How are your jobs tracking against the profit you were hoping to make? This is a question that most manufacturing businesses would not be able to answer.
Mistakes are excellent at erasing profit margins and unless tracked properly will continue to do so.
Every resource consumed as part of production counts towards the final cost. A manufacturing ERP tracks every cost incurred throughout the process, solving one of the most complicated equations every manufacturer faces: true cost.
Raw material, labour and outsourced operations are noticeable costs. An end-to-end ERP like Jobman not only reports on time labour costs, overhead allowances, material orders, stock consumption per job number in real time. But also provides reports to help you tally up the hidden costs like downtime, inventory mismanagement, re-work due to defects, logistics and more.
Why is accurate job costing essential?
It’s nearly impossible to put a fair price on your final product without understanding its entire cost. Without even realising, you could be losing profit or overcharging, leaving the market open for a more cost-conscious competitor to pilfer your profits.
Ultimately, it’s your business that pays the price for inaccurate job costing:
- Lost profits
- Negative customer experiences
- Forecasting challenges
- Cashflow problems
- Tension among staff and management
So how can you untangle the complexities of cost and put a precise price tag on your final products? It all starts with gaining access to operational data.
How manufacturers use ERP systems to assess true cost
To calculate any product’s total cost, you begin with the direct costs like materials and labour. Next factor in the less transparent elements:
- Production overheads (electricity, water)
- Wasted (scrap) material
- Time spent in pre-production
- Equipment wear and tear
- Consumable items
- Lag time between production stages
- Bottlenecks and downtime
The cost equations change by job type, manufacturer and production complexity. So not only do you need to bring all your standard operational data together in a single ERP system, but that system also needs to be flexible enough to grow with you.
That’s where Jobman is the best solution for Aussie cabinetmakers and manufacturers who want to grow their business.
Let’s do a quick cost-benefit analysis
When it comes to job costing, an ERP acts as your crystal ball. Not only will you see direct costs, but the software pulls operational data together so you can drill down on the true total cost of a particular product, including all the indirect costs mentioned above. You can identify anomalous expenditures, forecast more accurately, and keep track of timesheets to catch overages before they become a problem.
There are many more benefits to using an ERP for job costing:
- Accurate cost measurement on all jobs, including the complex ones
- Detailed financial, production, and sales reports
- See standard, actual and average production costs
- Lead management and job scheduling capabilities to streamline operations
- Time and attendance management for Payroll and managers
- Analyse profit margins by job type, contract, or customer
- Identify cost variances
- Find and eliminate wastage
- Track job progress in real time
- Use estimates, quotes and work orders to create budgets
Jobman makes cost control simple for busy manufacturers
Cost control is not a one-time problem. In today’s competitive market, even the slightest change to your margins really matters.
The only way to regain control of your job costs, identify potential profits, and streamline operations is to integrate a fit-for-purpose manufacturing ERP into your business.
The Jobman team has a long track record of helping Aussie manufacturers and cabinetmakers to see their business more clearly. Explore our features on the website or get in touch for a no-obligation chat about cost control, production optimisation, timesheet management or any other challenge we can help with.