Visual South Insights

Everyone needs a plan

Every organization should have an ongoing plan for continuous improvement. In a competitive environment, any chance to improve upon a process can provide the edge a company needs to survive—and ultimately thrive.  A good Business Process Review (BPR) template is a valuable first step in that plan.

What is a Business Process Review?

A business process review, which we refer to as an application process review in our services, is a project that aims to identify areas in your operations that can be enhanced and provide practical solutions to improve your use of software or procedures.

Production reporting is about the data

I’m a big believer in measuring what you want to improve. Measuring gives you data and you’ll see trends (good or bad) emerge. Figure out what is causing the good trends and keep doing that. Maybe you can even find ways to make the good trends better. Figure out what is causing the bad trends and find ways to stop doing that; or at least, minimize it.

Overview

Management consultants help businesses develop strategies, find opportunities, solve problems, and support management that they don’t have the time, resources, or specific expertise to do themselves. It is estimated that 72% of manufacturing companies in the U.S. have engaged a management consultant at one time or another. Based on an annual survey by Guiding Metrics, 87% of the companies that used a management consulting company were highly satisfied with the results, and 78% hired the management consultant for another engagement. For most companies who have chosen to seek this kind of help, it has clearly provided value.

What is a vision statement?

Most people have heard of a mission statement, but a vision statement is typically less well known. While there is some overlap, there is a distinct difference between the two. To put it simply, a mission statement describes what a company is doing to achieve its goals today, and a vision statement describes what a company wants to achieve in the future.

When is standard costing the best option?

The Visual South team works with hundreds of manufacturers with varying manufacturing modes. Many of our customers fall in the “to order” category. That means they are mostly make-to-order; and within that category they are either engineer-to-order, configure-to-order, assemble-to-order, project based, and mixed mode (they build some sub-assemblies to stock that can be used as a component part, finished good, or replacement part). The predominant costing method for “to order” companies is actual costing.

What is a KPI?

A KPI (key performance indicator) is a measurement of value that can be quantitative or qualitative in nature. Manufacturing companies typically use and track KPIs to determine how a particular area of operations is performing. KPIs are ideally presented in dashboard format, giving decision makers the ability to quickly answer the questions like, “How are we are doing?” and “What is causing performance issues?” Think of KPIs as a company or department’s scoreboard for how the team is playing the game.

What is a Business Process Review?

What we do in a Business Process Review (BPR) is pretty straight forward, and we perform several for our clients over the course of a typical year. In the review, we observe how the ERP processes have been built to manage the business. Then, we make recommendations to streamline and improve the processes and procedures related to the flow of data in the company. For example, how to use the ERP to alert procurement of projected material shortages, as opposed to having them look for shortages in a spreadsheet – usually after it was manually updated. In essence, an ERP business process review is a gut check on how things are working, and what can be done to make them better.

It ain’t easy on the shop floor

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.

Differences between make-to-stock and make-to-order manufacturing

These two manufacturing modes are just what you’d assume. Make-to-stock manufacturing is where finished goods are built to inventory. The demand associated with make-to-stock is typically driven by a forecast. Additionally, a mix of forecasting, inventory quantities driven by planning policies, and actual demand can drive planning and scheduling for make-to-stock manufacturers.

The difference between standard and actual cost

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.