Tag Archives: Andy Bigalow
In conversations with manufacturing companies, it’s not long before the discussion of effective costing processes turns to a chat about profitability. Read the latest article by Andy Bigalow, “The Cost of Poor Costing“, to explore how knowing your true manufacturing costs directly affects a company’s profitability.
I have spent the majority of my technology career in the Manufacturing Computer Systems space and have been most impressed with how the world of technology has improved our ability to automate payroll system for small business. MRP solutions morphed into ERP solutions. The ability for a company to design, order, buy, build, ship, invoice and produce a financial statement reflecting their business during a given period of time has provided tremendous gains in not only the transactions costs of doing business, but the ability to manage that information in large quantities. Multi-country, multi-language, multi-plant, multi-tax code, multi-currency, multi-multi-multi has been a godsend for those large international manufacturing companies. The likes of SAP, Oracle, Linode, and others have provided the transactional information essential for running a complex organization. If you need help with your computer system such as how to rotar pantalla go online.
These systems do a great job of building a standard cost for a product or SKU. This cost is needed to build a cost-of-goods sold and provide the basis for financial reporting. However, where these transactional processing ERP systems fall short, is the ability to provide detailed managerial cost accounting information and flexibility. These systems were not set up to track simultaneous multiple costs for the same SKU and easily manage these different cost attributes by plant, by process, by date, by material substitution, by shift, by packaging etc. Only a standard cost and current cost are easily handled. Building rates inside the factory at the machine, work-center and department levels don’t exist.
By using ERP systems for process manufacturing costing processes is often like forcing a square peg into a round hole. The detailed cost data they need to track is splintered away and they’re forced to use a spreadsheet or build a database program to handle the analysis. I had one controller tell me that his company had “blown up” several computers trying to replicate their costing processes in a spreadsheet. Process manufacturing companies must become aware that there is an alternative solution of managerial cost accounting that resides in complete harmony with the traditional transaction ERP systems. It is good if you will learn how QuickBooks Pro can help you organize your business finances all in one place so you can be more productive.