Managing a shop floor is no easy task. Your employees make mistakes, equipment breaks, rush orders slip in, jobs ship late, and days are long. On top of that, there is the constant demand to reduce costs and increase quality. It’s a real pressure cooker.
Note: This blog was updated in 10/2020 to reflect some major changes in version 9.x.x. See the end of the blog for updates.
Actually, that’s an easy question to answer. There are three reasons:
Before I get into the best costing methodology for a work-order-driven manufacturing company, let me define both methods. With standard cost versus actual cost, the discussion centers around how the ERP system values an inventory or labor transaction. Here is how the different costing methods calculate the value of the transactions.
In my years of working with companies looking for Enterprise Resource Planning (ERP) systems, there is usually a lot of emphasis placed on buying the right system along with declarations on how the new system is going to help run the business better. Other companies have achieved this, your company can also.
Visual South sells ERP for manufacturing-centric companies. More specifically, we sell Infor CloudSuite Industrial (SyteLine) and Infor VISUAL ERP. My experience with VISUAL goes back decades: When I was a plant manager, I bought and implemented VISUAL; I was a VISUAL consultant for years; and I’ve taken deep dives into CloudSuite Industrial.
I like a sense of order. If a picture is crooked, I straighten it. If there is a mess in the kitchen, I clean it up. I’m not obsessive about it, but it is part of my nature.
I also like data. Not data for data’s sake. Rather, data that brings clarity to a problem or situation, which brings me right back to my desire for a sense of order. Data helps me understand if a problem is fixed, or situation is under control. The data feeds my need for a sense of order.
Measure what you want to improve. Six simple words, but put together they convey a powerful concept that can transform manufacturing companies. (Point of reference: Visual South works with small to medium-sized manufactures that use work orders.) It’s a basic concept that’s hard to argue with: Collect data, see where the data leads you, and make changes that have a positive impact on the data. Repeat often.
I like figuring things out. It’s a simple statement, but now that I’m older, and yes, a bit wiser, I see that this desire to figure things out has been the driving factor behind many of my traits. From an early age, I made stuff. I’d see something that looked cool and would figure out how to make it. Scrap wood, a saw, and some nails would result in some sort of toy. I completely disassembled and re-assembled my bike to see how it was put together. As I got older, I tackled bigger projects. My first car was free because it needed a transmission. I figured out how to remove the old transmission, bought one at a junkyard, and put the “new” one in. It worked! It was the ugliest car you ever saw, but to me it was a triumph. I drove it with pride.
I like to take big, complicated topics and break them down to their simplest form. This gives me the clarity to evaluate new ideas, propose changes, identify problems, and such. For example, this is how I explain what Visual South does: “We work with SMB manufacturers to help them become the best company they can be. The tools we use to do that are ERP, consulting, and change management (usually involving processes and procedures).”
