Here’s how ProShop is powering the factories of the future
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Welcome to today's episode of Lexicon. I'm Christopher McFadden, contributing writer for Interesting Engineering. In today's episode, we're talking to Paul van Meter, co-founder of ProShop ERP, a manufacturing software platform born out of pure necessity. We delve into why precision machining is the backbone of modern life, how real-time data and going paperless can transform company culture, and what it takes to help small shops punch well above their weight.

If you've ever wondered how the stuff we rely on actually gets made, this one's for you.

Gift yourself knowledge. IE Plus is a premium subscription that unlocks exclusive access to cutting-edge stories, expert insights, and breakthroughs in science, technology, and innovation. Stay ahead with the knowledge that shapes the future. Also, don't forget to subscribe to IE Plus for premium insights and exclusive content. Paul, thanks for joining us. How are you today? I'm really good. Nice to be here. Our pleasure. For our audience's benefit, can you tell us a little bit about yourself, please?

Sure. I am one of the co-founders of ProShop ERP, and we make a sort of a shop management ERP, QMS, MES, too many acronyms actually, for precision manufacturers, primarily in North America, but we do have clients around the world, including the UK and Australia. But yeah,

I am passionate about precision machining, the importance of that industry to the world. And every, every product that is made today starts with machining one way or another. So it's just fundamentally the case that, uh, that companies, mostly small businesses that do this work are the absolute foundation of all economies, uh, and, uh, have been helping them thrive, helping them, uh,

do well, succeed in this very complicated and challenging industry is really important to me. Excellent. Is it any kind of machining or more specifically CNC? It is primarily CNC machining, which if you're making machines

you know anything these days in the modern world uh you know the geometries are complex uh cncs really you know are where you need to be that's amazing amazing technology i can't stop watching videos of it on on youtube it's there psychotherapy yeah yeah and the new the new video the new machines five axis and multi-spindle machines are absolutely fascinating to watch so cool incredible um if we move on it might be worth explaining what erp means for our audience

Yeah, you bet. So ERP stands for enterprise resource planning. Um, and it's a very broad category, but more or less, it is the software that runs a business. It is the backbone of, you know, the business operations and sort of the digital side of running a company. And we just happen to specialize in precision machining companies that do that. Fantastic. Well then, thank you so much for joining us.

ProShop was, I believe, originally built for your own machine shop. So what problems were you trying to solve that existing ERP systems couldn't?

Yeah. So just a little bit of backstory. So my partners and I, we used to own a machine shop. We started that machine shop straight out of university, straight out of college back in 1997. And we started running the company on spreadsheets as most small businesses often start out because they're cheap and free and available. But very quickly, we realized that those were not going to scale with us. And we

Started looking for just a product to buy on the market. And we were just kind of dumbfounded by how the products on the market were just really not designed for our type of business, even the ones that were marketed to a machine shop like us.

So we were trying to solve just the daily challenges of running a precision manufacturing company. You know, we had jobs to make. We had to keep on schedule. We had to keep our quality high. We had to make sure things were done efficiently. And a lot of the tools out there just didn't really have

good solutions for for doing those things so we decided to hire a software developer and just build something for ourselves never intending to actually sell it to anybody else incredible it's amazing how many um software products sort of start as sort of built out on the spreadsheet and then advanced to it's like you soon reach the limitations of it and then build on to a database or something yeah yeah when you're trying to solve your own problems and you intimately know them uh

I think that's the best way to build something that really resonates with others that, you know, that do that same thing. Yeah, exactly. Yeah. Sticking on the subject of the foundation of ProShop, I believe your roots go back to building race cars in college. So how has that hands-on engineering background shaped your philosophy behind ProShop, BRP, Effortool?

Yeah, a bit, a little bit. I mean, I think, uh, part of the main ways is we were just do it yourself kind of guys, right? You know, as you, as you mentioned, you know, in, in our college experience, we, every year we would design and build and then go compete with a race car against other universities. And so we just had it in our sort of in our DNA that we could just build anything ourselves. We had no preconceived notions about what an ERP system was actually supposed to do.

We didn't, you know, quite honestly, when we first started looking for software, we didn't even know what it was called. You know, we had to do some research to figure out what even was the category of software that we were looking for. So that...

you know, that mentality of we can just build anything and sort of looking at it from a first systems perspective of like, what are we actually trying to solve here without again, having, uh, I'd say any, um, yeah, preconceived notions about how it was supposed to be done and how other traditional ERP systems went about doing that, uh, I think gave us a big, uh, sort of a big

big advantage in building something that was quite unique in the market. Absolutely. It's very important, especially a software like this, that you have experts who actually have to use it, have an idea of how the product should be, and flesh it out. A lot of products are just built by software developers. They may be great, but they don't address the problem the software is trying to solve, right?

That is the universal issue in this industry. Yeah. When you when you look at the solutions, you're like the people that built this have no idea how to actually run a manufacturing company. That's incredible. And anyway, so ProShop, I believe, integrates everything from scheduling and quality control to equipment calibration. What are some of the most technically innovative features that differentiate it from other ERP platforms?

Yeah, I think there's a few things. The first one is the way that we designed the system with everything just incredibly interconnected.

And this, again, goes back to the fact that we didn't have any polluted ideas about what a system was supposed to do. Because I mentioned at the beginning all these different acronyms, right? I mentioned ERP, Enterprise Resource Planning. I mentioned QMS. That's Quality Management Systems. You know, quality is...

is paramount importance for anyone serving, you know, serving customers in industries like aerospace or medical or defense or telecom. And then the last one, there's many others, but MES, manufacturing execution. That's really, you know, software to help the execution of manufacturing processes on the shop floor. And again, because we didn't really

have any other notions we just built something that kind of combined all three of those main categories in a super interconnected way um you know because it's browser based it's all through hyperlinks which sounds sounds rudimentary but the way we did it um

People just absolutely love it. They can go from, you know, if they have, for example, an inquiry from a customer about a status, they can, you know, pull up that order. They can instantly look at the work order, look at exactly where the part is at. They can look at any time tracking, how far it's through the operations, any issues people are having. If there's been any scrap, they can answer questions about, you know, quality and quality

the material traceability, you know, all within seconds, which generally is not something that most systems can do. Fantastic. Fantastic. It's, yeah. And then I guess I'd lastly, we do a very interesting thing with the way we manage files, which are crucial to building things properly, right? When you're producing a precision component that your customer has hired you to make,

you need to make sure you have the very latest revision of the drawing and the 3D CAD file, any specifications they are flowing down to you. And the way that we manage files through a cloud network drive very securely is just fundamentally different than the way most other systems do it. So we don't have time to get into details, but it's pretty cool the way our tech team and developers built that system. How vulnerable is it to...

keeping an internet connection if you suddenly lost an internet for whatever reason there's an outage does the whole system stop whole production story that would be a fail safe like shut the production down

Yeah, great question. Yes. I mean, we do have a very small set of clients that do run on premise, but the vast majority of our clients are in the cloud. And yeah, if they do lose their internet connection, they are not using ProShop in the meantime. So, you know, we, we, most of our clients, that's a pretty minor issue.

If they do have, you know, internet reliability issues, we typically, you know, recommend that they have a backup system. And even these days, having like a, you know, a 5G Wi-Fi hotspot is a pretty separate system than maybe their cable or their fiber internet interface.

into their building. But it's a pretty minor issue. You know, if they're losing electricity and that's what's taken their network down, they're not making anything anyway because the machines need power to run. Yeah, bigger issues to worry about then. You bet. It's kind of getting ahead of ourselves. Would you have a plan to have like an offline kind of version that could run that beneath the internet? Was that not really a priority?

You know, it's not something customers are asking for, so it's probably not on our roadmap. You know, you could have something that, you know, you could put data into and then sync it, you know, an hour or two later when you get back connected. But yeah, it's just not something people are asking for because it's such a rare occurrence. Oh, no, fair enough. Just got a question popped into my head. Yeah, yeah, absolutely. So sticking on the subject, real-time data is obviously a major selling point.

Uh, can you give a real world example of how that kind of data and pardon me, visibility changes decision-making on a factory floor if possible? Peace. Yeah. Um, I'll give you a few real brief ones and then one a little more in detail. So I mentioned quality. So if, uh, if a factory worker is, you know, out there making parts on a machine and they are measuring their parts with pro shop, putting in that data, if they, uh,

put in a measurement that's not within tolerance, ProShop will instantly alert them and then they can, then it can instantly alert their leads or their managers so they can, you know, bring the best team right over to that machine to help them, you know, solve the problem. Similarly, if they're, if they're taking longer to do a job than they should, those, those automatic alerts get sent, you know, to management or to leads and that can really help

excuse me, that can really help a company make more real-time decisions about how to solve problems instead of potentially waiting hours or even a day before they realize there's a big problem, which is often the case in these kind of companies. But one...

method that that really kind of i think highlights the benefits of going paperless and having that all real time is in these kind of shops it is common that their customers send last minute changes sometimes they are changing the actual design with a new drawing revision sometimes they are changing the date that they want this job and when you have a paper-based system

That could take, you know, many hours or even a day to get those changes incorporated. Go find the old job to get rid of the paper and replace it with the new one, the new information. But in ProShop, you can update that stuff instantly. Everyone instantly gets notified on the shop floor that something's changed.

you know, with pop-up alerts that says, hey, you know, this drawing has just been changed. Why don't you click here to see what the difference is? So that can, you know, that can really just speed up the process of managing these jobs, making sure you're making the right thing and making it efficiently. Excellent. Does it have any capability to provide sort of feedback for improvement? Say you're prototyping something.

you expect i don't know expect the part to take five minutes maybe in reality it takes six i don't know i'm just plucking things out my head um is there any way the system could say oh if you tweak this bit here you could shave off a minute of production so it's a tool yeah the question does make sense um

The software does not tell you how to optimize your actual cutting time or cycle times. That type of software would typically be the CAD CAM software, possibly, where they're generating the actual files, the G-code that runs the machines. But ProShop absolutely has an entire system built into it where the workers that are out on the shop floor can identify improvements that they see

and instantly feed that back up into the office, which is something that almost every other system we've ever heard about just does not have. And we're actually going to get to this in a later question, but it really helps empower the shop workers to feel more heard, more seen, more connected. And that improves everything in the company.

Excellent. Still on the subject of the workers themselves. You mentioned clients seeing labor savings of up to 25% and jobs set up time cut in half. So what kind of feedback do you hear most often from clients after implementation of your system?

Yeah. So yes, I mean, those are some pretty lofty numbers, but they're absolutely true. You know, there's so many ways that ProShop just streamlines their operations, which often again, takes their setup time and cuts it in half, which that incumbent, you know, combination with so many other things often helps to increase their throughput by 25%. But just, you know, sticking with what I just said before,

Because we're now connecting, you know, in a very real time digital way, you know, the shop floor to the office and every other department, it really democratizes the data in a manufacturing company.

And that allows the workers that typically don't have a mechanism to share back into the system to be seen and heard and have their ideas, you know, acted on. Because let's be real, when someone is out on the factory floor making something, they are typically the experts in exactly why the process is going well or not going well. And so capturing their ideas is super important. And when you...

allow them to contribute that way, they just feel more connected. They're more engaged at work. You know, there's, there's so much, there's so many anecdotes these days about how many people are just sort of going through their day, you know, not really feeling engaged in the workplace. They're just there punching in and punching out. Um, but that just, that dynamic just really changes and, uh, we'll get to it again later, but it even starts changing the culture. Absolutely. And you might find your next chief engineer. Yeah.

oh yeah yeah yeah yeah yeah you some yeah a hidden gem that's right underneath your nose that you didn't realize had so many great ideas because they didn't have a way to share it in a way that was actually effective absolutely critical um okay uh so with your at the moment there's like an emphasis on empowering smaller medium manufacturers uh so how has pro shop helped these companies become more globally competitive if it has it certainly has um

I'll share a couple anecdotes. It is very common, of course, that a small manufacturer will have their customers or their prospective customers come and visit them. If they're trying to get on that approved vendor list to become an approved supplier for a big company, they're going to send a quality team or an audit team to come check out that supplier before they're willing to give them any purchase orders.

And when they walk into, you know, let's say a 25 person, you know, small shop, second generation, third generation business, and they see a company that is completely digital. Everything's connected from the quoting to the order entry, contract review, planning, purchasing, scheduling, shop floor operations, quality, training, everything.

you know, QMS compliance, if they have like an ISO certification or an AS9100 certification, when that's all completely paperless and fully connected and they can show them anything that that customer wants to see in a couple of mouse clicks,

it absolutely sets it a bar of just how professional this, this organization is, how robust their systems are. And it puts them, you know, at a level. And oftentimes these bigger companies are sort of jaw on the floor, like, Holy cow, this company has way better systems than we do. Right. I've heard that time and time again. And that instills a level of confidence that this cusp, this vendor is going to execute and be a really solid supplier and,

And they are more likely to win, you know, win those jobs, win those customers and win more work. And that is hugely important, especially at this time right now where, you know, there's a lot of, and COVID even started to accelerate this. There's a lot of things, you know, work moving between continents and countries and trying to find a new sort of balance in supply chain.

And these big companies are really, they're in the risk mitigation business. They want to make sure that when they set up with a supplier, that supplier is going to be rock solid because the cost to that end customer, if things, if parts don't show up on time and they can't build their product, you know, they might have planes on the ground. They might have, you know, medical devices they need to ship to patients. It's

It's critical. So it really does level that playing field and lets our customers compete at a higher level than they would otherwise. Absolutely, yeah. I mean, especially with ISO, I was going to ask about that, international accreditations. Yeah, that's a huge part of our system. Do your clients get kind of, not instant, like sort of automatic, do they automatically...

what I'm trying to say, meet the requirements of an ISO standard, or they still do some work themselves. And then once it's done, it's basically automated.

Yeah, that's maybe a bit of an oversimplification. But yes, ProShop does have the ISO standard and even the AS9100 standard and the 1345. There's different standards for different industries. They're all basically centered on the ISO 9001 standard. But yes, ProShop has that standard sort of deeply rooted in the DNA of the workflows of how the software works, which is really then an operating system for how the company should work.

And so, yes, very much so. If a customer is, or a company is, you know, using ProShop in the way that we designed and built it, they are pretty much going to be ISO compliant, and it's going to be much easier to maintain the record keeping and the compliance of meeting that standard than it typically does with a more manual system or a third-party system that's not actually connected to the ERP. Absolutely, yeah. And from my past, I think to

do these kind of accreditations. I tell you, that's a huge deal. It's a big selling point. It is. It's one of the biggest things that our customers talk about when they reach out to us. And by and large, we only work with companies that need to meet some kind of quality standard.

you know, we have a few that don't, but you know, push up has just huge amount of value when you have a company that needs, needs to meet really strict regulations. And, uh, the, the way I describe it typically is the more complex the requirements are, uh, the better pro shop works. Perhaps we make sense. It makes sense to me. Um,

So you mentioned ProShop is paperless, which you're very proud of. So how important is sustainability in your overall mission? And how do clients respond to this eco-friendly approach? Yeah, I think the eco-friendly approach is a side benefit to them. And it's certainly something that some of the bigger companies do value in their supply chain. But yeah, it is important to us that

You know, we try to do what we can to be contributing in a positive way to the, you know, to the environment. I haven't done the math. I was thinking about trying to do it, but I have no doubt, you know, we, our clients collectively have saved, you know, millions of reams of paper. You know, they're, I mean, I've had clients tell me, you know, they're saving,

you know, $25,000 a year just in paper and toner costs. Right. And that's a, that's one company, you know, one, one year. Um, so yeah, it, it, uh, it really makes a difference. Um, yeah, that's, we're proud to, you know, help, uh, perpetuate that.

potentially a module then for your UERP ever ISO 1400 standard. That's right. Yes, the environmental standard. 14,000. Yes, absolutely. How much carbon we're saving every day. Yeah, you bet. I love it. Invoices in the post. So, adoption of UERP systems is notoriously difficult. What's the secret to making ProShop easier to implement than traditional platforms? Yeah, so, I mean, most

big ERPs, first of all, they're behemoth systems, right? And we, you know, just to be clear, you know, we don't really try to compete with, you know, the SAPs of the world, you know, the oracles that are, you know, for multi-thousand, you know, person companies. But still, even some that are designed to be for smaller companies, they are just complex. They require a ton of configuration and customization even to work.

But I think fundamentally the reason why our implementations are generally much simpler and faster than others is because we are so narrowly focused on these precision manufacturing companies. Because the software was designed and built specifically for that type of company, it...

It doesn't require a bunch of customization and workarounds to make it work, right? Some of the things that are so complex about a big ERP is that you have, you know, a big discovery phase where you're like, okay, let's figure out how your company works and let's figure out how the software works. And we have to figure out how to meld that together. And oftentimes that just requires, you know, customization or integrations with other systems or workarounds or, all right, well, let's make a spreadsheet and then pull the data out of the spreadsheet and do this or that.

we just eliminate 95% of all that because we're not trying to be a jack of all trades. We're really specifically focused on these types of precision manufacturing companies. And since that's what we did,

the solutions are all pretty tailored, you know, to that industry and solve the problems without a lot of customization or just challenge to get it to work. Exactly. And now you'd be able to sort of streamline the system, keep it relatively small, large general purpose, which is bloat with the code and stuff. It would be unmanageable. Yeah, for sure. And, you know, many systems, even those for, you know, smaller to medium size,

They require a full-time administrator just to keep it running, you know, and we absolutely do not need that. I mean, we have, you know, believe it or not, we have probably half a dozen customers that have a single employee and they certainly do not spend their time administering the system. They're there getting jobs out the door and ProShop's facilitating that process. And yeah, because it's just so specifically targeted and tailor-made for that purpose.

And if you've got any updates, presumably that's automated, the actual update? Yes, of course. Yep. Yep. And our clients can opt out of automatic updates and then have us, you know, review them and schedule at a time that's convenient for them. So it's not like many, you know, SaaS products where, you know, an update gets pushed out, you don't have any forewarning and it just happens, you know, overnight or during the middle of the day. So,

Our clients can opt in or out of those automatic updates as they see fit. That makes sense. But yeah, but then the updates is just, you know, instant doesn't have anything to do, you know, they have nothing to do on their end other than review what's new.

Yeah, but presumably the biggest ones would be updates to ISO standards or new standards coming out that are relevant to the system to be updated to make them compliant. What would the lag time be if any standard came out? How quickly could you expect it depends on what the changes are? Well, typically we know well in advance that a standard is changing. So, for example, there was a big change to the AS9100 standard just to

just last year and a new form or a new change to one of their main forms for inspections. And, you know, we saw that in draft, you know, months ahead of time. We updated our forms and as it became live and started pushing out into the industry, we were already there with new updates to the forms. Okay. I apologize if you answered it, but can you manage the whole system from production to shipping at the end? Absolutely. Or is it just production?

Yep. Production, tooth shipping, and even generating invoices, vendor bills. We do rely on an integration with an accounting package for doing your general ledger and your AR and AP process. But the integrations are quite seamless, really. It actually...

probably makes it easier for them to, you know, find and employ bookkeepers using a really standard off-the-shelf system like QuickBooks or Sage or Xero, as opposed to, you know, needing to train people up on a very obscure and custom accounting system in their ERP. Okay. Again, it's sort of, obviously you can customize the labels and stuff, but yeah, how many, I mean, every country has different import restrictions and different forms you've got to have. Presumably that's all built in. It could be,

as modified, updated as needed. We certainly have many of those types of forms, um, that you can, you know, customize quite a bit. Um, and, uh, and we've just recently come out with, uh, with multi-currency. So, you know, it's easy if you're working across borders to, you know, to cost in one currency bill and another, and, you know, doing all those kinds of things that are important. Cool. That sounds pretty cool. Um,

Okay, you emphasize both efficiency and people, including better communication, transparency, and talent retention. How does the software help improve workplace culture in a manufacturing setting? You've kind of answered it. I have, you know, so...

improving that communication between people and departments just helps people feel more engaged in the workplace and then do a better job. But I'd say the biggest answer to this, and we have definitely heard our customers tell us like, wow, our culture has actually been changing. We were not expecting that. But I think the biggest reason is we reduce stress, right? I mentioned, well, I haven't mentioned specifically, but I believe the precision machining

the precision machining business is one of the absolute hardest businesses in the world right it's incredibly complex there's so much regulation there's a million things that can go wrong on any job there's just so many details you need to keep track of and most manufacturing entrepreneurs are really good at manufacturing that's why they just they were experts in the field maybe they were a tool and die maker or machinist or programmer and they decided to start a company but

They're not actually that great at running the business itself. And when, just as an example, you know, it's not uncommon that a shop like this is, you know, struggling to hit 60, 70% on-time delivery, right? When their customers say, I want my parts here on this date, it's hard to make sure everything goes right and everything comes together. You know, the stars have to align, so to speak, for that all to happen.

And when you're struggling with just a thousand little paper cuts every day to make this happen, people can get stressed. They can start snapping at each other. That just perpetuates this culture of everyone's on edge and kind of, you know, not real happy. And when all those, you know, not all, but when the majority of those problems are solved and go away,

Like things, people are just happier at work. There's less stress. They're more friendly with each other. There's more banter, more playfulness, more kindness. And that just improves the culture. And that is one of the most impactful parts to me is hearing this feedback from our customers that say, our employees like working at our company more now. And we can, you know, and we're growing and we're hiring more people. And that just is an amazing outcome.

Absolutely, yeah. All the T's crossed and the I's dotted. Well, yeah, being taken care of just lets the company focus on what's really important, actually producing a product, not producing paperwork. Yeah, absolutely. And doing an environment that supports employees so they enjoy it and want to be there and recommend their buddies and friends to come work there as well. Yeah, and actually compete with big boys, punch above their weight, really. Absolutely, yeah. You've got this system. Yeah. Fantastic.

Looking to the future then, what's next for ProShop? Are there any technologies like AI, machine learning, or Internet of Things integration on the roadmap? Probably all the above. I can't get too specific into our roadmap, but yes, we will continue to focus on a more interconnected system across both software and hardware within a company. That's crucially important these days.

AI, of course, has taken over everything. And, you know, that is and will be a real focus of ours in the future. And then the other one, the other sort of main area is that we're putting a lot of focus on is cybersecurity. Okay. Some of the, well, many of the, you know, critical industries that really want to protect their data well. They do not want their data hacked. Right.

Sort of leading the charge is the defense industry here in the U.S. with the CMMC requirement that's coming up. Cybersecurity Maturity Model Certification. It's a mouthful. We continue to build lots of tools to help be more compliant in an easier or automated way because...

These days, you're just not going to win business if you can't have a really strong posture in that area. Clients just will not sign up and work with you. Absolutely. Well, good luck with that. That's not going to be an easy task. No, it's a big one. That is all my questions. Is there anything else you'd like to add that we haven't touched on you feel is important, Paul?

I guess, you know, maybe just coming back to what I said at the very beginning, you know, the companies that are out there doing the type of work to build the machines that build everything else in the world, you know, whether it's, you know, computer equipment like we're using to have this recording today, whether it's the shirt that you're wearing, whether it's the chair you're sitting in or the glasses that you put on to see,

all those products are made by machines and those machines are filled with machined parts and fabricated parts and electronic parts. But even the electronic parts are made on machines, right? If you distill it all the way down,

every modern product starts with a machine of some type and those machines are made up of machined parts that are made by machinists. So, uh, I've just got increasingly passionate over the last several years about, about the importance of this industry, the important work of that, those machinists and everyone that supports the making of parts like that is I've started, uh, using, uh, the hashtag think a machinist, which lots of people are adopting. Um,

And, uh, probably to go along with, you know, thank a farmer and, you know, thank us, thank a miner, right. To get it, to get raw materials out of the ground, to feed people that need to do this work. It's all,

Sort of, again, back to first principles. But yeah, I'd love for people to think about that. Most people don't even give it a second thought in their daily lives. Like they take all modern products kind of for granted. But when you really think about what has to happen for it to get created...

you know, we need engineers designing them. We need machinists making them and then all the other supply chain things coming together and people to deliver products to, you know, to our house in a cardboard box. Same or next day when we order it off Amazon. Right. But, uh, so yeah, thank a machinist and everyone else that makes it, makes it possible. Absolutely. I think I speak for the audience when I say, uh, you're preaching to the converted there. I love it. I love it. With that then, uh, thank you for your time, Paul. That was fascinating.

Thank you, Christopher. I appreciate it. Yeah, I really enjoyed the conversation today. Our pleasure.