by Dienamic MIS Software Inc.

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Thursday, September 28, 2017

JOB COSTING = VALUABLE BUSINESS INFORMATION

By Mark Porter


In any business knowing your costs is important. After all isn't Profit = Sales - Costs. If you don't know your costs how do you know your profits. Sure at the end of the year you can say I made money or I lost money but if you control your costs and use your cost data to make better business decisions you may not lose any money or be able to say I made more money.

Previous blogs discussed the importance and ways to collect your cost data. Now we can look at what we can do with that data once you have it.

Last months blog discussed the proper Job Closing routines and the type of reports you should generate when a job is complete.

The last in this series of Job Costing Blogs will deal with the value of the data you have collected. Information is a valuable asset and when you are collecting information on every minute spent by every employee and machine, every material used and every purchase made you have a great deal of information that can be analyzed to identify better, more efficient ways to run your company.

The type of reports you can generate with this type of information are:

1. Job Analysis


At the end of each job you get a complete break down of all costs labor, material, purchases and inventory that went against that job. You can compare the actual costs and hours to the estimated costs and hours to see how your plant performed. If there are costs that can be rebilled to the customer you can capture more revenue. If there are differences in the estimate and actual these difference can be analyzed as to whether they were one off differences or systematic changes that need to be addressed


2. Production Analysis


It is important that you ensure that makeready times and run speeds you achieve on the plant floor clearly reflect the data you use in your estimating process.

If you are estimating a piece of equipment at 5000 per hour but infact you are only achieving 4000 per hour on the shop floor you are losing money every time you win a job. Conversly if you are estimating at 4000 per hour and are actually achieving 5000 per hour on the shop floor you are losing jobs you could produce profitably.


3. Employee Analysis

Not all employees are equal and monitoring production results from an employee angle allow you to identify which employees may need more training.

4. Historical Information


Capturing all data about a job provides an excellent foundation for estimating and production in the event the job is re run in the future. This can provide your company with a competitive advantage as to where costs can be saved or allow you the knowledge to requote the job in a manner that will ensure you re coup all costs.

5. Time Analysis


By capturing every minute of time spent by each employee and each machine we can analyze that time to make decisions. For example examine how many hours each employee worked and what percentage of those hours were chargable time. If you have employees that work less then say 65% chargable time you may have to examine their role in the company.

A good job costing system will record the hours spent make-readying, running, cleaning up, repairing, maintaining or having no work for a machine. A machine with increasing repair and maintenance time may need to be replaced. A machine with large amounts of down time may be an asset that can be sold.

Job Costing not only allows you to analyze how a certain job ran at a specific time but also allows you to analyze all aspects of your business in a very historical way.


Tuesday, August 29, 2017

OPEN DOORS TO PROFIT WITH PROPER JOB CLOSING ROUTINES

After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to

Increase Sales

Increase Quality

Increase Profitability

Increase Customer Loyalty

By Mark Porter


In any business knowing your costs is important. After all isn't Profit = Sales - Costs. If you don't know your costs how do you know your profits. Sure at the end of the year you can say I made money or I lost money but if you control your costs and use your cost data to make better business decisions you may not lose any money or be able to say I made more money.

In a previous blog we discussed the importance and ways to collect your cost data. Now we can look at what we can do with that data once you have it.

Lets start with your Job Closing routine. When you complete a job do you simply pass the job to invoicing and have them bill the customer based on your estimated amount. If so you are probably missing valuable information.

Closing a job in an automated system should generate several useful reports and functions.

1. Close the Job to Prevent Additional Charges

When you decide to make the invoice the last thing you want is to have employees still incurring costs against the job. Trying to get a customer to pay additional charges after you sent them the original invoice is at the very least embarassing.

Part of your closing procedure should prevent additional time, materials and purchases being placed against a job without a supervisor OK once the billing process starts.


2. Full Listing of all Costs Incurred


The Job Closing process should generate a report that lists all labor hours and cost, material costs and purchases that went into producing that job.  Ensure you are aware of all money that went into the job. Your closing report should offer you the option to view the data by dept, cost center, operation or transaction level.

Generally these reports are viewed at a cost center level. This means we would see a Total Hours and Total Dollars for each machine used on the job. If we see a cost center that looks unusually high or low we can drill down to an operation level to see if it was the makeready or run. If we identify the source we can drill down to a transaction level to see which employees worked on this job.

3. Actual vs Estimate Report

This report provides a comparison of the estimated hours and costs for all labor, material and purchases for the specific job to the actual costs.

This is a valuable report that can quickly identify actual costs that are not in line with your estimated costs. This could prove to be a one time exception that nothing could prevent or maybe it is a process that needs to be evaluated. If you are estimating a machine to run at 5000 / hr and it is actually running at 4000/hr you are losing money every time you win a quote. Conversely if it is running at 5000/hr and you are quoting 4000/hr you are losing jobs you should be winning.

4. Changes Report

When a job is complete you should be able to get a listing of all changes made to the job from the time you agreed to produce the job to the final product that was shipped to the customer. It is important to track these changes as you will need them to explain time and cost variances and also to help correct legitimate extra charges. Collecting extra charges can be a great source of additional revenue and by having a complete backup of information about the extra charge i.e. who, what where, why and when a change was made allows you to collect that extra charge without damaging the relationship with that customer.

5. Problem History

Provide your employees with a problem history system they can use to enter problems with jobs as they happen. When closing a job a list of its problems can be viewed. These problems may help explain some of the variations and issues on the job. This saves the time of office staff to track down employees and ask what happened 2-3 days ago.

Problem history is also very valuable when quoting or running this job in the future.

By following good closing procedures you can ensure that all costs are captured, all legitimate extra charges are recovered, all production variances are accounted for and all processes are running as efficiently as possible.

A good Job Closing Routine Opens Doors to Profits.

Thursday, July 27, 2017

BIOMETRICS - New Technology to Better Manage Your Biggest Cost - Labor

After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to



Increase Sales

Increase Quality

Increase Profitability

Increase Customer Loyalty

By Mark Porter
Last months newsletter discussed achieving accountability on the shop floor to ensure you are aware of all costs you incur in the plant Shop Floor Data Collection ensures that people are accountable for every minute they are in the plant and every material that they use.
After all Profit = Sales - Costs
If you don't know your costs how do you know your profits
Technology can also allow you to better manage who is on the shop floor. To ensure a company is getting the maximum productivity out of their labor they have to ensure that employees are actually on the floor.

With simple punch card systems it is too easy for friends to clock each other in and out when in fact one person may not be on the premises.
This results not only in the wasted dollars of say paying someone for 2 hours @ $20 per hour but also results in the lost productivity on the press for 2 hours  that you are selling at $125 per hour.
Managing this type of activity gets much tougher once you start running 2nd and 3rd shifts.
Biometrics use an employee's fingerprint to activate the time card system for clocking in, starting lunch, finishing lunch and clocking out.
Requiring a person's finger to clock in ensures that you are paying employees for actually doing work for you and you are running at the efficiencies that you expect and base your cost structure on.
The Biometric Time clock can be used in conjunction with the data sharing as an employee cannot record time against a job if he has not clocked in for the day or as a standalone payroll system.
As a standalone payroll system it will stop buddy punching but it will also provide a log of everyone that punched in immediately after a shifts starts so you are immediately aware of staff shortages for the day and it can provide a direct link to payroll services such as Paychex Payroll Services to eliminate rekeying and calculating payroll.

Labor is by far the biggest cost our customers incur. By managing the employees attendance through Biometrics and demanding accountability of their time and materials while they are in the plant you can take control of your biggest cost. Even small percentage savings on labor can be substantial
5% on $2,000,000 is $100,000 savings

Thursday, June 29, 2017

Thursday June 29th, 2017

ACCOUNTABILITY ON SHOP FLOOR LEADS TO PROFITABILITY IN OFFICE


After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to


Increase Sales

Increase Quality

Increase Profitability

Increase Customer Loyalty

  By Mark Porter
In any business knowing your costs is important. After all isn't Profit = Sales - Costs. If you don't know your costs how do you know your profits. Sure at the end of the year you can say I made money or I lost money but if you control your costs and use your cost data to make better business decisions you may not lose money and you may be able to say I made MORE money.


There are many benefits to a Job Costing System.

1. Capturing all costs incurred by a job for billing purposes
2. Analysis of Jobs to identify process or employee problems
3. Compare Estimate to Actual Values to ensure they are in sync
4. Production & Employee Analysis to ensure standards are met
5. Work In Process
6. Analyze time spent by all Employees and Machines
7. Payroll Benefits * New Finger Print Scanning and integration to Paychex

Last and certainly not least ACCOUNTABILITY - We will look at this aspect in our Blog


I don't think it matters if you are the person sweeping the plant floor or the president of the company - if you have to account for every minute of your day and every material you use you will become more productive and less wasteful.


This can add up to tremendous savings. Lets say we get even a modest 5% increase in productivity and 5% decrease in waste. Extend that to the money that flows through your plant each year. On $2,000,000 dollars that is a $100,000 savings.


There are several methods to record time and materials in the plant and each method has different levels of accountability.


1. Employees simply writing their time on the back of the Job Bag provides little value either in costing the job or in accountability. The employee can simply place the time and materials he thinks you want to see. You have no way of knowng if the time he wrote down reflects the true time spent.


2. Employees manually writing out time sheets is a step closer because at least the employee has to account for his time within the structure of his day. But again if he knows he took way too long on a process he can factor it in over the course of a day.


3. Real Time Tracking is the most accurate and therefore profitable method. The employee simply enters that he is starting or finishing a process. the system keeps track of start and stop times in real time. The employee knows he can be held accountable for every minute of the day.

Real time tracking means that you can see the location of a job, the activity of a machine or the process an employee is doing at any time from any pc. Not only is the employee accountable for his time - it can be viewed at any time. 

And accurate time collection leads to other benefits such as accurate analysis of employee and machine time. Job Costing provides many benefits, which we will look at in future articles, but accountability is a huge benefit that leads to greater profits which is good for you and the employees.


Thursday, May 25, 2017

PURCHASING ANOTHER PIECE OF THE PROFIT PUZZLE


After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to

Increase Sales
Increase Quality

Increase Profitability
Increase Customer Loyalty

By Mark Porter

All companies have to purchase both materials and services in their day to day activities. The levels of those purchases can vary from industry to industry and from company to company. Certainly the industries of Print Finishing, Trade Binding and Diemaking are more labor based then material based but purchases must still be made.

These days anytime money leaves your company it is vital that you have accountability for that money and confirmation that you received the value you expected for the funds.

Purchase Orders should be generated for all purchases. This includes items for specific jobs, materials for inventory, any outside labor services and general office purchases such as supplies.

Issuing purchase orders whether written or verbal is the same as writing a check from your company to the vendor . Whether your company makes many purchases or only a few each one represents money leaving your company that should be controlled.

A Purchasing System should record every purchase order issued. This provides accountability of who is issuing purchase orders and where they are being sent to. By making people accountable for the purchase orders they issue you will ensure they are more careful with the purchases they make.

When goods or services are received they should be matched up to the original purchase order to ensure that you have received the full order, more than was ordered or if items are still to be received.

When the Vendor Invoice is received it should be matched up to the original purchase order to check that the prices on the invoice match the prices that were approved on the purchase order.

The Vendor Invoice should also be matched up to the receipt of goods to ensure that the vendor is not billing you for more goods than you actually received.

Our industries are so job based it is often a good idea to take a step back and view purchases by vendor and employees issuing POs.

By ensuring your company follows these procedures you can tighten your financial control of another aspect of your business to ensure you are maximizing the success of your company.


Friday, April 28, 2017

MINING FOR DATA GOLD

By Mark Porter
Job Costing - whether done via time sheets or shop floor data collection is the process of tracking every minute of every day of each machine and employee. This not only allows us to get accurate costing of how much each job actually cost us to produce but also allows us to analyze all aspects of our operations.

How much of employee John's Smith time last quarter was chargeable(rebilled) and how much was non chargeable. How many hours did we spend repairing that old Kluge press last year. Collecting shop floor data allows you to easily find this information out.

This type of information can allow you to control your labor costs and make more informed decisions regarding the machines in your company 

We can extend this further if we start to track characteristics of jobs. For example what was the average running speed on 28x40 sheets of 10pt coated stock 2 up on the Bobst press.

How much time did we spend waiting for Customer ABC to do press oks.

This type of information can help with providing more accurate estimates. This is very important because if we are quoting a job at 3000 per hour when we are only achieving 2500 on the shop floor we are losing money as soon as we get the order. Conversely if we quote at 2500 per hour and are actually achieving 3000 on the shop floor we are losing jobs we could be producing profitably.

You do not have to be limited by the analysis our software allows you to do. All this data can be sent to excel where you can sort and analyze the data in ways that answer questions that are specific to your company.

There is a wealth of information happening in your plant every day. You simply need to start collecting it and analyzing it to help you improve productivity and profitability

Thursday, March 30, 2017

Turn Problems into Positives

By Mark Porter

As the old saying goes "When life gives you lemons make lemonade". This can be applied to the daily problems you encounter in your business.

Software can help documenting and recording problems provides several benefits to your company and you can actually turn problems around to strengthen relationships with customers, vendors, employees and improve operating procedures.

Providing employees easy entry of information such as Job Number, Customer, Vendor, Employee, Department, Problem Type (Paper, MR, etc), Quantity effected, Problem Description, Problem Solution etc allows you to sort and analyze problems which can provide many benefits such as:


Don't Make The Same Mistake Twice
Becomes a Database of Problems and Solutions
Improve Relationships With Customer/Vendors/Employees
Documenting Problems Minimizes Damage


1. Don't Make The Same Mistake Twice 


Another old saying goes "Your not stupid for making a mistake just for making the same mistake twice."

By recording problems against jobs you can be immediately notified when re quoting or rerunning that job of the issues incurred last time. At the estimate stage it allows you to re quote the job based on the previous information or at Order Entry you have the option to not proceed with the job if the customer is not willing to incur the extra costs this time around.

2. Becomes a Database of Problems and Solution
s

Recording problems and solutions builds a knowledge base that can be accessed by employees in the future. By entering the problems with data such as department, problem type employee etc allows us to shorten the solution time to similar problems in the future.

Combine this with the ability to add video and images of the problems/solutions to the database and you can learn from your previous mistakes.


3. Improve Relationships With Customer/Vendors/Employees

Generate a list of problems you have with good customers each quarter and then discuss those issues and offer solutions with the customer. Continually refining the working relationship between your company and customers allows you to produce higher quality, better priced and better serviced products for them. This strengthens the bond with that customer ensuring it takes a bigger mistake or price difference for them to take their business elsewhere.

The same logic applies to vendors and employees. By discussing issues with people you strengthen the working relationships to the betterment of your company.

Trends can be seen with employees and certain operations. Say an employee is always having problems with MR a certain product. Additional training can be provided. Trends with Vendor materials continually causing problems can be identified and rectified.


4. Documenting Problems Minimizes Damage

If nothing else documenting problems can save money and relationships in the event of disputes. The more documentation you have the more you reinforce your position to the other party in a constructive and articulate way. This can reduce or eliminate your liability and open the possibility to future business.

So next time you make mistake make your company stronger for the experience