For manufacturers, accurate estimates are critical to managing costs and margins. If estimates are based on guesswork: bids can be lost, delivery times missed or costs can spiral out of control. Too often, operators will pencil-whip work times on their way out the door rather than accurately tracking and recording their work. This skews the limited data available causing misinformed directives from the top. When both the historical data and the analytics at the foundation of estimates are suspect, problems quietly grow costing the company money that has to be made up in additional production.
Turn Production Data into Profit
Accurate estimates require both clean historical data and production visibility, both of which are provided by the Quantum Production Control System (PCS). Let’s look at a few areas a PCS can enhance your estimates:
- Accurate Labor and Production Data
Know who did what and for how long during production, and then turn that data into more precise estimates. The PCS automatically tracks labor and production through standard use of the system. This includes machine time and labor, so management can see how much time, effort, materials and parts are required to complete work. Over time, as accurate data is accumulated, the company can begin providing more accurate estimates and labor loading.
- Identify and eliminate scrap
Scrap can turn profitable products into an expense for manufacturers, and yet many companies struggle to understand the cause. The production control system collects production data that reveals where and how scrap is generated. The PCS links the scrap to the work being done at the time it occurs. With this information, the manufacturer can either eliminate the root cause of scrap, or better estimate standard losses in production.
- Focus on profitable work
Once you are tracking labor and production costs, leverage the data to identify and prioritize the most profitable work. Refine your gross manufacturing margin using production data to identify products and goods with a higher gross margin. With this information, you can make more profit on every sale and shipment. The company makes more and spends less.
Increasing Profit Velocity
Many companies look at a production control system to solve a specific problem such as a failed audit, late shipments, or poor visibility into Work in Progress (WIP). Even with the solution in place, the company finds more value in the critical data the system feeds to the sale and production cycle. With higher gross margins, accurate estimates, and control over scrap and production the company finds expenses go down and profits up.