In recent time we have been discussing the various activities and requirements that make for successful outcomes in the manufacturing and construction related industries. In times past physical completion may have been seen as the end of activity. Just get the completed work on a truck and away to the customer. Then wait to receive payment was all that was considered necessary.
In today’s’ more competitive business environment this would be a risky strategy. These days it is vitally important to really know and analyse all the component costs and activities that went into any particular job.
Typical questions might include:
- How close to final cost was the original estimate
- How many man hours did it really take
- Were the labour allocation and skills used adequate
- Was the cost of material more than expected
- Were there any significant cost overruns
- Were there any delays that could have been avoided
- Were there any bottlenecks in the process
- Did all the machinery perform as expected
- Was machine capacity adequate
- Did we have to wait for any components
- Was the job completed and dispatched on time
- Were our margins adequate
- Would we do it again.
- Has the customer been invoiced
- Did we receive payment in a timely manner
Nowadays it should be possible to readily answer these type of questions using suitably configured and interfaced manufacturing software. Note we say interfaced because some of the questions are directly related to the finance and accounting function within an organisation.
For many small to medium enterprises (SME) the first software application they invest in is an accounting package. This is understandable because cash and financial information are the life blood of the business. Failure to look after the finances can quickly lead to ruin. To have knowledge of cashflow, outstanding creditors and the ability to pay your bills is crucial right from the start. In many cases these packages are either MYOB or Quickbooks both of which are well known proprietary software applications for SME’s
Once the business starts to grow however consideration is generally given to software that will support the operational side of the business such as manufacturing software. By now the accounting package is well established and any thought of replacing it because production wants to introduce some new manufacturing software package frequently meets resistance.
So we need an interfaced manufacturing application rather than a complete revamp of the existing accounting system. If such an interface is achieved, particularly if it is seamless, then we have the best of both worlds. Accountants remain happy and production can be greatly improved because of better information and job control.
And then we are back to where we started.
So if we have access to manufacturing software which will let us
- do the original estimating
- prepare a quotation
- generate a work order
- print the work order tasks
- identify and produce any necessary drawings
- print any specifications
- obtain any stock components
- cut any materials
- schedule machine and manpower requirements
- track the job(s) through the shop
- collect labour time and material usage
- prepare final despatch documents for the job
- despatch the finished goods, and
- produce production and performance reports
And if this manufacturing software interfaces with the current accounting package so that the organisation can
- prepare and despatch an invoice
- track accounts receivable and accounts payable
- receive and bank payments, and
- pay the bills
Then we have the a very effective and valuable tool set with which to counter the strong competition that exists today for most manufacturers. And the job is completely done!!