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Episode 134 – Paul Osterhaus, Managing Partner at QOC Innovations

by | Mar 26, 2026 | Episodes

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Episode 134 – Paul Osterhaus, Managing Partner at QOC Innovations

Manufacturers are generating more data than ever — from machines on the production floor to purchasing, inventory, and finance. Yet many companies still struggle to turn that data into clear answers to the questions that matter most: Are we profitable on a given job? Do we have the capacity to take on more work? Where are bottlenecks slowing us down?

In this episode of Manufacturing Matters, TECH B2B Marketing‘s Winn Hardin and Aaron Hand talk with Paul Osterhaus, managing partner at QOC Innovations, about why so many manufacturers remain data rich but insight poor and how modern enterprise resource planning (ERP) strategies can help bridge that gap. One key piece of advice: Don’t try to boil the ocean with massive, disruptive implementations. Find the one or two problems holding you back and solve those first.

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Episode 133 – Geoff Dawson, Director of Sales at FANUC: Audio automatically transcribed by Sonix

Episode 133 – Geoff Dawson, Director of Sales at FANUC: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Jimmy Carroll:
Hi everybody. My name is Jimmy Carroll. I'm the vice president of operations at Tech B2B Marketing. And welcome to this episode of the Manufacturing Matters podcast. I'm joined today by Geoff Dawson, who is the director of sales at FANUC, and it is my pleasure to have you. Thank you so much for taking the time.

Geoff Dawson:
Thanks, Jimmy. Appreciate being here.

Jimmy Carroll:
Awesome. Well, the pleasure is mine. I got the chance earlier to watch a great executive roundtable discussion at the A3 Business Forum, where we are this week. And Mike Cicco was on it. He's the head of FANUC, CEO. And they talked a lot about how 2025 was sort of a year of uncertainty, and 2026 is the year of optimism. There's a lot of reasons to be excited for 2026. And that's where I'm going to start things. What are you most excited about and why should people be optimistic?

Geoff Dawson:
I'm really excited about the accessibility of technology and the new technologies that are coming out and the purpose of those technologies, things like AI and cobots and digital twins. They're all really technologies to make things more accessible and to make the job easier. So to make the deployment of robots much more agile, much faster. Just seamless, so to speak. And you don't have to be a rocket scientist to engage with a robot. We're bringing the technology forward that allows for ease of use and for ease of operation, for these companies to implement them quickly and successfully.

Jimmy Carroll:
Yeah. And ease of use is a good topic, and it seems to come up a lot and for all the obvious reasons. And the reason I'm asking this question is, we talk a lot in this industry about attracting young talent to come in, because there's a labor shortage and manufacturing isn't the sexiest job maybe for young people. But if robots are easier to use, if machine vision technologies are easier to use for the non-integrator engineer type, that can attract people to come into this industry as well. Wouldn't you agree?

Geoff Dawson:
Absolutely. We call them the dull, dangerous, and dirty jobs. And we don't have a lot of talent that wants to go into that kind of manufacturing. But we've all grown up with some kind of device. We all understand how ease of use has applied in our lives. And even current operators, allowing them to move to the next level. And now they're operating equipment, they're operating a cell rather than being the cell, rather than being the devices that are doing the loading and unloading, they're operating the equipment and the technology that is now advancing both their company's ability to be successful and their lives as well.

Jimmy Carroll:
Yeah. It's interesting. Like, iPhones now have no buttons at all. But the first iPhone had one single button, and I remember that transition, thinking, "How are we going to go from a full keyboard to one button? How's that going to work?" Well, in some ways that's happening in automation, like with intuitive HMI for both the technical and non-technical. And that's something that's really interesting to follow. And it's kind of a good segue into another question I wanted to ask you, which is about this gap in labor and the need for training of the younger generations. There have been some really significant investments in manufacturing and production facilities in the U.S. So obviously, this is going to lead to an even larger labor shortage, gap. And that's going to mean more automation. So how do you think, in terms of U.S. reshoring efforts, robots are sort of going to lead the charge there, would you say?

Geoff Dawson:
Absolutely. Back in the day, we talked about: How many heads are we going to remove from an operation? Now it's: How do we maintain the heads we have and how do we subsidize them? And robots, cobots especially, are ways to do that. So we're seeing a lot of that, things that we didn't think to automate before, high mix and low volume, now are becoming automatable with some of the tools that we have out there. But I think robots are a very important part of bridging that gap because we have a skills gap, and it's an ever-increasing skills gap.

Jimmy Carroll:
Yeah. And FANUC obviously does its iRVision technology, but there's a lot of different technologies that come together to make that possible. And you look at the different-colored lanyards here, and it's the motion control and AI and machine vision and robotics. And all these technologies work together to make these operations happen. A topic that's come up a lot is lights-out. Lights-out manufacturing. Not just manufacturing, but also in the warehouse. And I know FANUC has its Zero Down Time solution, but beyond that, how can we get the lights out? Can we get the full lights out? Do you think we'll still need some minimum level of human intervention? And what are your thoughts in general there?

Geoff Dawson:
I think absolutely there's human intervention. But I think we can get to a level where it requires less of that. I work a lot around the machine tool industry and around machine tool load/unload applications. And there's a lot of standard pre-engineered solutions out there now that have drawers and tables that the parts are populated on, and they get loaded up, and then the robot loads and unloads, until basically you end up with finished parts. And a lot of times now these are going into small/medium size — I mean even down to the job shop level. You know, we have over 30,000 what we consider job shops in the U.S. So there's a lot of opportunity there. And some of these companies are doing some sort of lights-out where at the end of the day, they can load these drawer systems or these systems up and come in the next morning with finished parts. So that's a variation of lights-out. And FANUC itself has a company that's been doing lights-out production in Japan for a long time. We have over 5,000 robots in Japan. We build robots with robots. We have machining factories that we could put the raw materials in, and we have a long production cycle of several days before we have to theoretically replenish those systems. So I think we can get there. I don't know that every operation everywhere can go lights-out. But I think there are certain low-hanging fruits, things that can be run as lights-out.

Jimmy Carroll:
It's probably application to application or industry to industry for sure. Maybe there are some that are dealing with pharmaceuticals. Maybe that's more attainable than others.

Geoff Dawson:
Yeah, food. Even if you could come up with an always-running system, at some point you have to sanitize, for primary food handling. So there's sanitization that has to happen. So it's not really they can run. But I think we're at a point where a lot of these systems, assembly systems and such, run several hours, which is somewhat lights-out. You know, they can run without intervention.

Jimmy Carroll:
Yeah, Alex Shikany called it a dark factory. Well, it's like the mostly dark factory.

Geoff Dawson:
Yeah mostly, but it's very interesting. And obviously the closer we get, the more efficient businesses can run and everything else.

Jimmy Carroll:
You mentioned food, and that's a good one I want to ask about, because there are specific needs in food with wash-down environments and things like that. But I know that, when it comes to robotics, automotive a lot of times takes the main stage in terms of the applications. But what are some other industries where you've seen robotic adoption growing and where maybe even your company has had to adapt its product development to meet these new needs?

Winn Hardin:
Everybody, I just want to take a quick second to thank our sponsor. Manufacturing matters is sponsored by tech B2B marketing. They're a full service public relations and marketing agency that focuses on technology companies, especially in the energy and automation markets. They provide full service media relations, investor relations, employee relations, full end to end content development, video services, animation, full IT stack development from website integrating with ERP system, CRM, marketing automation systems, and they bring a whole lot of knowledge and experience about technical markets since they've been servicing those markets for over 30 years. So if you have any questions you want to learn more, go to tech b2b.com. And now let's get back to the show.

Geoff Dawson:
Well, I'd say definitely food, because there's requirements, sanitation requirements and such, that have required us to take a look at how our robots are constructed and ensure that we have the ability to wash those robots down. Definitely. And the ability to handle chemicals. There's some pretty corrosive chemicals that are used in that cleaning process. So definitely there. Pharmaceutical assembly-type stuff. FANUC, we weren't players in the SCARA area. We brought SCARAs out. Now we have a full line of SCARAs and they're very, very popular.

Geoff Dawson:
And in that assembly, whether it's electronics assembly or whether it's used in pharmaceutical, whether it's used in medical assembly, there's a big demand. We got into cobots by taking industrial robots and making them cobots. But we found a need to have a purpose-built robot to really fit what the market is looking for. So that's where our CRX line came out. Painting. That's another area. FANUC has been building paint robots in the U.S. since 1982. So we manufacture the paint robots in Rochester Hills, Michigan, that are shipped all over to our subsidiaries. And that goes back to a joint venture we had with General Motors, where they kind of brought the paint technology. We brought the electric servo motor technology and married them together. And now paint's a huge, very big business for us.

Jimmy Carroll:
Yet see a lot of different industries. So it's kind of hard to use a crystal ball here. But what are some industries where you could see some significant growth in the next couple of years?

Geoff Dawson:
I think anything to do with data centers.

Jimmy Carroll:
Yeah. Yeah.

Geoff Dawson:
And when I say that, it's the AI. So it's building the stuff that's going into the data centers. So we're seeing a lot of need. You're hearing a lot of programs that are building the GPUs and building the cases and assembling those. A lot of backup power for data centers. So we're seeing a big push because they require a lot of power and they also require backup power. So you're seeing a lot of power generation growth, from some big customers. So definitely one of the areas. Space, things that take the satellites into orbit. We've seen a lot of push there with all the companies that have gotten into that space. Definitely pharmaceuticals, especially with all the new injectables and so on and so forth. We've seen a lot of growth there too.

Jimmy Carroll:
What about applications that could be considered so-called physical AI? First of all, what does that term mean to you It's something that has been discussed kind of at length lately.

Geoff Dawson:
People have strong opinions on it. But I think we've been doing it for a long time. We've incorporated AI for over 15 years and we use AI to tune servos. We used AI for a product we had called Learning Vibration Control, where we had a vibration sensor on the end of a robot arm, and we would go through the pass. And the whole purpose was to try to smooth out that motion by sensing the vibrations. And this was very important in automotive when they were getting the tack time down on, like, spot welding applications, really intense, really fast, quick, tactile, quick tack time applications. Safety. Physical AI is in safety. A lot of the new safety systems are starting to see where they can incorporate AI and of course AI vision. The impact of all the startups. Especially I would say one of the biggest areas where we've seen AI the most in the last few years is the e-commerce and warehousing space. With all of the different companies on specific applications. You'll have somebody that's really focused on truck unload. You'll have somebody that's really focused on eaches picking. Somebody that's really focused on sortation, palletizing.

Jimmy Carroll:
High-speed barcode reading, whatever.

Geoff Dawson:
And just having more compute power for that. FANUC's just really opened up and we've got streaming now. We've got ROS 2 drivers. We've got some Python support in our next-generation controller. We've got all kinds of tools now, because at the end of the day, it's the startups that have the thought on the different kinds of technology. They want those tools. That's how they're going to come to reality. And I think Mike talked a little bit about that earlier, too, about how these companies, it opens up a lot of possibilities for them. But it also opens up safety concerns too. So it's a Catch 22. But I think having those tools available, having the ability for people to get access and use those tools that they're using to develop different applications within our markets.

Jimmy Carroll:
Yeah. And that's a really good point. One of the things I wanted to ask you about was, I've seen a number of companies out there, whether they're startups or even sort of grown beyond being a startup, that don't necessarily manufacture a product. They offer solutions, and oftentimes they're using FANUC robots. What are some examples in recent years of customers of yours that are using FANUC robots but maybe integrating their own AI or vision or whatever to solve new challenges?

Geoff Dawson:
Most prominently it was in the warehousing and e-commerce space, right? Figuring out the depalletizing, but we've also got our own box locators for doing that with AI now and starting to see it on the machine tool side, using AI chat with the robot in order to tell the robot, instead of having to fill out a form, it's more of a conversation, almost like a ChatGTP, telling the robot and the machine what the setup is and what the part they're going to run is.

Jimmy Carroll:
Yeah. And that's a really good point too. Like these large language model tools. Even just a few years ago, people were going, yeah, here and there they can be used, maybe to help with some coding. But now there are large companies that are integrating LLMs into their environments. And that's super fascinating to me. What else is out there? What are you most excited about in the next couple of years? Do you have any predictions, things you expect to see?

Geoff Dawson:
For sure, for sure.

Jimmy Carroll:
What else is out there? What do you, what do you, um, what are you most excited about in the next couple of years? Do you have any predictions that things you expect to see?

Geoff Dawson:
Just the continued usage of our technology to help fill this skills gap I think is important. I think there's going to be more plug and play on vision and grippers and continued development of applications. I'm excited about the opportunity to bring automation and robotics to help the small company become very successful, or they can't find people. So that excites me a lot. I think just continued growth in the collaborative robots. We continue to see new applications. It's funny, you know, collaborative robots. At first it was the do-it-yourself thing. Now it's about solutions. And I'm excited about all the solutions that are being developed, that people can buy a solution almost ready to go, in some cases ready to go. And also the adoption of cobots. The large companies are now doing programs where they're realizing that a collaborative robot can be an assistant to their operators, to present parts to the operator, so they can allow the operators to really concentrate on what they need to and get away from ergonomic issues, get away from dirty issues and danger, just handle and really be supplemented by the robot or be subsidized with the robot.

Jimmy Carroll:
Yeah. That's a really good answer. I think that to me, it feels like the industry might have dips and jumps in terms of growth, but for the industry to really continue to grow, more and more, small- and medium-sized companies need to be able to adopt automation, and seeing what companies like FANUC are doing and then companies that are leveraging FANUC's technology to implement their own software or whatever it might be as a total solution and making these things more accessible, easy to use. There's a lot of opportunity there to see growth in automation. And to me, one of the most exciting things, and I say this too often and I know I shouldn't, but it's seeing all these different technologies converge to solve challenges for people. And that's going to be more necessary than ever now with reshoring efforts.

Geoff Dawson:
Yeah, I'm really, really excited about our investments, reshoring, FANUC investments. You know, when I moved to Michigan 11 years ago, we had 400,000 square feet in Michigan. Now we have almost 2 million square feet. So since 2019 we've built a 450,000 and a 650,000 square foot building. And we can deliver robots pretty quickly, which I think is needed at this time. And training people too. It's very important, the training aspect. We've got a big investment going on right now into our training academy. So that's really exciting. And also on the customer side, there's a lot of pilots out there. We have a lot of pilots and the technology is being proven. And I'm excited for those pilots to turn into scale. So really looking forward to seeing some of these really kick off.

Jimmy Carroll:
Yeah.

Geoff Dawson:
Yeah. So I think I think, you know, really looking forward to seeing seeing some of these really kick off.

Jimmy Carroll:
Absolutely. FANUC's leadership in the industry is something to follow. I don't know how many millions of robots you've sold now, but I remember you hit some milestone a few years ago. And I thought to myself, "Wow." I had no idea. Geoff, is there anything else we haven't talked about that you feel is important to mention today?

Geoff Dawson:
Geoff Dawson: I don't think so. I've really enjoyed the conversation. I think everybody — our customers, our partners — we're all going to be winners going forward. I think there's so much opportunity. It's an exciting time. But I think every year is going to be more exciting. I think we just have excitement upon excitement coming up with this industry.

Jimmy Carroll:
I couldn't agree more. Yeah, absolutely. And everyone probably listening to this knows who FANUC is. But if you don't, go to FANUC.com and check them out. Go on LinkedIn, read their blogs, see what they're up to. It's been something I've been following for a long time now and look forward to their continued leadership in the industry. And same for A3. Go to automate.org. If you're looking to make that leap into automation, FANUC and A3 would be two great places to start. And with that, Geoff, I would just thank you for your time. I really appreciate it. If anybody has any questions, feel free to reach out to us at Manufacturing-Matters.com, and once again, thank you very much.

Geoff Dawson:
Thanks, Jimmy, I appreciate it.

Jimmy Carroll:
Awesome.

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Aaron Hand: [00:00:08] Hello and welcome to this episode of Manufacturing Matters, where we talk about the technologies and trends that are shaping the global manufacturing industry. I’m Aaron Hand with TECH B2B, here with my colleague and managing director Winn Hardin. Today we are here with Paul Osterhaus, managing partner at QOC Innovations, a company that is focused on ERP strategy and implementation. Welcome, Paul.

Paul Osterhaus: [00:00:32] Thank you. Thanks for having me today.

Aaron Hand: [00:00:34] So just to get us started, because I try to keep those intros short, why don’t you just give us a quick rundown of QOC Innovations’ place in the manufacturing ecosystem?

Paul Osterhaus: [00:00:44] Yes. So we specialize in Odoo implementation. Odoo is an open source ERP with over 16 million users worldwide. And so we have a team of 75–80 people. We just do manufacturing and distribution implementations. And although we have a development team, and I stack our development team up to anybody there, but what really sets us apart is our manufacturing distribution knowledge. So our business consultants come from industry, and we’re really just trying to change how this works. We’ve all been part of ERPs that are a struggle. And we’re there to support and help our organizations, our customers, to get to the next level in a different way. And so that’s our strategy, is to take care of them and do the right thing and to help them implement best practices and get to the next level in their business.

Aaron Hand: [00:01:37] Okay. So that makes sense. So when I think about the manufacturing world, I just think how much everybody is drowning in data, and they don’t necessarily know what to do with all of this data that they’re gathering. They’re still starving for insight despite all of this. So why is it that so much of that data in the plant is not getting used or not getting used correctly?

Paul Osterhaus: [00:02:00] Paul Osterhaus: Yeah, there’s lots of examples of that. I think there’s a lot of use cases around. I think there are people that are starving for data and there’s still people that are looking for data. But for those that have a lot of data, a lot of times, maybe my data is stuck in a PLC on the shop floor, or maybe my data is in a silo over here. Like, how do we bring that together and make it actionable, both so that we can have an improved understanding of throughput and our capacity, but understand, like, what is the costing associated with that? And so we find ourselves — I was in a conversation earlier today with a customer who said, “Hey, I need to be able to pull that data into my ERP at a granular level so that I can understand from a quality perspective, when I was running this job, what was the cost? What were my parameters when I was running it? So if I have a quality issue, I can see that.” So we find ourselves in that situation a lot, where we’re trying to make people’s data more actionable to them so that they have visibility. And we find pulling that into the ERP system makes a huge difference.

Winn Hardin: [00:03:02] So we mentioned ERP — enterprise resource planning systems. It’s super critical. And it becomes such a hot topic during the pandemic era. And then during the global, international trade era that we’re in right now, which is posing some unique challenges as we move forward. How critical is it to have your ERP system connected to — or do you also need a manufacturing execution system, an MES, or a warehouse management system, a WMS? Does ERP stand alone or does it need to have this ecosystem built around it?

Paul Osterhaus: [00:03:35] I think you’re raising a great point. ERP has multiple definitions. For us, an ERP system both has the MRP process. It’s managing the manufacturing orders, but it also has the inventory side of it. We’re doing warehouse management too. So we’re picking parts. We’re shipping parts from there. But we also have the accounting side of it too. So we understand the cost to cross the road. But it’s critical that all of those things are talking to one another and they’re connected in a way that we’re not siloed. So can I pull up an invoice and see the associated sales order that was tied to that invoice? And can I see the manufacturing order so I can do a job cost and say, “Okay, when I shipped this part, did I make money or not?” Having those all tied together with the parameters from the shop floor makes a huge competitive advantage for a customer.

Winn Hardin: [00:04:27] Absolutely. And we haven’t even gotten to the quality components that we’re talking about. But I know we’re going to delve deeper into that. And just in terms of process optimization, visibility is one thing, but optimization is really what we want. I mean, when I think of these discussions, I always think of the old engineering saw: “You cannot manage what you do not monitor.” And I come back in our company all the time, where we really focus on that. So I appreciate you adding that.

Paul Osterhaus: [00:04:50] Yeah. And it’s not just about, like, yeah, you’ve got to be able to see it, but you’ve got to be able to take action with it. Can I look at my parameters, my quality parameters throughout the entire day at the work center level. But then can I look at it from a particular job perspective to say, “Hey, I had a quality issue here” or “I think I’m going to have a quality issue; I need to go look at these parts.” Or a customer contacts me with a with a quality issue. Let’s go back and see what were the parameters running on that thing.

Winn Hardin: [00:05:14] Absolutely. Especially in clawback situations, so critical, or any kind of mission critical safety components. And it’s got financial benefits no matter what industry you’re in. But it’s super cool.

Paul Osterhaus: [00:05:28] So prior to starting QOC, I used to run a fab shop, a job shop. And that was the constant thing. The OEMs are calling up and saying, “Hey, this is a bad part.” And we’re like, “I don’t think so.” But you had to prove yourself. You weren’t quite innocent until proven guilty. It was the opposite way. Like you were guilty and you had to go prove your innocence. And so having that data makes a tremendous difference in just having the conversation. And I’m taking a quality perspective to this. But I could also take a financial or accounting perspective. Like, “Did we make money on this part?”

Winn Hardin: [00:06:06] Those two things go together.

Paul Osterhaus: [00:06:08] “Did I make money on this part?” That’s one of the questions I love to ask. Like when I’m doing tours of manufacturers, when I get to the end, like, if we pull up a finished good: “Do you know on this unit, this serial number, did you make money on this particular unit?” And 99% of the time people are like, “Oh, I think so.”

Winn Hardin: [00:06:32] No. Don’t think no.

Aaron Hand: [00:06:35] So people know that they want to optimize. I think all of this always sounds great. Yes, we do want this information. Yes, we need to know how much money we made on that. And they’re just hankering to get started. But you got to have all your prep in front of you, right? So what are the kind of hurdles that companies face when they’re trying to modernize their operations?

Paul Osterhaus: [00:07:00] Yeah. You know, I always say the first thing we do is, we don’t want to boil the ocean. So we have people reach out to us every day that are either in failed implementations or are looking to say, hey, there’s a use case, there’s a reason. Maybe they’ve hit a plateau and they can’t get to the next level from a sales or throughput of their shop, or they’re just running archaic systems. And it’s just not getting the information that they need to them. But we always say, “Let’s not try to boil the ocean. Let’s figure out what you’re really good at and how do we get you over it? Like, how do we get you on to a new system?” And sometimes that can be done in different ways. Often you hear, “Well, you got to clean all your data up before you put it in a new system.” We actually say, no, don’t do that. Let’s bring your dirty data in so that we have an apples to apples comparison of what you’re doing today. Let’s not clean up your data. And then we can’t ship orders because we change the product numbers or we change the . . .

Winn Hardin: [00:08:00] We have no trend vector.

Paul Osterhaus: [00:08:04] We have no trends. And then over the course of time when we’re using new technology like Odoo, we can import and export data really fast. And we can use some data cleansing tools that allow us to put you at a different spot. But once we get somebody into the system — for us it’s Odoo — but once we get them there and we get their core capabilities working, where we see value, we want to get value within months not within years. Maybe they’re not running an MRP process. Maybe that’s new for them. Maybe they’re not doing quality to the level. Maybe they don’t have the financials to the level. Let’s solve those problems. And then over the course of time, then we’ll extend out, figure out how do we pull PLC data into the ERP or how do we go into payroll or how do we go into — name the whatever feature that you want to get to, is your end goal. But let’s not try to boil the ocean right out of the gate.

Winn Hardin: [00:09:03] I think that’s super cool because I think these large-scale enterprise systems pose a real risk for the C-suite. 100%. Huge investment. There’s time to develop this. A lot of times, parsing it down to: What are our biggest pressure and pain points? And coming up with solutions there and knowing the cost. So what I’m hearing from you is that the cost to deploy. I mean, maybe you’re not looking at the full enterprise. We’re looking at just problematic applications or segments of our process. The return from that can be enough to get a decent ROI and then grow into a fuller implementation.

Paul Osterhaus: [00:09:43] Yeah. It’s a scary thing to do. I ran this manufacturing firm. I was the one that made the decision to go forward with an ERP system. Like, that’s a career-level decision. You want a partner that understands having made those decisions and understands what it’s like and understands your business inside and out. If I was to give any recommendation, that’s the thing I would say: Find a partner that’s going to be with you and it’s going to jump off the cliff with you and help you to land safely. And who’s got the power, both from a tech side but also from a business process perspective, understands the manufacturing, whether it’s a fab shop, do they understand lasers and brakes and robots, or do they understand plastic extrusion or whatever that is? They need to have deep domain expertise in that because they need to be guiding and leading best practices through that process.

Winn Hardin: [00:10:39] If I could ask a quick follow-up on that, and we’re identifying a lot of the parts of the enterprise that Odoo and ERP systems can help solve. When folks come to you with a particular problem, when we’re not trying to boil the ocean, what are some of the most common ways or parts of their day or their operation that people are bringing to you, saying “I got this problem. Can you help me fix it?” Improve. Optimize. What are some examples?

Paul Osterhaus: [00:11:01] So commonly, like, job costing, understanding what actually their cost, what actually they’re making on their parts. That is a common conversation. Capacity analysis is another one, all the time. Like how do I understand what I can actually commit to my customers? And I can get on a soapbox for this. And I don’t want to be political at all. But we keep talking about bringing manufacturing back. And I’m 100% there. I’m 1,000%. We should be bringing manufacturing back. But are we really helping our manufacturers to understand that when we bring this work back, that they have the capacity to do it, that they understand their costs, and that they’re going to be profitable doing that? I don’t want to bring it back and put somebody in a bad spot. I want to bring it back and make sure that they’re growing their business in a very sustainably helpful way. And so those are the kind of things that really I get passionate about, like: How do we help them solve their problems in a way that’s going to take them to . . . You said it earlier best: How do we take that first step? And then let’s take the value of that and apply it to the second one. And then it just starts to snowball through the process

Winn Hardin: [00:12:08] Managed growth. For goodness sakes. Managed growth. Instead of just . . .

Paul Osterhaus: [00:12:12] Don’t try to do everything. It’s going to be a failure if you try to just do every single bell and whistle out of the gate.

Winn Hardin: [00:12:21] All right. I want to ask more questions, but I’m going to hush up because I know Aaron’s got one.

Aaron Hand: [00:12:27] Well, just looking at this visibility issue and also related to bringing manufacturing back is that supply chain. It really came to the fore at COVID, but it was already beginning to be an issue before COVID hit. And so I guess are people, are manufacturers thinking differently about their supply chain? How do they get better visibility there?

Paul Osterhaus: [00:12:53] Well, I think there’s a lot of war wounds out there right now, whether you’ve been in the steel industry . . .

Winn Hardin: [00:13:00] Hopefully lessons were learned from that. Pain teaches us more.

Paul Osterhaus: [00:13:03] But I think that everybody is sitting here going, “Okay, now what do I do?” I think there’s a lot of open things. So some of the things that we’re getting involved with is visibility into the supply chain is all the way down to — like QOC has developed a node which we can connect and gather real-time data from the shop floor. We’re starting to put that in suppliers. So how do I get visibility to what somebody across the country or in Mexico or in China? Like how do I get visibility to what’s going on in real time so that I can make those decisions? It just all comes back to our previous conversation. How do I make those actionable? How do I pull that data in so that I can make decisions in my scheduling and I can make decisions in my accounting? I can make decisions in how I’m planning for what I’m going to be doing?

Winn Hardin: [00:13:52] Is there anything that manufacturers are getting wrong when they’re looking at the supply chain visibility? Do standards come into play? When we talk about, especially if we’re going downstream, it’s usually going to be upstream, the way we want our visibility churn from. So what are some of the pitfalls or what are they getting wrong when they’re thinking about it?

Paul Osterhaus: [00:14:11] Yeah, I see people just not getting enough data. Just not getting enough visibility. Have they built that relationship with their suppliers where they’re getting visibility to what’s going on in their shop? I see manufacturers still treating them as — handshake agreements that are not real partnerships. But we see the most success when it’s a real partner. Can they see their on-hand stock of raw components so they can make better decisions about what they can provide to their customers or are they just standing there beating the table and saying, “I need 10,000 more units,” because they need it? But what does that look like? And how are they sharing data with their supply chains? How are they sharing, like, “This is what’s coming at me.” Let’s help them build that partnership. So it really comes down to the relationships people have built in their supply chains. We talk about visibility, and I think visibility is important, but the relationship is as important or more important.

Winn Hardin: [00:15:14] Let me ask one quick follow-up.

Aaron Hand: [00:15:16] No, I didn’t want to get away from this topic before because I had something else too. But if you have a follow-up, that’s great.

Winn Hardin: [00:15:22] I’m just curious, and this is probably the impossible question, but really that’s why I want to ask it. So a lot of times you’re going to have a small manufacturing, a fab shop, come to you and, you know, they want to grow their business, but they think they’re already at capacity. And you’re like, well, actually, if you manage this better, we can find 5%, 7%. Is there any kind of range or things that people might be able to realize?

Paul Osterhaus: [00:15:44] Well, I hate saying a number because then the next time I see somebody, they’re going to say, well, you promised me this, but I can give examples. I’ve seen consistently, especially that smaller to midsize manufacturer maybe that’s been traditional. It’s been using a legacy ERP system, maybe hasn’t been running an MRP process. We’re going to see a 30%–40% efficiency when the MRP rules engine is helping them to identify when to buy material, when to make jobs, etc. I’ve also seen the extreme case where I went into the operation and literally the person in purchasing pulled out a notebook from their drawer and said, “These are my purchase orders.” Like, we get into those extremes. Like that was a multiple x of throughput in the first month that we went live. So I don’t want to overpromise. We’re never going to overpromise anything. But the reality is when you get an ERP system working for you, not against you, but working for you, it’s a rules engine. It’s there to help you. And that’s the whole key. We’ve got to get it in a place where it is supporting you. It’s helping you to make better decisions. And we’re going to take a lot of that data entry out. We want to collect data real time from the shop floor. We want to get counts so that we’re not relying on operators. We want to get the data as accurate as possible. The more accurate that we can get the data — and that’s always going to be a challenge — but the more accurately we can get it, the more we can dial in the ERP system to drive efficiencies for the operation.

Winn Hardin: [00:17:24] Hey everybody, I just want to take a quick second to thank our sponsor. Manufacturing matters is sponsored by tech B2B marketing. They’re a full service public relations and marketing agency that focuses on technology companies, especially in the energy and automation markets. They provide full service media relations, investor relations, employee relations, full end to end content development, video services, animation, full IT stack development from website, integrating with ERP systems, CRM marketing automation systems. And they bring a whole lot of knowledge and experience about technical markets since they’ve been servicing those markets for over 30 years. So if you have any questions you want to learn more, go to techbiz.com. And now let’s get back to the show.

Aaron Hand: [00:18:06] So many things that you’re saying make me think about something else. And I do want to go in terms of getting better data, I want to go back to your point of you can bring in your dirty data in the beginning, but are you then continuously working on that to clean that data and get better data as you go along?

Paul Osterhaus: [00:18:27] I think it can be done in stages. It’s not like you’re going to drag that out for a year, but our lesson for us has been, I’ll be honest, like when we first started QOC, we thought we had to clean the data up when we were doing that, and then we brought it over and then we were like, well, how do we even know it’s right in the new ERP system. We can’t compare it because it’s different. And so what we usually find is there’s the go live, let’s get you live. And then a month or two in, that’s when we’re going to start saying, “Okay, let’s go through and cleanse all of this. Let’s merge these records, let’s get rid of this, etc. And then it’s going to be a constant — I don’t want to say battle — but it’s a constant thing that we need to be doing. Like we have what we call a health check app in Odoo, where we create metrics around how well are you using your ERP system? And that’s going to tease out — and we actually score people on that.

Paul Osterhaus: [00:19:26] And you can have metrics around sales, accounting, inventory. And they could be simple things like, “Have you received all the receipts that you have opened?” “How past due are you on closing?” “Do you have negative inventories?” There’s all of these different rules. And then we score that to say, “Okay, how well?” And the actual number of the score isn’t that important. It’s the improvement. Typically when we turn this on, we see scores in the 40%. And then when we get up to 80, everybody goes, “Ah, that feels better.” Like, it’s working for me. It’s helping. Like it’s beneficial, but it’s focused. You have to focus on it. It’s an ongoing thing to make sure your data is clean, that you’re using your ERP system and you’re keeping it clean. It’s easy to go live with it and then just let it tail off. And all of a sudden you’ve got negative inventories and you’ve got all this mess and you’re like, well, wait a minute. It’s not providing the value it was for me at one point.

Winn Hardin: [00:20:27] I think that’s brilliant because I know one of the questions that Aaron and I had was, How do you design these applications, the tools, the user interfaces so that they’re user friendly? And I mean, having that expert guide built into it, to be able to suggest recommendations for process modifications without having to go back to an engineer console, back to QOC right at the beginning. You’re really empowering the manufacturer, job shop, or whoever it is. Are there other ways, in addition to the expert guide, that you kind of make these tools accessible?

Paul Osterhaus: [00:20:59] Yeah. So like the health check, we make it accessible to everybody. We want that to be supervisors. We want that to be leads on the shop floor, that they’re looking at their jobs and making sure that they’re clean, etc. across the board. You know, the other things that we’re doing as far as, we get down to the shop floor and we’re looking at, like, how do we take as many clicks out of it as possible? How do we make it as easy as possible? We want real feedback. I think that’s part of our implementation process. We’re looking for feedback from the shop floor. We’re looking for feedback from people, and we want to intentionally incorporate that feedback so that we get their buy-in. There’s nothing better than them telling us, “Hey, if it could do this for me, it would be helpful,” and for us to do that and come back to them, and they’re automatically bought in because they know that we’re listening to them. And so having that communication directly to the shop floor. Doing this ERP implementation, it doesn’t work just to talk to the leadership. Leadership always thinks they know everything going on on the shop floor. Sorry. There’s a news flash. It’s not true. You have to talk to the people on the shop floor, the people that are doing receiving, the people that are shipping, the people that are running the machines. Because that’s where you find exactly how they’re doing the process. And let’s hear from them. Because you know what? They have wonderful ideas. They have great ideas. They may not understand the entire ecosystem of how this is going to work, but they’re passionate about helping their business too.

Winn Hardin: [00:22:36] I suspect that’s a cultural improvement too, not just operational efficiency. Cultural improvements directly translate to better productivity down the road. So it’s basically just a built-in communication, collaboration hub as part of your platform?

Paul Osterhaus: [00:22:51] Yeah, absolutely.

Winn Hardin: [00:22:52] Very cool.

Aaron Hand: [00:22:53] Yeah. And certainly change management is so often the number one obstacle. And I was going to say digital implementation. But I would say any implementation, any tool, any new tool that the folks on the floor are expected to use. So it seems like you’re going a long way to get that open communication with them. But what still needs to happen from the top down to make sure that this all works?

Paul Osterhaus: [00:23:21] Yeah. So one of the things that we do, if we do an implementation of Odoo, we use a methodology that we call the 10, 10, 10. So what the thought process there is within three weeks of starting with us, we want your 10 hardest parts that you make. It could be actually 15 or eight. It doesn’t really matter. We want a group of parts, bill materials, their associated customers, their associated vendors. We want all the data associated with those parts. And we’re going to load it into Odoo, and we’re going to make all of our conversations based on the base product. And we’re going to go quote to cash, buy to pay. And we’re going to identify where are the gaps and opportunities? So the opportunities could be — Odoo, the base product, does it differently today, but it’s a best practice. And we’re going to change your process to do that. And we’re going to get buy-in from the leadership from that. And then there’s gaps. Where are the gaps? Where do we need to pull in our development team? Make a modification to support that.

Paul Osterhaus: [00:24:27] But what we find is, doing that process, instead of just giving them a blank whiteboard to dream up whatever they would want, gets us really honed into solving a problem. And the problem is: I have these parts that are really hard to run through the shop, and if I can run these parts through your system, then I can run all of them. I can run a thousand of them through. And those conversations start to really lead into some great — you mentioned the cultural — they get into process. They get into, “Okay, how is this going to work?” And we start getting people in the system, and that starts to change management process. We start getting them to drive and to go through it. And that’s part of our secret sauce. That just kind of helps streamline this process. So we’re not sitting here having a blank sheet of paper. And six months later we still have ideas. We want to be very actionable. In a lot of our implementations, we’re doing four to six months for the base implementation. Like we want this to be geared around the system and the process, and it forces lots of decisions to be made.

Winn Hardin: [00:25:35] It’s interesting to me. We haven’t really talked about the plant, network, and infrastructure. There are job shops that will benefit from this who are not leveraging a lot of automation. It’s going to help them quantify from front-end engineering consultation through job costing all the way to production and what our margin is. But can you talk a little bit about the relationship between ERP systems? If you’re a larger manufacturer, does the hardware lead the ERP? Does the ERP lead the hardware? Can you talk about that relationship a little bit before we let you go?

Paul Osterhaus: [00:26:07] Well, I think it’s a balance. So you know with Odoo, technically we run it on the cloud or we run it on anything. It doesn’t really matter. It comes down to — the hardware component for us is, “How do I connect to the devices on the shop floor?” Whether that’s Modbus. Whether that’s MQTT. Whether that’s whatever. Like how do I connect to that? We’re not going to want to make a lot of changes there. So we also have the ability to just put simple switches that we can count things going on a conveyor line. Every time a robotic process goes to the home position, we automatically touch or break a laser beam. So there’s some simple things that we want to do there. But again, I go back to my original comment about this. Let’s not try to do everything at once. Let’s try to get the ERP system. Let’s connect where it makes sense. We can get that real-time data, but let’s drive the process and make sure we’re doing what you’re really good at. First, drive value. And then, at that point at the end, when we’re live, then we can step back and say, “Okay, now we have this value. Let’s go replace this. Let’s go build this.” I mean, I’m surprised how many times we get done with an ERP system and somebody says, “Hey, can you help us identify an automation solution for x? Can you help us with this tool?” Because we become part of what they are. And now we’re in position. We have the technology. We can connect to almost anything.

Aaron Hand: [00:27:38] I don’t want to get too down into the weeds, but I’m just thinking about folks with more legacy systems, and can you deal with that? Is that a contingency to have systems that can properly connect, or what is kind of the baseline that people need to have to start with ERP?

Paul Osterhaus: [00:27:58] So I think it’s a real challenge in the industry. Like if I go to FABTECH, I go to ProMat, I go to those trade shows, and I see all this new technology. You talk to the vendors. There’s a lot of them that are struggling to connect to these legacy ERP systems, because they’re all written in old technology that don’t support REST APIs and all of those fun things that we can do today. So there’s a lot of things that we’ve done to support that. Like we have a customer right now that’s running a legacy system. We’re not coming in and replacing everything. They didn’t have an inventory management system, warehouse management tool. So we’ve put that in. And now we’re just kind of creeping our way back to replace. Eventually, a couple years from now, we’ll have replaced the entire ERP system. But we’ve done it in a very gradual, pragmatic way. And sometimes we even have to write our own endpoints on top of the legacy data so that we can make this thing work the way we need it to, so that we can scale this. So it’s a balance, again. It’s not a requirement to come in and say, “Hey, we got to rip everything else out.” We’re right now talking to somebody who’s got 30 distribution facilities. You know, they’re running an old legacy system and we’re talking about doing the same thing. How do we replace their warehouse management tool? How do we just start inch-worming our way back to get them on a technology suite that supports their future growth.

Winn Hardin: [00:29:23] And it addresses one of the most, I think, biggest concerns. And maybe probably most chief executives are going to think about this, but it’s not just the initial cost of the software and the development, the deployment. It’s the cost of disruption. Potential lost productivity. If you’re trying to do wholesale changes, necessarily there’s going to be wrapped-up times. If you eat the whale one bite at a time, probably a lot less disruptive obviously.

Paul Osterhaus: [00:29:48] Yeah, I think it’s a lot less disruptive. But I think to your point, there’s a carrying and opportunity cost associated with this. And I think a lot of times we look at the carrying cost of what is it going to cost for software? What is it going to cost for implementation? But we also got to look at what is the cost of not having that visibility today? What are those opportunity costs? What’s the cost that I can’t connect to this? What’s the cost because I don’t have visibility? And so when we look at that holistically, this approach where we’re no nonsense, we’re just flipping the paradigm on the head. We don’t come in with large teams, with large-burden overheads. We’re solving problems incrementally. It makes a huge difference for these organizations.

Winn Hardin: [00:30:38] As long as they can survive the price point of initial discussions and deployment. I mean, if you’re offering someone 30% improvement in efficiency of their overall enterprise, that’s kind of a no-brainer to a certain extent.

Paul Osterhaus: [00:30:50] Yeah. Sorry to interrupt you. This is what I love about Odoo, and I know this is not about Odoo, but Odoo is open source. It’s a low-cost opportunity. We’re talking about a fraction of — I don’t want to say a vendor — but any of the other vendors. It’s a fraction of the cost. So we’ve even had customers come to us and say, “Hey, we want to try this out. Let’s just fail often but early on this. Let’s just try it out. The cost of us starting a project with you guys and going and solving this problem, if it fails, we’re not risking the business and we’re not spending $1 million.” I love those because we’re going to win every time, because the technology scales and it’s there. But we have to kind of prove it. And so let’s go find your hardest thing to prove and let’s go do it.

Winn Hardin: [00:31:39] Right. That’s brilliant. Build trust over time. Always a good solution. Good go to business strategy.

Paul Osterhaus: [00:31:45] If I’m honest, like, this comes from me sitting in, running this manufacturing firm, having to put an ERP system in and having gone through the traditional process where we ripped everything out. And I had to train people. Every consultant I had come in, I had to train, like, how do you schedule a brake press. Every person. That’s a big difference. Whether it’s a brake press or plastics or it’s food. That’s what we tried to build here at QOC. Not try — that’s what we built. We have people that have been in industry for 25, 30 years that have that experience. That’s totally different when you have that conversation.

Aaron Hand: [00:32:27] Well, and I think looking at your experience there, I wanted to get into kind of this democratization of digital tools. I think so many companies say, well, sure, that Nestlé can afford that, but can I, some mom and pop spaghetti maker, can I afford that? What was your perspective from the user’s viewpoint — what was your make-or-break decision? Yes, it’s a no-brainer, but can we afford this upfront? How do you approach that?

Paul Osterhaus: [00:33:00] Yeah. I’m going to jump to Odoo. I won’t talk about other vendors. I’ve been through that. I paid the big price in previous lives, but particularly Odoo, you’re talking about $40–$50 a user per month. It’s a very, very low cost in the scheme of things. And so I actually have a negative side of it. Sometimes I get into these big-enterprise decisions, and they’re like, well, you’re half the price of the other guy.

Winn Hardin: [00:33:35] What are we giving up? Uh, you’re not. And we’re supported by a million users. But you can make the decision you want to, sir. It’s all good.

Paul Osterhaus: [00:33:43] Yeah, but it’s also hard. I respect, I totally respect — like nobody really gets in too much trouble for choosing SAP or NetSuite. Those decisions sometimes are really easy to push through the board and make those decisions. But if you go to a newer technology like Odoo, although that’s changing dramatically. So if I go back three, four years in our business, we were just working with the smaller companies. But that has definitely changed dramatically. But, yeah, it becomes a really interesting conversation sometimes when we look at the price point. Price is not the decision point.

Winn Hardin: [00:34:23] Okay.

Aaron Hand: [00:34:25] All right. So what haven’t we asked you? What are your big tips that you want to share about ERP that we haven’t talked about?

Paul Osterhaus: [00:34:35] I would say get a good partner. Like no matter who it is, find somebody who knows your industry and is passionate about your business and is not just dealing with this from — and I’ll get on a soapbox a little bit here. Again, I love our tech people, but some people call us a tech company, and I kind of cringe, because that’s not what we are. We’re a problem-solving company, and those problems are solved best when I take a business consultant who knows the industry, a developer who understands the technology, and a whiteboard. That’s when I get the best result for a customer. And that’s what we’re focused on. And so we’re just no nonsense. We just get after it and like helping people solve their problems. It’s not that hard. The innovation is: Take care of your customers and take care of your people.

Winn Hardin: [00:35:27] Right on. Absolutely.

Aaron Hand: [00:35:28] Well thank you Paul. I really appreciate you taking the time to talk with us today. And thanks to our viewers for joining us on Manufacturing Matters. So if anyone has any questions for Paul, please go ahead and put them in the comments below. If you’re watching on LinkedIn or YouTube or wherever you might be watching, you can also see past episodes of Manufacturing Matters on our website, which is manufacturing-matters.com, or on your favorite platform. So for now, do us a favor: Hit like, subscribe, and keep tuning in.

Winn Hardin: [00:36:01] Thanks again, Paul.