It's not easy to manage any business that starts from a home kitchen and grows to hundreds of employees and several facilities in a few years, but these problems expand greatly when the business is in the burgeoning cannabis production industry.
Papa & Barkley, the cannabis products business that began in a kitchen, has helped manage its growth with MRPeasy software. MRPeasy is a cloud-based material requirements planning (MRP) system specifically designed for small and medium enterprises like Papa & Barkley, who have used the software to manage an ever-changing array of regulations that have stymied other similar cannabis start-ups.
Based in Los Angeles, Papa & Barkley began four years ago when its founder and CEO Adam Grossman cooked up a cannabis-derived CBD treatment for his father's immobilizing back pain. The treatment eventually allowed "Papa" to leave hospice and Grossman decided to turn his homemade concoction into a business. Papa & Barkley now produces dozens of CBD-infused pain relief products, and in addition to the Los Angeles headquarters, has added a production facility and a distribution facility.
This rapid company expansion resulted in a need to implement systems that could handle the production and distribution of products in an evolving regulatory environment, according to Boris Shcharansky, Papa & Barkley's COO.
"We have multiple [systems needs], multiple CRM needs, and most importantly, because cannabis is tracked and regulated to a higher degree than even some pharmaceutical products at this point in time, we had to have track-and-trace with rigorous compliance testing standards and quality control standards," Shcharansky said.
Keeping up with changing regulations
The company relied on Google Sheets in the early stages, but outgrew these quickly and implemented an ERP system that eventually didn't meet their needs, Shcharansky said. At that point, the company found MRPeasy, which provides the flexibility needed to deal with evolving regulations.
"We needed a system because we were coming into full regulation in California in 2018 and we need to be able to submit the state inspection," Shcharansky said. "We need to be able to show them our internal documents and our sourcing controls, especially on the cannabis side, because the state wants to make sure, one, you're paying your taxes, and two, you're not diverting any cannabis out of state."
Keeping track of everything that happens in the production process is critical in this regulatory environment, according to John Schoenbeck, Papa & Barkley's supply chain system director.
MRPeasy made is possible to report Papa & Barkley's inventory above the 97% minimum accuracy level required by California regulations. Anything at 97% or below would trigger an audit of the company's entire inventory, Schoenbeck explained. One main advantage of MRPeasy is the low user cost and ease-of-use that allows every employee in the company to be a "critical user."
"Each user has the reporting capability and the training needed to be able to use the inventory system to record their day-to-day floor activities," Schoenbeck said. "At a big manufacturer like Coca-Cola or Heinz, you'll have one inventory person and one Q.C. on an entire shop floor of 50 people who have user accounts of inventory. In our case, everyone uses it, and because of that we all report every little detail of everything we do and we can account for each person, each item and every little thing that happens during a production operation. So when we get audited and inspected by the state, we have proof of work for everything we've done."
MRPeasy also has flexibility to deal with a constantly changing regulatory environment, according to Shcharansky.
"It's an out-of-the-box system but it's so flexible that it allows us to bend it to what we need it to do to cover our regulatory requirements," he said. "This industry is ever-changing and very challenging, and we went through compliance 1.0, 2.0 and 3.0 that really crushed our industry and product fell off the shelves. I went to a dispensary in Los Angeles and it was practically empty -- there were literally only two companies' products on there and one of them was ours."
Finding a niche for SMB manufacturers
MRPeasy was first developed in 2010 by a general software development firm based in Tallinn, Estonia. The goal was to meet the needs of small manufacturers who weren't being served well by the large enterprise ERP vendors like SAP and Oracle, according to Konstantin Klugman, MRPeasy product manager.
"We were getting lots of requests from small to mid-sized manufacturers for an ERP system that could meet their requirements at a reasonable cost," Klugman said. "We decided there should be a different approach for small companies than for large enterprises."
MRPeasy was developed with three critical factors to meet these needs, Klugman explained. First it would be cloud only, as developing an on-premises product would have needed a huge investment and driven the price up for users. Second, it needed to be intuitively understandable for users, so they would not need expert help from consultants to run and manage the system. Third, it had to be applicable for all manufacturing companies in all industries.
"There's not much difference between small manufacturing companies, whether they mold plastic or cut metal into shapes," Klugman said. "We decided that small manufacturers would be satisfied with an ERP system that would give them 90% of the functionality of the big systems at 10% of the price."
MRPeasy is available under a range of licensing options beginning at $49 per user per month for a limited starter edition. An unlimited license costs $149 per user per month, while most customers have an enterprise version at $99 per user per month, according to Klugman.