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.
ERPAG 5.1

Mixed Reality Manufacturing in ERPAG 


 


What is Mixed reality? How can we use mixed reality in modern ERP/MRP cloud-based apps?
Welcome to another blog post by ERPAG. This one is a little bit different. We will not try to explain and define the basic concept in manufacturing business. Nor we are going to talk about how to cover workflows in ERPAG. This blog is about peeking into the future. We hope - near feature, something that is on a grasp of our hands - augmented reality and mixed reality.

For starters, just for your info, one development team is now focusing on new technologies and the technology implementation in ERPAG. Their job is pretty simple - to enable all current and future ERPAG user to utilize power and functionality of groundbreaking technologies like:


  1. Mixed reality - Based on VUZIX technology (we are in the process of developing mixed reality apps)
  2. Business intelligence extension based on Google Data studio and Google ML (Big data analysis and machine learning) tech
  3. IoT (Internet of things) - API for data exchange between current and future hardware components (In) that collect data in a place where data is formed (drones, scanners, sensors, CNC, etc..)


What we are focused on is “Functionality before Fashion”, because we wish to deploy these new features ASAP so we can shape them together in order to bring you the most benefits.
We will give our best that some of these tech see daylight during 2019.

Today we will start from a simple app that is already available in ERPAG for mobile users.
The goal is to enable data insight “when and where you need it”.
We call this feature Mixed reality and you can start it from the main menu in our mobile app.




To give you an overview we will present some of the business cases which we try to solve.
Usually, these are operational situations, where you are not at your desk and the only thing that you have at hand is your smartphone.

Yet that smartphone can be your crystal ball and it can deliver fast precise info - in the perfect moment.
Case one: Inventory details
How many times did you wish to get info about a specific shelf, lot or item in your hand?
What is turnover, how many pieces do you have in stock, is it a slow mover, etc..
Case two: Machines
You see a construction machine parked or on site - and you wish to know the mileage, in which Work Order it’s currently active, maintenance, etc.
Case three: any kind of statistical data that can be blended with ERPAG entities like a shelf, warehouse, item, machine, employee, documents, etc.

Now, let's go and dive into technical details - nothing complicated.






Preparation stage:

  • First, we have created a 2D QR code as a unique identifier. We call it, for now, ERPAG Tag. You can tag anything: machines, vehicles, people, warehouses.
  • Each entity has its own properties. We have created a small component similar to label setup where you can define fields which you wish to display on your phone screen.
  • When a user prints the label with a tag, they just need to place it on the desired object 


Print labels:


Simple printing engine - just find QR code icon on the right menu ribbon and click on it:
You will get a new modal window where you just need to select the right dimensions.



When you print labels, just tag some object.



You can tag anything :

  • Board where you wish to see your sales
  • Print T-shirts with QR codes
  • Big formats for shelves, warehouses
  • Tag your CNC machines, Vehicles



For example - we have tagged our desks so each of us can see a list of request received and daily schedule.



Scanning stage:


Now, you can scan QR codes and finally get company data when and where you need it.

We are trying to enable you the best user experience possible.

Immediately.

If you are in inspection at the warehouse, and you need immediately to see a snapshot of the current CNC center.




The app detects ERPAG QR anywhere as you scan using your mobile camera. As QR gets scenes APP renders all predefined data overlaid on the scan screen.
Current work order, Employee assigned, Start Date/Time, expected end Date/Time, last inspection (service) date, next service date, etc.


Now plans about the future:


(image for demonstration purposes only: ownership of VUZIX Inc)



This is only a small stepping stone or piece in a puzzle - the next step is fully developed on wearable hardware/software platforms like VUZIX. 

We are already in the process of adapting API and hardware so we plan to have first beta apps during 3Q and 4Q this year.
Please give us feedback on this :D
We are open to all your suggestions.


You can contact the dev team directly: 

ERPAG 5.1

Manufacturing cost


Why is the manufacturing cost so important? What is the "manufacturing cost"?
How to calculate manufacturing cost? Should we simplify cost capturing and how?

We know that as a manufacturer you are interested in knowing your profit.
Also, we know what a headache is to figure it out. Whether you are dealing with overseas import or you have a project-based business model - each scenario has a vast number of inputs that are fluctuating which makes cost capturing a tricky job.

Let us start with basic definitions-what is the manufacturing cost?

Manufacturing cost is the sum of:

  • Direct materials cost
    • Sum of all of the materials that are used to create finished goods (product
  • Direct labor cost
    • Types of labor which are considered to be part of the direct labor cost
  • Manufacturing overhead
    • Indirect labor cost: The indirect labor cost is the cost associated with workers, such as supervisors and material handling team, who are not directly involved in the production.
    • Indirect materials cost: Indirect materials cost is the cost associated with consumables, such as lubricants, grease, and water, that are not used as raw materials.
    • Other indirect manufacturing costs include machine depreciation, land rent, property insurance, electricity, freight, and transportation, or any expenses that keep the factory operating.



Can you name some of the costs, based on your experience?

Here are some examples:


  • Direct materials cost: 
    •  Aluminum in a bike frame, rubber for the wheels, steel for other metal parts
  • Direct labor cost:
    • Workers on the assembly line, welding guys…
  • Manufacturing overhead:
    •  Transportation cost, outsourced operations e.g painting or other material surface treatments

They all come together and form your MANUFACTURING COST.

But, there is a catch.
As much as you are trying to record the exact cost, the process alone is influencing costing, to be precise-your indirect cost.

This equation gets a little bit complicated -it is almost as trying to achieve the speed of light.
Of course, this is a joke, but it is not far from the truth. As much as you try - you need more time and resources to capture the exact cost.

So, why do we think that manufacturing cost capturing can actually increase your costings?
Let’s try to elaborate in 5 simple steps, that show us what do we need to implement in order to capture cost:

  1. Hardware components needed to be implemented in the manufacturing process
  2. Software necessary to run on top of hardware
  3. Skilled labor necessary to operate hardware, software and daily routine manufacturing jobs
  4. The time necessary to record necessary data generated during the operational process and time needed for the system maintenance
  5. Prevent “balkanization” during the process (instead, create synergy between hardware software and workforce) 



As you can see, it seems to have logic to implement cost capture - when you have a small number of inputs (signals recorded).
When things get complicated, then you need to weight organization benefits against the number of manufactured items.

Why? Because insisting on capturing all cost parameters can create a boomerang effect and increase your product cost. We will not go into accounting details, because here we are trying to transfer experience and best business practices from hundreds of implementations.

It is not the same for SMBs and large corporate business. And believe it or not, when a small business /startup goes into accelerated growth - the main problem is to keep organization stable, fulfill deadlines and get your inventory in place, capturing cost comes as a reward at the end of the process.

In ERPAG  our initial design approach is to try to lower down pressure on actual cost capturing.

From the small business perspective we can downgrade and simplify manufacturing cost capturing by recording just core signals:

  1. Raw material cost
  2. Work Operations (Labour)
  3. Landing cost
  4. Contracting fees

First of all - to capture the price of raw materials we needed to develop a great purchasing engine that enables you to store the cost of raw materials and components which include
  • the direct cost of goods
  • transporting or landing cost
  • positive and negative exchange differences between different currencies
The second thing is a Multi-level bill of materials -a tree-view component that enables you to get estimated cost at a button click

And the third part is an intuitive mobile application that enables guys on the shop floor to seamlessly  record inputs during the manufacturing process, which are:
  1. Raw materials used in Work Order (WO) 
  2. Work Operations rendered during the manufacturing process
Also, we have enabled a label scanning/printing feature in order to minimize negative inventory impact during the process

Manufacturing cost is one of the essential components in order to really know your profits, but a decision maker in small business, please have in mind that you follow the step-by-step approach.

Also, pay attention that costs of implementation in order to capture manufacturing cost does not “overheat” you real manufacturing cost.

To get more info please go to:

To read more about process and workflows go to: