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The Selection of an MRP Software Solution

An Introductory Guide

If your company is considering the purchase of an MRP/ERP system, Neil Kirwan, Business Manager with MXI Software, outlines for APS members the recommended steps in the selection process of your software solution.

To reduce manufacturing costs and increase output many Small and Medium sized manufacturers are adopting MRP/ERP with the inherent benefits of:

• Improved Production Scheduling
• Improved Visibility and Inventory Traceability
• Access to Live Company Data
• Increased Productivity, Reduced Working Capital
• Broadened Product Range

Traditionally the domain of larger manufacturers MRP II / ERP systems now scale to the smallest of companies driving competitiveness and bottom line growth.

Determination of Business Requirement.
The first step you should take if you plan to acquire an ERP/MRP System is to agree on the objectives of the new system. Do you have a ‘vision’ of what you are trying to achieve?

• Examine the current systems
• Highlight their deficiencies
• Identify the key improvements you could make

For instance

• Do goods received update stock lists in real time?
• Do staff log goods received so that accounts can settle with supplier seamlessly”
• Are your raw material purchases aligned with sales orders and forecasts? If not, might you benefit from running MRP?

Distinguish between your requirements considered “Vital” and “Nice to have”.   Defining everything as essential will limit your choice and drive up the end price exponentially.

SAMPLE Checklist
Stock Control                   Yes             No

I recommend you don’t specify any changes to your new system for the first year of use following the “GO LIVE” date, as it will allow users to get used to the new system.  

Some companies will turn to specialised third parties to advise them. This service might typically cost around €25,000 or more for well-established Consultancies. Some will even implement a full solution for that price or less.

Knowing your requirements in advance of speaking with vendors is going to make the choice a great deal easier. The vendor will therefore concentrate on the solution as opposed to teasing the information out of you.

Software Choice & Budget
Your manufacturing process and finished product will play a large part in determining what software to consider. Is it be compatable with your process and finished product? Will it allow you run mixed mode manufacturing in combination? You might decide on an industry specific solution. Watch out however, as they can be expensive. in combination? You might decide on an industry specific solution. Watch out however, as they can be expensive. in combination? You might decide on an industry specific solution. Watch out however, as they can be expensive.

Nowadays most firms don’t consider writing their own software but prefer to deal with specialist implementers. As Irish vendors generally tend to implement NT/Server2000 based solutions, network and hardware support for ERP will be available locally.  There’s a good chance you will already have a network running E Mail, Internet access and Banking services.

When it comes to money, some are inclined to say that you ought to spend whatever it takes.  My advice – vendors don’t like this, as it never comes to pass. Decide in advance what you willing to spend and it will reduce the prospective vendor list.

Double check that you can affect simple changes to the package to suit your circumstances. Can it connect easily with existing legacy systems, MS Excel or Autocad/Solid Works? For instance EFACS E/8 from Exel Computer Systems allows users to easily adapt the software to incorporate additional functionality.

What other software is required to run an MRP System?
Individual tools may come with various add-ons but in my experience I recommend the following

a) A Good Report Writing Tool
Initially you won’t need these but they come in handy down the road once the system is in. They’ll allow you write your own custom reports on top of those already there with your choice of ERP. You’ll see the benefit of this no matter what tool you opt for. For example, Crystal Reports is a relatively simple yet powerful reporting tool is emerging as a standard.  It works with SAP, excel, and Access more or less everything.

b) An Industry Standard Database
The standard in Ireland is NT Server or Server 2000 with SQL Server as the database. Larger Organisations may use Oracle, Informix or a standard RDBMS. In any case different rules apply for large corporates.

The Impact of Web Technology on ERP/MRP.
More and more ERP/MRP applications are becoming web enabled – i.e. you access them via an internet browser on your desktop PC. The software is still installed on your own server but it means that users located in other company sites can access the system. Web technology is going to be a long-term trend, and has the potential to be even more significant than the emergence of NT Server Software that we saw over a decade ago.

Areas in which web technology might be useful are:

E-Commerce, CRM, B2B  - Beware the Pitfalls.
In recent years, the IT Market has been struggling and these difficulties only exaggerate the industry tendency to oversell. While these issues can make a valuable contribution to your business, they require serious and separate consideration aside of your principle ERP system.   Have the vendor confirm in writing the potential for addressing these areas. You may not really need to buy new software for these areas but link up the ERP solution with your current legacy system.

Implementation & Training
Whichever ERP tool you choose, you will need the assistance of an experienced ERP implementer. Search for one with a good track record here. Don’t be fooled into believing you can save a few euros by reducing the number of training days.  Why have an expensive investment go to waste if you’re not willing to devote time & effort in getting your people trained up?  Granted you can spread this phase of the implementation out over several weeks or months depending on complexity, but if you’re really serious you’ll want to budget for this appropriately.

Its getting much more difficult to get extensions to budgets nowadays!  

Selecting your ERP Vendor  
From your search for possible vendors, narrow your selection down to 3 or 4 and arrange an initial demonstration. Nothing too heavy but enough to allow you get a feel for the product.

·        Draw up an “Invitation to Tender”  

·        Use a rating scale

·        Enter into dialogue with vendors so that proposals are finely tuned to your requirements.

Your rating scale might use the following factors:

When closer to final selection, arrange a working demonstration of the software to key members of your company.  Supply the vendor with real company data to work with in advance as it will make the day much more meaningful.  

Final Steps
When you’ve exhausted the process of evaluation and have decided upon a preferred supplier, organise a reference visit to one of their customers. Speaking with current users will confirm your prospective partners’ bona fides - happy users speak volumes! 

Conclude the process by clearing up any last remaining issues such as price discounts, support, or start dates before signing any contracts. 

That completes the first part of our series on MRP and ERP Selection. In the next article on MRP, I’ll discuss what paybacks you can expect for all your effort and hard earned cash!   

About the Author: Neil Kirwan is Business Manager with MXI Software Ltd, experienced implementers of MRP and ERP Solutions for SME Manufacturers since 1994.  MXI is the Irish Partner for Alliance MFG and EFACS E/8, leading MRP and ERP solutions amongst SME’s in Ireland.   He can be contacted at 01 284 14 66 or on the web at www.mxi.ie  /  www.mxisoft.co.uk or by email nkirwan@mxi.ie

Glossary:
ERP:  ERP systems bring together all of the company functions in a single shared environment. A functionally integrated computer system shared across an organisation.  Sales, Production, Stock Control, Purchasing, Distribution, Finance, Marketing etc.  ERP actively promotes collaboration and efficiency between departments for the collective good of the organisation.

MRP:  Materials Requirement Planning (MRP) is a program found within integrated manufacturing software systems. It is run usually at least once a week (sometimes once a day or more) and interrogates a company computer system for sales orders, stock replenishment requirements and the like and outputs recommended build and buy plans. MRP drives component buying requirements and flags up shortages to be expedited (chased) in order to meet demand.