ManufacturingPower: Mike Franz

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CEO Mike Franz discusses how ManufacturingPower has been addressing common difficulties faced by manufacturers, like pricing inequality and labor shortages.

 

 

Danny:

Okay. So, today we have another IndustrialSage Executive Series interview. I have ManufacturingPower. I have the founder and CEO, Mr. Mike Franz here joining us. Thank you, Mike, so much for joining me today.

Mike:

Great to be here, Danny. Thanks for having me.

Danny:

All right. So, before we completely jump into this, let’s just kind of set things a little bit… If you could give me just a quick little synopsis on ManufacturingPower, who you guys are and what you do.

Mike:

Absolutely. So, ManufacturingPower, we’re a SAAS software developed specifically for small to midsize manufacturing companies to help them with their challenges around MRO and industrial supply purchasing. We know it can be a pain to really tackle these objectives, for the most part. And what we’ve developed is a very easy to use online tool that helps organize and really gives our customers the benefit of being able to see market pricing. So, we collect data, we show transparency in the market, and give them the best opportunities to make the best buying decision.

Danny:

Interesting. Okay, great. I like it. So, we’ll get into that here in a little bit more, but before we do that, I want to get to know Mike. I want to get to know you a little bit more and for our audience to get to know you a little bit. Tell me a little bit about your journey, your career journey before ManufacturingPower.

Mike:

Yeah. Unbeknownst to me, after school, after college, I had no intentions of getting involved in industrial supply. I have a sales background and came out of school with a marketing degree and thought, “What the heck am I going to do?” as most do, and fell into industrial supply and have been in multiple roles over the years, pretty much 20 years of experience being in the manufacturer’s side, being on the purchasing side, being in the sales side. So, I always say it’s kind of the triple threat position. I’ve seen the industry from all different sides and kind of understand that. But yeah, my experience is really in manufacturing and trying to understand the needs of manufacturers, and that’s what’s brought me here today. I saw a definite need and a problem that needed to be solved that continuously gets overlooked, and that’s industrial supply managing and maintaining those accounts and partnerships with distributors and how to buy better, how to organize better. Those types of issues were something I consistently saw over the years.

Danny:

Yeah. All right. So, throughout your journey, is there somebody or either milestone moments or somebody that really helped influence, whether that was a coworker, a mentor, whether it was a leader, do you have one or two of those that really made a big impact on you?

Mike:

Yeah, for sure. I mean, 20 years, there’s a lot that has contributed to that, a lot of people can relate to that. But specifically thinking off the top of my head here, as far as people specifically, there’s been a lot, but I’ll give you a couple of scenarios that really impacted my career. And one of the last ones I worked for a manufacturing company, we made components for, I’ll just say the power sports industry, and what happened was I had really an experience that changed the way I thought about all kinds of business. It was more or less the fact that I learned what not to do. There was some customer interaction that really, really got under my skin, and that I wanted really never to do ever again. And how not to handle customer interactions and situations and being very respectful and putting the customer first in whatever I do. I mean, it’s not specific to this industry or what we’re trying to accomplish other than the fact that we really put the customer first in what we’re trying to do, and that’s pretty evident in how we approach building our product, what we really want to listen to our customer, and how that impacts our product and how the customer experience really is with ManufacturingPower.

Danny:

All right. So, walk me through, then, how did you make that decision and that choice to say, “Hey, we’re going to do this ManufacturingPower thing”? What’s the story behind that?

Mike:

So, I guess the story, going back to the very beginning, I mean this is about four years ago, when kind of the idea hatched. I was working for another large manufacturing company, a Fortune 100 company that I was making sales calls with distributor folks on manufacturing companies. And we would go into a business park and go from Joe’s Machine Shop to Paul’s Machine Shop to Peggy’s Machine Shop, and they would buy the same items, relatively similar volumes, and each customer would pay a different price. And it was consistent. Every day, same thing. Okay? No matter what distributor partner I was working with, it was always the same thing. Everybody charged a different price for the exact same product. And I thought, “Okay. As collecting data, understanding data, and using that data to really expose that, there’s got to be a way to do that so everybody has a fair playing field.”

And that was when kind of the light bulb moment went off, and it had a lot to do with acknowledging capability. At the time there was, the cloud was really starting to become something that people were utilizing for data, and it was cheap. So, having that cloud space and that data aggregation capability really became something that was possible without having to buy multiple servers at super huge expense. So, with that said, just kind of started working with some people that I knew in tech that had some software writing capability and some database knowledge, and we just kind of started this thing. And here we are today.

Danny:

Yeah. That’s a pretty good story. So, obviously, the big challenge is, is really that pricing transparency piece. I mean, obviously, and the data and understanding that, and that’s what you guys are setting out to challenge. So, when, again, did you start the company? What year?

Mike:

We officially started in 2016.

Danny:

Okay.

Mike:

Yeah, coming up actually four years, four years ago, and at the end of the month. I’m not a big guy that says the word journey a whole lot, but it’s been a journey. (laughs) And I’ve got a lot of support here. We’re based in Minnesota, and we’ve got a lot of support here. We’re growing our business. And the people that, as the back story goes, there’s been a ton of people that have been very generous and have helped out.

Danny:

That’s awesome. So, I’m curious, just from like an entrepreneurial standpoint, what was that moment like when it was crystallized in your head that it went from, “I think we should do this,” to, “I’m doing this,” and, “Okay, let’s do it”? And then, making that mind and then making that jump.

Mike:

Well, it was super exciting until I kind of realized what I was doing and that was very scary. It was, “Oh, this is going to be great.” And then, realize that there’s how much work and effort and how much support you need to really start actually doing this. For anybody who’s started something, I know you’re an entrepreneur as well, so starting at anything and getting it to go and all that, they always talk about flywheel, having that catch. The highs and lows of actually being an entrepreneur and fighting through that and believing in it, it’s a challenge, but man, I wouldn’t trade it. It’s something that I’m super passionate about. I’m super passionate about the product and the people that are involved, and it’s something that I couldn’t imagine going back to what I was doing before.

Danny:

Yeah. Yeah, no, that’s awesome. Very similar story you hear from people just across the board. It’s exciting, but it’s also like, “Oh my gosh.” But that’s cool. Hey, four years in, that’s awesome. So, kind of transitioning here a little bit, let’s talk about some of the challenges in the industry. Obviously, pricing transparencies is a very big one, it’s the core of what you are solving right now. What other challenges inside the industry are you seeing?

Mike:

Are you talking specifically in industrial supply or more manufacturing?

Danny:

Both.

Mike:

Okay. So, I guess to relate both of those, one of the challenges that I saw for years was that, and rightly so, the manufacturing companies, small to midsize manufacturing, their biggest concern is, obviously, making a good quality product and serving their customers and getting product out the door. Okay? Back of the house was definitely the priority, and from my perspective, looking at some of the technology that is out there and wasn’t fully being taken advantage of to help these small businesses succeed in kind of a new way.

A lot of this technology has been out there for large manufacturing companies, and they totally utilize it because they have the resources and the capabilities to handle those types of projects, where the tools available for the smaller folks were just not there. And now, just bringing that to life and educating people around the tools that are out there and available for them to be more organized and more successful, but money really towards their bottom line, is… I would say manufacturing is pretty old-school when it comes to certain processes and being able to educate a little bit more, it’s only going to help that kind of mindset change a little bit to help them succeed a little bit more. And a lot of the challenges associated with manufacturing specifically are, I think, two things. In relation to our product, it’s kind of the changing of the guard, where you have small to midsize manufacturing companies, maybe family owned or have folks that are getting to retirement age, those types of situations, where new blood’s coming in and maybe a little bit more open to some of these new ideas and technologies that are out there. So, that’s good.

A huge concern, and keep track of national news as far as what the challenges are, but specifically locally here to Minnesota there’s a huge challenge with finding skilled labor. Anything that you can do to help attract skilled and new folks that are coming out of school, even building it from that educational level to build, I guess, awareness around manufacturing to show that it’s cool and to show that there’s a lot of technology that’s in it. It’s only something that’s going to help improve the industry overall in our little tiny chunk of that. Kids coming up through school now really are used to using products at home on a consumer level, where we’re trying to make that experience translate into the immediate experience as well. So, just a little portion of what we can do to help maybe entice somebody to come and work for a company. Maybe that’s a little bit of grandeur, but those types of things are only going to attract more skilled labor into the industry and to help kind of that problem.

Danny:

Yeah, absolutely. Yeah, that’s a big sticking point with a lot of companies right now, especially with a lot of growth and… Yeah, it definitely is, how do we attract that skilled laborers back; and even more, as well, as that younger generation? So, certainly a lot of different things to sort of associate and to tackle there. So, one other question that I’ve got related to that is kind of switching back to the sort of this price transparency kind of challenge with ManufacturingPower. How are you guys… You kind of explain it there a little bit at the beginning, but what does that look like? How do you guys really do address this challenge? If I were to come on to use your product, what does that look like?

Mike:

Yeah. So, great question. Thank you for asking that. So, the process is very easy. So, if a customer signs up, and we do offer what we call our Power Potential Report, and what that is basically is a customer can download some of the pricing information and part numbers. Okay? So, for example, if you have a distributor partner that you’re maybe shopping around, for example. So, if you have your industrial supply, you have three or four different distributors that you want to shop around for next year to see what that overall pricing package looks like in the contract, they do it for you. You upload your part numbers and pricing information, and the advantage is that nobody pays a book price. So, if you go online and search some of the larger distributors, nobody’s going to pay exactly what’s on there, for the most part. Okay? So, we collect anonymous invoice information. You get 100 part numbers, we’ll take a look at that or it’ll go into our pool of part numbers, and we’ll show you exactly what the true market price should be for those part numbers.

So, in a negotiation situation, if you’ve got four or five distributors that you send out to bid, or send out an RFQ for them to put together, our data can definitely help in that negotiation process for that big spend quantity. So, if you’ve got $100,000 in spend, we try to expose exactly where you can save the most money so that you can go back and negotiate the best pricing possible. Not only does it help in those larger scenarios, but on a day-to-day basis, we point you in the right direction to potentially get the best price. So, for example, if somebody comes in off the shop floor and says, “Hey, here’s 10 part numbers that I need in two days.” For example, a purchasing person would be able to use our software to quickly and easily check to see where and what those market prices should be so they can, again, make the best buying decision possible. We also have an RFQ builder, which is basically a one, two, three step process where they can plug in the information, and it sends that out to all the distributors that they choose to send it out to. Makes it very easy and organized.

Another thing is, as far as our product, one of the biggest benefits that we’ve found and our customers have found is the simple organization of the part numbers. We put it into one single source where if you have an ERP system, there might be 10 different part numbers for that one part number. You have capital X, Y, Z , and then there might be an X space, Y space, Z space. I mean, it can be all over the place you have it in a spreadsheet format. Where, we really look at the manufacturer part number, the distributor part number and description, and that’s how we collect all the data. And then, we show it to you in one single source so that you can see that by invoice and by just your catalog.

Danny:

So, one quick question is, obviously, how are distributors reacting to this?

Mike:

Well, we hope that they’re going to actually like us. At this point, we’re growing for sure. And I see some synergies that could potentially happen, and right now, we don’t get a ton of feedback from them. But yeah, hopefully, down the road, we’ll be able to work something out.

Danny:

Yeah. It’s interesting because I think it’s one of those things that as a… We’re really talking about the B2B buying experience, and when you look at from a B2C perspective, how you and I purchase something, I mean that pricing transparency is… I mean, that’s been sort of the gold standard. I mean, if you think about it, there’s very few things that you can go and buy now that you don’t have transparency into. Probably the biggest thing that I’m thinking about, from a consumer standpoint right now that probably has the biggest clouded mystery is probably in healthcare. And you’re hearing a lot of talk about that on how they want to rip that open and look at… so, just as a whole, I feel like we are moving into this whole transparency piece, and you’re seeing the exact same thing happening in B2B. So, if I’m buying something from a consumer standpoint, but then also I put on my business hat, why am I not having that same experience? And I think that is that struggle that we’re going through right now.

Mike:

I’m really happy that you said that, and I appreciate that because that’s really the goal that we want to bring to the industry. There are so many examples, the ones that we often use are TrueCar, using the bell shaped curve that they have, and you see the guy with the beard and he says on the commercials, “You see what other people pay for the exact same car.” The idea that we want to bring to people as well, so in the B2B space, why can’t you have the same experience? Now, Hotels, Trivago, they all expose what the best price paid for that is.

There’s a very specific one, and it’s very similar and I’ve got to know this team very well, but there’s a company called Farmer’s Business Network that started out very similar to us, where they looked at grain prices in certain counties in Iowa and counted grain prices and you use that data… or seed prices, excuse me. Seed prices. And they went around, collected that data, and used that to negotiate better pricing for their specific area. That’s exactly what we’re trying to do. Now, they have over 8,000 farmers as customers, and their business is doing very well .and they provide a lot of value to their customers, and that’s the model that we’re trying to go after too, it’s to really expose that, get the best prices for the manufacturers, the small to midsize manufacturers, and help them.

Danny:

Yeah. No, it sounds like win to me. And it’s interesting because this obviously comes back, I mean distributors are taking hits right now. Obviously, with the whole e-comm piece and manufacturers saying, “Hey, there’s an opportunity to be able to go direct.” Obviously, pricing transparency piece right now. So, as me as a distributor, if I’m looking at it, there’s one word that I think that could help solve this. This is where you need to start thinking about it from a distribution standpoint, and that’s the piece around value: really be thinking about how to be able to provide more value. How do you have added value? Because it can’t be price. Price is a losing game. If that’s the only thing that you’re able to…

So, anyways, I think what you’re doing is pretty cool, and I think it’s exciting. We’re seeing more of this, we’re seeing a lot more… Even looking at things like Xometry, who we had on probably a couple months ago, and they’re coming in and it’s the ability… It’s like the Airbnb, if you will, or the Uber of custom manufacturers, where you can upload a CAD file and you can basically get pricing and estimates across all these different custom manufacturers inside their database. And so, it’s happening. Whether you like it or not, it’s happening, and that is where things are going. And there’s a lot more coming down the pipe.

Mike:

You mentioned something in there that was pretty interesting. Now, I want to make clear, I don’t partner with any distributors, but I think the value that we can bring to them that they can tell their customer is that the end customer’s going to be exposed to the best pricing possible. Right? We don’t tell them, “Hey, distributor X, Y, Z, we don’t partner with them.” So, the advantage there is that we’re showing the distributors, through our RFQ process, we’re giving them opportunities to quote on things that they might not have had the opportunity to quote on, and pushing business their way. It might be small and incremental in kind of the day-to-day scenarios, but in the cases where they have to improve their value and show their value and prove that they want to be partners with these small-to-midsized sized manufacturers on a kind of a larger scale contract level, I think it’s a really good opportunity to show them that they’re embracing this new technology, but also looking to partner with the small to midsize manufacturers and show them their real, true value.

Danny:

Absolutely. And be able to show, yeah, show the true value, and like you mentioned in there… I’m glad you clarified that, that you’re just looking kind of as a whole, the snapshot as a whole. But yeah, to be able to work with that data, I would certainly want to know that, like where is everything going and where… Okay, well… Hey, you may find out, “Hey, we’re actually undercharging. Maybe we need to, as a whole… How can we provide more value so that a customer feels, ‘Hey, we’re paying X percent more, but gosh, man, these guys are doing this and this and this. Okay, we don’t mind.'”

Mike:

Data’s more valuable than gold right now, I’d say. And working with and developing synergies, not only with the end user customer, but also with distributors, and different avenues for us is really… We want it to work for everybody. Maybe that’s a little naive, I’m not sure. But the data will prove that, and as we collect and gather more data, we’ll be able to kind of make those decisions moving forward. So, for us, it’s really all about the data, collecting it to find the best pricing possible, helping the small to midsize manufacturers really grow and succeed is our main goal.

Danny:

Awesome. Well, Mike sounds like you guys are onto something, and I’m excited to see where you guys go over the next several years. Thank you so much for spending some time with me today on IndustrialSage. So, for those, I’m sure want to come check you guys out, manufacturingpower.com. That’s the URL?

Mike:

Absolutely. Yeah.

Danny:

All right.

Mike:

We got the .com, so that’s really important.

Danny:

That is very important. So, thank you again. And again, if anyone wants to come check you guys out, manufacturingpower.com

Mike:

Yeah, manufacturingpower.com. There’s several ways to connect with us. Sign up for the newsletter, sign up for a demo, sign up for a multitude of things. We really want to be in touch with you, and if you have questions, please let us know. We’re also in some magazine articles right now, which you’ll see on the website. And Danny, I can’t thank you enough. This is fantastic. I really appreciate it, and thank you for your time as well.

Danny:

Well, I really enjoyed it, getting to know you a little bit more and about ManufacturingPower, and I’m excited about all things in the future to come.

Mike:

Thanks. Right back at you.

Danny:

All right. Thanks. Okay, and that wraps up this episode, this Executive Series with IndustrialSage with ManufacturingPower. I really like what Mike and his team are doing over there, just tackling this whole transparency, pricing issue, relative to small and medium sized manufacturers, when they’re buying their industrial supplies and MRO, and just to get a sense of what they’re paying as a whole. This shift we’re seeing, this ripple effect of how as consumers, from B2C purchases that we’re making, we have access to all this information. B2B, maybe not so much, but it’s coming down to the tracks. So, be thinking about that.

So, that’s all I’ve got for you. If you’d like to learn more about them, you can go to manufacturingpower.com. We have a link to their website in the show notes, if you’re listening on any of the podcast news stations. That’s all I’ve got for today. Thank you for watching or listening, and I’ll be back next week with another episode of IndustrialSage.

 

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