magento will be considered valid and the product in ERPAG will be overwritten with the one in Magento

In the Price field, you can choose which side will win as far as the selling price is concerned:
  • ERPAG win - means that the selling price for the product found in ERPAG will be considered valid and the selling price for the same product in Magento will be overwritten with the ERPAG price
  • Webshop win - means that the selling price for the product found in Magento will be considered valid and the selling price for the same product in ERPAG will be overwritten with a price from Magento 
  • Ignore - denotes ignoring the prices defined in ERPAG and Magento, i.e. prices in ERPAG and in Magento remain as defined


      When you have completed all the necessary settings (according to the needs and specifics of the Shop itself), you need to click on the SAVE button to record the changes.

      Since both Magento and ERPAG allow you to work with more Stores / Warehouses, after recording the changes, a new panel will appear where you can define (pair) the Magento Store with a specific store in ERPAG. Activate the "Edit" option and pair the appropriate Magento Store with the ERPAG warehouse.


After choosing a warehouse, record the changes.

Setting up items for synchronization in ERPAG

ERPAG allows you to create and select the products you want to synchronize with your Magento Store. Creating a product in ERPAG is already described on the following link: https://learn.erpag.com/project/create-new-product-1/untitled-4/basic-definition and in this manual we will only show details related to Magento.
So, go to the Products and Services list and activate the product you want to synchronize with your Magento Store.


From the dropdown list, select the web shop with which you want to synchronize (if needed, you can also select multiple web shops).

By choosing one or more web shops, a special panel for each web shop will appear on the form.


In this panel, you can define all the parameters necessary for sending to Magento. ERPAG will offer you some default values, but you can correct them at any time. The only information you cannot select is SKU. The SKU must be identical on both sides so that the synchronization process can function at all.

Name - may be different from the name of the item defined in ERPAG

Attribute set * - select the appropriate set (required field)

Price - enter the desired price for the product. If the price is not defined, ERPAG will enter the Default price

Categories * - select one or more appropriate categories (required field)

Status - you can select "Enabled" or "Disabled"

Visibility - you can choose "Not Visible Individually", "Catalog", "Search" or "Catalog and Search".

Description - you can enter a detailed description of the item

Short description - you can enter a short description of the item

In addition to the above-mentioned data from the web shop panel, ERPAG will also take the following data:
  •          Gross product weight and
  •          Unit of weight measurement


When the settings are complete, record the changes by pressing the Save button.

* Note: Magento and ERPAG do not have the same structure and functionality related to product properties and product categories. When defining a product in Magento, you have to choose the Attribute Set as a set of multiple different attributes (properties). ERPAG has no such approach, i.e. the products in ERPAG have no properties sets. Also, Magento allows the product to belong to several different categories which is not possible in ERPAG. Because of these specifics, product properties and product category in ERPAG do not match the Attribute set and Category in Magento.


Product Synchronization

After adjusting all the items you want to synchronize, you can synchronize that data with your Magento Store. From the Product and Services list, click the Web Shops button and then click on the shop with which you want to synchronize the data. Please note that ERPAG will synchronize all products that are defined for synchronization, not just those that you just entered or selected in the list.


The synchronization process takes place as follows:

So, in the event that ERPAG during the synchronization determines that the data synchronization needs to be updated using Conflict resolver, you need to know the following:

  1. ERPAG reads the product list you have in your web shop
  2. Comparison of products from the Magento list and ERPAG list is performed, based on SKU
  • a) In case there is a SKU in Magento that does not exist in ERPAG, a new product is inserted into ERPAG
  • b) In the case that ERPAG has a SKU that does not exist in Magento, a new product is added to Magento
  • c) In case there is a product with identical SKU on both sides, comparison of other data (name, price, properties, etc.) is made.
  • i. If the data is identical, no synchronization is performed
  • ii. If the data is not identical, the correction of the data based on the Conflict Resolver is done

So, in the event that ERPAG during the synchronization determines that the data synchronization needs to be updated using Conflict resolver, you need to know the following:

  1. If ERPAG wins - the Magento data will be corrected in accordance with the information defined in ERPAG
  2. If the Webshop wins - the data in ERPAG will be corrected in accordance with the information defined in Magento

ERPAG will also adjust the price of the product according to the setting in Conflict resolver:

  1. If ERPAG wins - the price in Magento will be adjusted in accordance with the price defined in ERPAG
  2. If the Webshop wins - the price in ERPAG will be adjusted in accordance with the price defined in Magento
  3. If Ignore - prices remain intact, or each side keeps its prices

In addition to the above operations, ERPAG reviews other parameters of the individual product, such as Product Description, Product Short Description, Weight and Weight UOM. In case it is needed (on the Magento or on the ERPAG page), ERPAG will automatically create or correct the data in accordance with the Conflict resolver.

After synchronization is completed, refresh the list of products in Magento in order to see the synced data.



Sales Order Synchronization
Orders created in Magento that don’t have the status of Fraud, Holded, Canceled or Payment Canceled Reversal can be downloaded into ERPAG. ERPAG will not download the Orders automatically, but you need to be logged into ERPAG, go to the Sales module and then select Sales Orders. Now from the Sales Order list, click on the Synchronization button and select the wanted web shop.


The process of synchronizing and downloading Sales Order runs as follows:

  1. ERPAG downloads a list of all the orders you created after the last synchronization date (reading the Synchronized date in the Setup of the webshop)
  2. Reviews the products that are in the Order and, if necessary, synchronizes products with ERPAG
  3. Performs a customer check (by name) and if they do not exist, creates them in ERPAG
  4. Creates Sales Order in ERPAG and loads products with quantities and prices as they are in the Magento Order regardless of prices found in ERPAG

In the case that Orders created in Magento do not have customer information (name, address, etc.), ERPAG will create a Sales Order where it will write Point of Sale in the name of the customer.

In the case that there are Orders in Magento containing items that you have deleted in the meantime from the Magento Product List, ERPAG will create a Sales Order with a Draft status because it is unable to determine the exact contents of the Order. In this case, you need to activate the Sales Order and correct the content yourself, or to enter the correct products that should be in the Sales Order.



ERPAG 5.1
Supply-Chain-Management-Software


What is Supply Chain Management (SCM)? When and why do we use SCM software? When should one start using SCM? What are the 5 most important features of SCM?



When we try to answer the question of what is the supply management software, we need to give a business framework or our perspective.

It is not the same to investigate SCM from the perspective of an enterprise or a big business, as from the perspective of a small business. We will focus on SMB implementations and look at the SCM from the small business perspective.

by Investopedia definition Supply chain management
is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace. SCM represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains cover everything from production to product development to the information systems needed to direct these undertakings.

Today more then ever we can see the penetration of software and high tech into a real business. This software interconnection is a new bound strengthening the already established links between different entities in this process.

These entities can be recognized as:

  • Our company 
  • Suppliers
  • Manufacturers
  • Contractors
  • Transport

It also represents the connected network of all individuals, resources, activities, and technologies involved in the manufacturing and sales of a product or service. So, it is not by chance that the term used to manage all this was constructed.  

So with the process in place and the right software tool, we can expect to really manage the complete supply chain and, in the end, benefit from it. 

The core beneficial points are:
  • add efficiencies 
  • increase revenues
  • decrease costs
The need to control material flow and provide fluency grows on the priority list as a small business accelerates. There is a point in time where company growth is in direct correlation with supply management. The good thing is that we can very early see improvements in our company, resulting from the efforts invested in supply management.
In the short-term, all our inventory-related costs should decrease, such as:
  • manipulation cost
  • warehousing cost 
  • transportation costs
Now, we can feel more confident and with continuous investment in our supply chain management we will strengthen our operations and in the long-term, we should expect:
  • more reliable manufacturing 
  • better customer relationships
  • stronger supplier bondings
What are the 5 most important features of SCM?


Now let's see what are the core components/features of standard SCM software.

Inventory management 
for tracking and managing the availability of raw materials, stocked goods or spare parts. This feature can also help with asset management, barcode integration, and future inventory and price forecasting.

Order management 
for automating purchase order processes. For example, generating and tracking purchase orders, scheduling of supplier deliveries, and creating pricing and product configurations.

Forecasting  
for anticipating customer demand and planning procurement and production processes accordingly. Efficient forecasting can help remove the need to buy unnecessary raw materials or store excess finished goods on warehouse shelves, hence reducing costs.

Return management  RMA
for inspection and handling of damaged or faulty goods, and processing of refunds or insurance claims.


These are only the core modules, usually, software developers deliver industry-specific modules to round-up the business workflow.


For more information, here is the link to our user manual:https://learn.erpag.com/project/
and our blog: http://blog.erpag.com

And follow us on Twitter: https://twitter.com/Erpag
where we post our newest updates!


ERPAG 5.1

Reordering point and reorder formula


reordering point fulfillment


How do you calculate ROP? Do I have a reordering point in MRP software? Do ERP solutions support ROPs?


By definition, reorder point (ROP) is the level of inventory which triggers an action to replenish that particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such that, when the stock falls to this amount, the item must be reordered. (source, of course, Wikipedia https://en.wikipedia.org/wiki/Reorder_point)

As a manufacturer, seller, reseller, distributor, you want to have your items in stock always. When a customer places an order, you want to be able to fulfill that order ASAP.

The best way to always have your stock full is to get inventory management, ERP or MRP software which will take care of that, whether you are manufacturing the finished products, or just reselling them.

ERPAG, as such a solution, will make sure that you always have your items in stock.

ROP in ERPAG is a minimum stock quantity. Once your stock reaches the minimum, the fulfillment will be triggered and you will be able to either generate a purchase order or a work order in a fast few clicks. You can read more about setting up minimum stock quantity in our user manual - https://learn.erpag.com/project/create-new-product-1/untitled-4/basic-definition/quantity-below-minimum

The reorder formula is simple (Lead time x Average Daily Usage) + Stock in case of an emergency aka safety stock.

Lead time is the procurement time. The time that passes by from the day you order the products from your supplier, until he ships them to you and you receive them in your stock. In MRP systems it's entered as 'shipping days' on a product level, from which the expected date is automatically calculated.

Safety stock represents an extra quantity of items that you save in case of an emergency, sudden inflation or tornado (if we are talking about food).

In this equation, Average Daily/Monthly Usage, represents your average sales per day/month or even a year. This is how much you always want to have in your stock. Minimum.

For example, you own a shop - BikeWorld. You place an order to your vendor (1) which accepts it the next day (1). After 2 more days, your order gets processed (2), after 15 days your bikes get transported to your shop (15), and after one more day your items are received to your stock and ready to be sold (1).
This gives you the total Lead time of 20 days = 1 + 1 + 2 + 15 + 1
By this calculation, BikeWorld needs 20 days for full stock replenishment.

To get to your Average Daily/Monthly Usage of products number, simply calculate the average number of sold bikes per day/month. If BikeWorld sells 10 bikes in 5 working days of a week, that means that the average daily sale is 2 bikes = 10 / 5

Safety stock depends on many factors such as seasonal demand, delivery time in case of holidays, etc.
Let's say that the Safety stock for BikeWorld is 6.

Now, when we have all our numbers, let's just put them into the equation:

(20 x 2) + 6 = 46

The reordering point for BikeWorld shop is 46. Whenever the bikes hit that number or drop below it, the BikeWorld should replenish their stock by ordering more on time.

You never want to have too much of a product in stock, since they will go to waste if you don't sell them, and you still have to pay for a storage fee after you already paid for the shipping fee, and basically it's just 'frozen money' which you are not getting back.. Just like that, you don't want to have your items below the minimum, because, for example, I as a customer will go over to a different store which handles their inventory in a good way and have what I need already in stock, rather than waiting for you to get what I need in a week. You need to find the 'perfect balance'.

If you run by the YOLO motto (thumbs up if you understood this reference) and you order/produce only after the customer places an order, ERPAG as an ERP/MRP software, still has your back! If you enter a sales order that indicates that you have no quantity or partial quantity in stock, the fulfillment in the purchasing module will be triggered. And, in case you create a sales order for which you don't have quantity or you have a partial quantity of an item you are manufacturing, the fulfillment under the manufacturing module will be triggered. You can read more about our fulfillment/back ordering options on one of our previous blogs - https://blog.erpag.com/2018/10/fulfillment-backorders.html

Regards,
ERPAG Inc.

ERPAG 5.1


Blanket-Purchase-Order(BPO)


What is a Blanket Purchase Order? When to use a Blanket PO? What are the main benefits of a blanket PO? What do you need to take into account when creating a blanket PO?


What is a blanket Purchase order?

A blanket purchase order (BPO) is a long-term agreement between your company and your supplier to deliver goods or services with a set price on a recurring basis over a specified time period.

If your business makes multiple payments for the same goods or services, issuing a blanket purchase order with the details, such as price and delivery schedule, already specified, is an efficient way to reduce time spent and processing delays. Suppliers, on the other side, can submit multiple invoices referring to the same BPO number. 

Typical elements that need to be considered when specifying a BPO are:
  • time frame
  • duration of agreement 
  • quantity
  • price
  • item quality 
  • delivery locations
  • billing address

When do we usually use a Blanke Purchase Order?

In general, we will use a Blanket Purchase Order whenever we wish to streamline repetitive purchasing projects. Of course, there are some basic pre-requirements and terms that need to be met before issuing A BPO.

First, of all we need to know does our supplier have the capacity to deliver required items based on specified terms.

Secondly, we need to project and forecast our demand based on past business trends, taking into account future developments and plans.

The third is - the pairing up our own storage capacity with the production facility and shipping deliveries. It is important to find an optimal quantity per shipping delivery. 

What are the benefits, and why should we use a Blanket Purchase order?

The main reason is to optimize the manufacturing cost. The second reason is to ensure stable deliveries of raw materials necessary for the constant flow of our manufacturing process.
And, in the end, we can calculate and forecast our financials more accurately.

With proper planning and the right suppliers, we have an option to lower the next manufacturing costs:
  • by bulk purchasing, we can lower purchasing cost
  • lower time to process procurements
  • lower your warehousing costs
  • lower shipping and landing cost
  • generally lower operational costs
To manage all this, you need the right software (MRP/ERP) tools. Currently, here in ERPAG, we are a couple of steps away of delivering a fully integrated BPO that will accommodate all numbered features and ensure a seamless workflow implementation from the Small Business Perspective. We are on the path to deliver all ENTERPRISE features optimized for Small and Midsized Business (SMB), and Blanke Purchase order is one of them.
Let's move forward to the next topic:


Blanket Purchase Order -The challenges

As you can presume, the most challenging part is of course: FORECASTING
SMBs can rely on experience and trends. But it is not that easy. From our experience business that is trying to implement  BPO as a business workflow has outgrown a startup or small phase and it's in the fast-growing phase. 
To enable stable growth, business managers are reaching for tools that can ensure that. In that fast pace change, you cannot rely just on your guts. 
You need to process past data, get all necessary statistical data, and get an insight into current orders and trends. BPO comes just as a logical next step and upgrade when you have already tightened your inventory, purchasing, and shopfloor - from the inventory movement perspective.


Next challenge is to ensure the quality and reliability of the chosen supplier.

The last one is monitoring:

You should monitor totals for each delivery against the agreed quantity and to match incoming invoices with the right BPO. The best way is to use automated software tools(like ERPAG) that can gather that form different departments and tie them to the BPO.




ERPAG 5.1

Difference between lot and serial numbers

What are serial/lot numbers? Can I track serial and lot numbers in an ERP/MRP software? What are the perks of tracking my products by serial or lot numbers in ERP/MRP software?

Lot numbers are used to represent a certain number of products that share common characteristics such as manufacturing date, manufacturing location, a certain material used in production, etc.

There is a one to many relationships, so as many items can have the same Lot Number.

Lot numbers are useful for products you receive a large quantity of, and can help in reporting quality control problems or any other info. They will help you easily identify production faults, expiration dates.

For example, a certain batch or a lot of yogurts might be unsafe. Instead of recalling all of the yogurt produced, the manufacturer can recall only a certain lot number.
 A batch of yogurt is a set of containers of yogurt that used the same ingredients and have the same “best before” date because they were fermented together at the same time.

Yogurt producers apply the “best by date” to give consumers an idea of when their yogurt will taste best, or when a store should stop selling the yogurt because it might not reach consumers in optimal freshness.

Unrelated to our topic, some experts say that certain products are safe to consume even after their best before date.


Serial numbers, on the other hand, are unique per product. No two products can have the same serial number.
Smartphones, computers and other electronic products are identified by a serial number. Looking up your specific serial number can assist customers in finding the software and support necessary for keeping your devices working.

Additionally, it allows companies to track quality control, warranty claims or similar for each unique device. Serial numbers and lots can be technically tracked with pencil and paper, but the vast majority of companies leverage inventory management software to properly track serial numbers and lots.
An important thing to look up for is that not all inventory management systems offer a lot and serial number tracking.

The complexity of inventory management arises when you need to keep up with a lot of lot and serial numbers. With lot and serial numbers consisting of a long combination of letters and numbers, there is a high probability of human error during the input of serial and lot numbers. As a result, most companies use inventory management solutions with in-built barcode reading functions to eliminate human error and to read barcodes.

 Many products have a lot printed or stamped and do not have a barcode for the lot number so it is important to find an inventory management solution that has the ability to print barcode labels.

Although there is a difference between lots and serial numbers, proper inventory management software is required to track either of these identifiers
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2019. ERPAG Inc.

ERPAG 5.1

Bespoke Manufacturing
and the future of manufacturing

What is bespoke manufacturing? What are the origins? How to manage and improve your Custom Manufacturing process.



The term was derived from old English "bespeak" or to talk 'in the name of''.
Let's see wiki definition:

Bespoke is derived from the verb bespeak, meaning to "speak for something".[2] The particular meaning of the verb form is first cited from 1583[3] and given in the Oxford English Dictionary: "to speak for, to arrange for, engage beforehand: to 'order' (goods)." The adjective "bespoken" means "ordered, commissioned, arranged for" and is first cited from 1607.[4][5]

According to Collins English Dictionary, the term is generally British English.[2] American English tends to use the word custom instead,[6] as in a custom car or custom motorcycle. Nevertheless, bespoke has seen increased usage in American English during the 21st century.[3]

In American English, the proper term is "CUSTOM".
And the previous sentence is something that really makes us get the real necessity to erect Bespoke as a term for the 21st century. 

  • Custom manufacturing 
    • just listen to it and think about it. When you say custom, from today's perspective it is more like something that goes beyond the standard. It means that you have some way of doing things and someone wishes to customize that process or product.
    • E.g. We are manufacturing standard sizes of product X, but a customer insists that we make a different size, usually with a "custom" price. Or we need a prototype and we need to find a manufacturer willing to deliver custom made parts.
    • Another example is to customize a serial product, with engravings, special printings or even different materials.
  • Another term that can be used is Tailor-made 
    • and we see it as a crossing between Custom and Bespoke Manufacturing.
    • Tailor-made, in the past, was coined to bring us the feeling of knowledge about all the layers of PROCESS, not just the product as a result. It means that someone is starting from scratch trying to fulfill the vision and needs of a customer.


And where are we now?

We will take the liberty and look into the future, joining two major technological breakthroughs that are the real game changers:
  • big data analysis 
  • Machine learning combined with AI
Integrate these two in the standard tailor-made manufacturing process, and you will see where are we going.

Bespoke Manufacturing

Manufacturing process from the Bespoke perspective will be built around the customer- where each customer will represent a unique design and, as a result, a unique manufacturing experience. 
Now we will introduce special AI software toolkits based on the Generative  Design Networks.

A generative adversarial network (GAN) is a class of machine learning systems. Two neural networks contest with each other in a zero-sum game framework. This technique can generate photographs that look at least superficially authentic to human observers,[1][2] having many realistic characteristics. It is a form of unsupervised learning.[3]

Just think about it. Hundreds, thousands of parameters will be used as an input into an AI GAN network that will learn from results and evolve designs until it gets the optimized result:
Your weight, height, feet, hand size, a temperature of a city where you are living, working conditions and daily routines - these will all be inputs needed for the system to develop an e.g. perfect helmet for a bike ride.

Around that principle, we will build a manufacturing process based on new, one or two layered, nanomaterials (smart materials) using different manufacturing techniques such as 3d printing, material programming, etc.
If you have 15 min please watch this TED video to gain more insights (2016):

And yes, it will scale. It is hard to imagine the infrastructure for e.g. sneakers production based on personal feet scanner - or smart wearables (human upgrades). 

So it is a pretty simple concept: give a "computer" goal, set up the constraints, and it should return the best design for the requested product.
We can see the trend of more "organic" design that comes from the algorithms that are similar to the Nature evolving algorithms.

Here you can see some examples:
And, where are we now?
Currently, the coined phrase is forming roots, and it is branching through various industries: medical, food, apparel, etc. until it brings us to absolutely new ways of manufacturing.
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2019. ERPAG Inc.
ERPAG 5.1


Discrete manufacturing simplified

discrete manufacturing simplified

How many times did you ask yourself what is discrete manufacturing? What is the difference between different types of manufacturing? And where does the ERP/MRP system fit in that equation?


Some might say that production processes are about practice, not theory. But sometimes it takes just a little bit of knowledge, a sprinkle of precision and a splash of accurateness to overlap the distance from practice to perfection. So, make sure to look before you leap!

Discrete manufacturing - definition
A production process is a system of dynamic actions consisting of a set of technical procedures for the modification or transformation of certain elements. Through the production process, the input elements become output elements, after a manufacturing process in which their value increases.
These transformed elements are parts, components (popularly called raw materials), while the output elements are known as finished products, that are intended to be sold to a final consumer.
Almost every item that is sold in stores is a product of discrete manufacturing - it is a distinct unit that was manufactured from components that are also countable units. Also, those individual finished products can be counted, touched and seen.

Discrete manufacturing vs. Process manufacturing
While the result of discrete manufacturing is a distinct unit, the product created by process manufacturing is not. Process manufacturing uses ingredients that are blended, refined, and in batches and the final product cannot be broken down to its basic components (an example for this would be oil, salt or water).
The individual products of discrete manufacturing (such as automobiles, toys, furniture) are easily identifiable, while in process manufacturing, you can’t tell the difference between one product and another.

Bill of Materials
Discrete manufacturing can be low complexity – if it’s single level and it doesn’t branch out beyond the assemblies and work operations, or high complexity – if the manufacturing process includes sub-assemblies and their own manufacturing processes.  
In both of those cases, it relies on recipes, blueprints, a.k.a. prescribed processes to manage the manufacturing workflow.
This is popularly called Bill of Materials (BoM), and it explains the manufacturing flow and gives a list of assemblies, sub-assemblies and work operations included in the manufacturing process.

multi level bill of materials

Discrete manufacturing can cover every production process, from the basic one, such as just assembling the parts together to make a finished product (for example, the legs and top into a table), to the most complex production, that has a wide number of different input items that are processed and come together to make a multi-level output product . 
As the complexity of the input and output items varies, the BoM complexity varies as well, and according to the number of output items and the number of parts necessary for those items to be produced, as well as the number of work operations and processes included, you should choose a software that can handle the requirements of your workflow.

MRP system implementation chart

As shown on the diagram above, ERP for small and medium-sized companies cover the production process that includes a smaller number of input items and a low complexity of output items (the table example), while the production that includes a wide variety of input items which result in a complex output item require an Enterprise level software (the example is the automobile industry).

What to expect? 
It can be very discouraging as it’s difficult to imagine these concepts being applied to a small-scale business or medium-sized business, so the ERP systems were originally developed to help manage the discrete manufacturing processes, regardless of the size of the company and the complexity of workflow. ERP systems give companies the control and provide them with a very precise view of the manufacturing processes at any point in time, helping to eliminate waste and reduce the time required to produce the goods.

Typical functions in these systems, that are also included in ERPAG are:
Inventory management
Sales management
Purchasing management
Warehouse management
Manufacturing management 

Last but not least, good ERP software should cover discrete manufacturing needs across different industries, and that’s why ERPAG can be customized to meet every small and medium-sized manufacturer’s specific workflow!
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Regards,
ERPAG Inc.
ERPAG 5.1

MRP System


What is MRP system? What are the benefits of using MRP system? How to implement one?

In past blogs, we have already covered basic concepts of  MRP systems.
We have also analyzed the difference between ERP / MRP system.

Today we will cover modern implementations of MRP systems from the small business perspective.
Which parts should we focus on and what parts of the MRP system we can implement on the basic level.

From our experience, the MRP system represents a core component for any Small business that transforms the material. Based on this principle, we can identify the next business models:
  • Process Manufacturing 
  • Discrete Manufacturing
  • Contracting Manufacturing
  • Mixed 
 Each of these manufacturing types needs a specific approach in order to fully implement MRP in the company. Before we go through what we need to do, we will first stress out top 5 mistakes that managers do when they implement MRP\ERP in their Small business companies.
  1. Short deadlines
    • instead of the preparation period, people just jump to implementation because it is the eg. start of the fiscal year.
    • in SMB price range no software can offer ETL process for a reasonable price. That's the way you cannot expect that all your previous data entries will be transferred with some kind of magical transfer process.
  2. Now or never
    • The most typical mistake in software implementation. We will make an example. Company A cannot control stock levels, not to mention automated purchasing or manufacturing planning - but in their feature list is to acquire software feature like -integration of CRM with email platforms or social networks.
  3. Ad-hock approach
    • ad hock execution from the perspective: if I had a specific software I wouldn't lose $$$
  4. Low priority
    • not assigning enough priority to the new software implementation process compared to standard business process 
  5. Conflict of interests
    • Pass implementation process to the employees that have no interest to implement, or even worse have the interest to sabotage implementation process. We can identify a few scenarios:
      • employees that in some way derive authority from the past software.
      • not a skilled employee
      • an employee that prioritize other business processes instead of implementing
      • an employee that is stripped off decision-making 
Today in the era of the 4th industrial revolution, the implementation of new software is probably the biggest decision that you need to make in your business. That's why you need to explore, get prepared and act with confidence once you decide to implement a new MRP system.

Enough with critics, let's go back to the practical bits of advice.

A team that is assigned with this blog, was included in more than 500 MRP software implementations, during the 10 yrs course of time.

We saw it all, done it all -  bad practices learned from failures (and yes we saw them too). Furniture, guns, food production robotics and high precision instruments. Each company had its own unique business process but here is what we found in common:

You need to take a step by step approach. It is almost like an onion skin - layer by layer.

The most important thing is, of course, a firm foundation


  1. First, you need to create a perfect inventory control system. Every MRP system is basically an upgraded inventory management system.
    • Plan your SKUs
    • Define Lot and serial numbers
    • Smartly plan product categories and how to group them
    • Translate you complex products with Bill of materials feature
  2. Secondly, enter all other entities
    • Suppliers
    • Customers
    • Machines
    • Employees
    • Bank accounts
  3. Prepare for transition 
    • PLAN the date and take the company's SNAPSHOT of:
      • inventory levels
      • debit/credit balances for Customers and Suppliers
      • Bank account standings 
  4. Connect your eCommerce
    • connect - integrate
    • sync
  5. Let it run
When you complete all of this you can start using your system. You don't need to wait to implement mobile apps, or time capturing on the shop floor level.
Just let the system to roll out. WHY?

Because:
  • You could easily manage all the bad things that can go wrong.
  • Your employees will get used to the system, gain speed and efficiency. 
  • The project itself will get the authority and the whole company will know that you are moving forward with it.
Once you see that everything is at place go to the next phase - Shop floor level.

A shop floor is a place for your manufacturing where the real action takes place. It is responsible to bring out the tangible, usable and superior quality products based on days or even months of preparation. And has its own heroes. These are employees that have difficulty to engage in any kind of process that is not related to the core of their work operation.

And yes, this is a hard-core of the rebellion, where skilled workers see themselves attacked with new technology gadgets.

Some of them cannot even understand the necessity of information capturing - they tend to see it as trivial, or as a new management play toy, while they are the ones doing the real things.
And guess what, usually they are right. Due to the failed experiments, wrong steps during previous attempts - it is expected to see them more pessimistic than the sales team or purchasing team.

And to win this battle you need to play it safe, step by step, with implementing one feature at the time:
E.g first month try to use mobile devices to input real-time use per work operation.
In the second month - implement material movement.
During the transitional period assign one person to use a spreadsheet in order to pass info from the shop floor to the MRP system. In ERPAG, we have developed a 3-way input depending on the implementation level.

That's why you need to take user interface and ease of use in matter. It not enough just to deliver technology - you need to deliver it in the most human possible way.

These are some of the pre-requirements necessary in order to implement MRP System on a shop floor level:
  • simple interface 
  • simplified workflows
  • automated data inputs (scan, capture, picture)
  • stable internet connection
  • step-back control
  • authorization levels
In conclusion, the MPR system will make your life and your business flow easier. Like coloring by numbers - it seems boring and dull at the beginning, and further you go with coloring (implementation) it makes more sense as it gets its shape.

Regards,
ERPAG Inc.
ERPAG 5.1


MRP / ERP APP from $49

cheap ERP software

How come I can use full ERP software for just $49 per month? Will I be charged additionally for support and implementation of the ERP/MRP software?


1. Introduction


When we first contact the customer with our price list, the potential user usually asks us the next question - how is it possible that the MRP / ERP software can cost from $ 49 at a monthly level?

After more than 25 years of experience, we can say that the answer is positive, in this text we will explain in more detail.

In our case, we will take a period of 5 years. This is the minimum period in which any introduction of the information system made sense. We will compare several decades of the 1990s, 2000s, 2010s, and expectations for 2020, the data we bring out are from our experience with the classic desktop application (MS-DOS, MS Windows).





The data displays a percentage share in the price of the software. Nominal cash values are not comparable, as $1000 in the '90s is not the same as today. In the analysis, we would have to calculate inflation and other inputs.

We will analyze each of the inputs and see where there is an unnecessary cost.
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2. OS & Third-party Software

OS and third-party software

With the advent of open source software (eg Linux), programming languages ​​that are used for free (JavaScript, GScript, PHP MS VS express), databases whose use is also free at some limits (MySql, MongoDB, MSSQL Express, etc.) and executable server applications where the costs are quite low (eg node.js), there is an evolutionary cost reduction.

The savings that can be done here are small and there is a risk that the introduction of one of the "freeware" can increase the costs of Development and Support.

For example, if the database is transferred from MS SQL Server to MySQL (or PostgreSQL), it would take a lot of time for programmers to adjust "calls" to the new database. In theory, each database should follow the standard (https://en.wikipedia.org/wiki/SQL), but each of them has its own specificities so that the cost is "overflowing" to development.

There is also a risk that something that was free (in some form) will start being charged at some point or will be "outdated". One example is that MySQL, which has been free for years, until it was purchased by Oracle.

Simply put, there are no revolutionary savings on this input, the savings will be more evolutionary over the years.
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3.      Setup & Installation

settings and installation

The pre-Internet era, or the beginning of the Windows era, required a direct installation on-site.Hours
and hours are spent unproductively only until they arrive at the user site (We even had professional
drivers at some time and we are a software development company). During the 2000s, the
installation process on computers took several hours (update, patch, license activation). The Internet
has allowed costs to be reduced at one point, but a new security-related issue arose.

What enabled the installation to be done remotely now required additional engagement in new fields
(Firewall, Antivirus, ActiveDirectory, etc.).

What we would say: we do not have more needs for professional drivers, but we need the Network
Security Specialist (which is also three times more paid).

The question is, is it possible without this cost? If it is a "cloud-based" application, the answer is
"yes".

ERPAG is completely cloud-based (or SaaS), there is no installation, setup. We even went a step
further to prepare the databases in advance, in moments when resource recruitment is limited.
When a new user is registered, he is already assigned a pre-arranged slot and can start working at the
same time.

But now we have Network Security cost. Cloud infrastructure providers, besides hosting applications
and data, also offer Security services. This cost can be said to be included in the cloud infrastructure
cost. The more users/servers you have, the cost per user is lower and lower. Example: for 100 users, the cost is 10% while the 1000 users, the cost is 2%.
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4. Software development

software development

The first thing that comes to mind when potential users see our price is that development is done as "outsourcing". The company has an idea or an existing solution that needs to be scaled to a new platform and engages a third-party company that will do the "coding". Developer prices vary from region to region, but it's not a price that is in focus, but quality. Engaging "nearshore" / "offshore" requires additional specialists (QA, Scrum master, etc.) as well as the biggest problem - "communication". This is good for ad-hoc solutions, but when inquiring "core" processes, there is a big risk.

With the advent of services such as Freelancer, Elance, Upwork, it has led to the equalization of developer engagement prices. So, whether a developer is from the USA, the EU or India has no particular impact, the only thing that has any influence is developer quality.

ERPAG is a 100% in-house solution.

Also, the cost of development in the price of software decreases during the year. One reason is that the other costs are increasing, the other is that with the emergence of modern programming languages, "coding" productivity is increased, the third and most importantly, the knowledge and experience are available a couple of "clicks away" (portals such as https://stackoverflow.com).

In Software development, there is no space for saving. And every attempt to save has returned to us like a boomerang.
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5. Support

support

All software companies are saving here. Anything that does not refer to getting new customers is considered to be an unnecessary cost. Most companies are focused on getting new users, and not so much on keeping the existing ones, they are guided by the idea of ​​"investing better in marketing and getting 100 new users because the existing ones are a closed chapter". Most bonuses are calculated and paid for commercial, very rarely for loyalty.

Such practice leads to loyalty and goes below 33% (users who have used the application for more than 3 years), and this is the value that flows over to the final price. Which means that the price of the software must be 50% higher than when the loyalty is 66%.

According to our statistics, ERPAG currently has a loyalty of a bit over 60%. (With the classic desktop version loyalty was even over 75%). We still have users who have gone through all three generations of our applications (MS-DOS, MS Windows, Cloud).

Like most companies that began in the 1990s, we were a two-man-band. Since it was time before mobile phones, fieldwork was part of everyday life, when a problem arose - existing users simply could not contact us. One of them said, "... then find somebody to answer my call me at least, if I have to I will pay double, just to have someone who will listen to me."

There are "old school" and "new school" users, someone prefers to communicate by email, someone is sticking with a phone call. That's why we have enabled our users to choose, if they want phone support, then they will have to subscribe to our "premium" service. With today's prices, it is hard to expect that for $49 someone will answer the phone, for that service, it should be added to the price.

There must be a support for this type of application. And more importantly, it has to be effective. The more efficient the support is, the cost of support is lower. Everyone is trying to outsource support. Such support is cheaper but less efficient. For years we have been trying to transfer support to our partners, but in the end, not only did we not save any money, but we were at a loss. We spent more time on training third parties, so the cost was higher than when we worked with in-house support, and again the problems came to us.

ERPAG has 100% in-house support. With us, support and software development are the two sides of the same story, one complement each other.
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6. Implementation & customization

implementation and customization

These two inputs are interconnected so we will treat them as one topic.

Here lays the answer to the question of this blog. Implementation is the most expensive part of the MRP / ERP system. And this is the most critical point of application of the information system.

For SMBs, it can cost from $1,500 to $4,000 per operator, or from $75,000 to $750,000 per company. (source: https://www.workwisellc.com/erp-software/erp-software-cost)

Over 60% of implementation is unsuccessful.

In July 2018, the German trade chain "Lidl" gave up, after investing $550M and seven years of implementation. (source: https://www.br.de/nachrichten/lidl-setzt-500-millionen-euro-mit-software-von-sap-in-den-sand-100.html)

At these prices, the question arises as to whether it is profitable for small businesses?

According to our analysis, as many as 80% of all activities related to implementation are made by the company itself. When we implemented the same thing, for as much as half the time, we listened to the mutual dispute among employees, anyone who was asked any question, thought that his demands were a priority. Requests for customization, training, documentation have spread through the organization like a virus. It was guided by the idea of ​​"now we are introducing a new system; now is the moment to fulfill all our desires and needs", if a clear limit is not set, the price can go to the stratosphere.

Without strong and authoritative management, it is impossible to successfully implement (and economize) the system.

ERPAG is facing SMBs and entrepreneurs, where the hierarchy is clear, the owner is the only decision maker (he is asked for everything), sharing tasks and controlling the implementation process.

In the price of ERPAG, there is no implementation, implementation is up to every company, every company is doing it independently. If you need help, you can always contact support.

Each company knows its processes, there is no need for consultants to record processes. If ERPAG covers more than 70% of the process we can expect that the independent implementation will be successful. The greater the coverage of the process, this price increases exponentially (80% of the price coverage will be 10 times more expensive).

In SMBs it often happens that recording some business processes are more expensive than themselves. For example, in one implementation, it was required to upgrade the HR module to the application that will record the number of employees shoe size. The reason was the following - when ordering protective shoes to have a "one click" report. It would make sense for the company that has 1,000 employees, but they had 10 and ordered the shoes every second year. The cost of finishing and implementation was higher than the value of the shoes mentioned.

 At the price of ERPAG, there is no customization, because it is none.

Like a wardrobe - if you are buying ready-made sizes (size XL, L, M, S), the price is one, but if you want your suit to be custom-made, the price is not just doubled but it's 10 times higher. There is no question here why there is a higher price, while with the information systems the demand goes by the principle "it's a small implementation, what's the problem?".

We periodically improve our system according to the meaningful requirements from our users, all in order to become the best cloud-based application. Requests are collected through the customer service, analyzed, and if we think that some are interesting and helpful to other users, they go into production.
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7. Maintenance

web

How to save on maintenance? The answer has three letters - "WEB".

Cloud-Based Applications require incomparably fewer maintenance resources. With this, the lower end price of the application is achieved.

Even a large IBM company confirms fewer maintenance costs for Cloud-Based Applications (source: https://www.ibm.com/cloud/learn/benefits-of-cloud-computing).

Another advantage of ERPAG is that only one version of the application is active. All ERPAG users use the same version so that only that one is maintained. In systems where there are multiple active versions, the cost of maintaining each version must be embedded in the cost of the application itself.

As always, saving on one side creates a new cost on the other. In the Cloud-based application, there is a new cost called "cloud-based infrastructure", simply save 10% of the cost of the application, but we will have a new cost of 5%.

ERPAG is designed in the following way - the more users company has, the cost per user is lower. We achieved this by introducing a "server-side" cache. For example: "product and service list" will be required by almost all users (data of the company), and we will insert data into the cache, and deliver it to everyone. The good side of this algorithm is that the memory is quite cheap, the bad side is when the company has a large number of users, then the memory limit can be broken. ERPAG is designed for SMBs and 5 users are averages per company, so the memory limit is not compromised.
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8. Marketing

google analytics

When we say "marketing" we actually mean "Google".

Previously, the software advertised through fairs (eg CeBit), lobbyists, consultants, professional magazines, electronic and other media. "Today everything is pay-per-click (PPC)".

Cloud-based software companies (or, as someone prefers the term, SaaS Companies) spend between 10% and 120% of their annual sales revenue on marketing. (source: https://www.xandermarketing.com/what-should-your-saas-marketing-budget-be)

The reaction of someone who is not from SaaS business is "120% on marketing, you must be joking?".

Most cloud-based services are start-ups. The goal of a start-up company is just growth (especially recurring revenue), so it can only be interesting for investors. They are willing to pay for a "click" as much as they need, just to keep growth up to the acquisition, i.e. before the users drop off. If they invest a bit in marketing they will not have expected growth, but if they invest too much, they will burn.

90% start-ups fail.

This risk is transferred to the price of the software. And we can say that it affects how much implementation costs.

ERPAG is not a startup. We exist since 1996, we have no investors (for the time being) and we are financed exclusively from our own profits.

Of course, we wouldn't be here without marketing.

PPC is difficult to control, from 0.5% to 1% of "clicks" will become users. With an average price tag of $20 (USA market) for significant keywords, from $300/mo to $500/mo would be the minimum cost of marketing per user. How is it worth paying us $49/mo?

Fortunately for us, there are business-to-business services and listings.

One of them is Capterra (https://www.capterra.com/p/142477/ERPAG), where in our case, 20% to 30% of "clicks" turn into users.

In addition to PPC and business listing, there are still many effective methods, but the most effective method is the recommendation of a satisfied user.
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9. Conclusion

The primary parameter that makes a price of $49/mo is:

Implementation

The principle is the same as with the Swedish furniture manufacturer, Ikea, these are furniture models, fit your needs to them, take them over by yourself, transport them by yourself and assemble them by yourself. If you do not want to do it, you will have to pay someone to do it for you.

ikea pencils

Off-topic:

"Ikea" is also called the "The divorce maker", the ones which assemblied the furniture with their wives, knows exactly why the meaning behind this name. If you have a spouse in your company, be armed with patience during the implementation.
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2019. ERPAG Inc.