How Job Costing Software Benefits Manufacturers

Job costing software may or may not be an integrated component of your existing Enterprise Resource Planning (ERP). In either case, accurately measuring the cost of a job (parts + labor) will allow manufacturers to save money and increase efficiencies in a tough economy. There are two basic ways to better measure direct production costs: manufacturing job order tracking and process cost evaluations.

Manufacturing Job Order Tracking.

For boutique, custom manufacturing companies and fabricators, it is better to track individual job orders rather than the process as a whole. Custom fabricators will agree, measuring and managing costs for custom fabrication is an “art form” that is hard to master. Manual labor costing and job tracking is only marginally accurate, and often result in increased expense – just the opposite of the goal!

One of DSI’s customers who manufactures custom commercial cooling and heating systems told us that while they were profitable at year-end, they didn’t know which jobs made them money and which didn’t.  This not only limited their profits, it made it impossible to estimate a new job accurately.

Dynamic Systems, Inc. has one of the only job costing softwaresolutions developed specifically for small to medium sized custom manufacturing and fabrication companies.

In a nutshell, when each job contains unique parts and variable labor, the software allows you to track these items during the actual production process. An added benefit is that your production management is able to identify where each job is in the process – by task, employee, department, etc.  This will allow for increased efficiencies and the most precise job costing.

Operational Process Costing.

This method is designed for a manufacturer of a single or homogeneous product. If your company produces thousands of the same widget each year, measuring process metrics and getting a better understanding of the process as a whole will give you the highest return.  Many larger companies hire Process Control consultants or employ quality and efficiency experts on their staff – such as an expert in Six Sigma, a system of “Lean Manufacturing”.

In either case, the increased information from job costing or process control evaluations result in increased efficiencies and more profitable jobs within the manufacturing process.

 

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