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Distinguishing Characteristics:

    Most manufacturers that are small businesses operate much like construction-related industries where Time and Materials costs must be tracked carefully, as products are often made to order one-at-a-time or in batches.  Issues such as inventory and materials management, rework, and work flow also become more important.      

  • Component Assemblers

  • Machine Shops

  • Welding/Fabrication Shops

  • Woodworking Shops

    Some manufacturers may operate in more of a continuous flow or assembly line manner.  In such cases, metrics such as machine throughput and setup times become useful, as well as concepts such as the theory of constraints, lean manufacturing, six sigma processes, and continuous improvement. 

Actual Client Results:

Machine Shop:  Annual revenues of $1,448,000 and $49,000 saved annually through improved labor utilization.

Woodworking Shop:  Annual revenues of $1.8 million and $45,000 saved annually from reduced shop labor.

Aviation Parts Manufacturer:  Annual revenues of $400,000 and $20,000 saved annually through redesigning rework processes.

Sheet Metal Fabricator:  Annual revenues of $1.3 million   and $90,000 saved annually through improved labor utilization/productivity.  While improved labor utilization sometimes translates into reductions in payroll, that was not the case here; the company had a substantial backlog of work, so the increase in productivity allowed them to take on new projects immediately.

Aerospace Manufacturer:  Annual revenues of $1.5 million and $227,000 additional annual net income from proper job costing and pricing.  The company was using JobBOSS for its manufacturing processes, yet estimates created by hand in Microsoft Excel did not match estimates or project costs in JobBOSS, resulting in irregular bidding and pricing.  Furthermore, overhead costs were not being properly allocated to jobs.  While raising prices is not always a good solution, the company was in a niche market with a large backlog and could command significantly higher prices.  Aligning direct costs, overhead costs, and budgeted profits together in one system for estimating (e.g., JobBOSS) eliminated the need to compare quotes between Excel and JobBOSS, resulting in non-trivial payroll savings, as well. 

 

 

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