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Manufacturing

A small or mid manufacturer's day runs on the shop floor. Raw material comes in at whatever rate the supplier quoted that week, batches go into production, and finished goods move out to dispatch. The owner is often the one deciding what to make next, chasing a late material, and working out at month end whether the month made money.

What we build: Production, batches, and costing

Running a small or mid manufacturing unit means the owner is usually on the floor. You decide which batch to run next, chase a material that has not arrived, check whether a machine is free, and keep an eye on what is due to dispatch. At month end you work out whether the month made money, often from memory and a look at Tally, because the numbers are spread across registers, purchase bills, and the godown.

The hard part is costing. You buy raw material at rates that move week to week, sometimes day to day. A batch that ran last month used material bought at one rate, and the batch running today uses material bought at a higher one. If the price you quote the customer is still based on the old cost, the margin quietly shrinks and nobody notices until the year closes. Wastage and scrap make it worse, because the material that went in and the finished goods that came out rarely match, and the gap gets guessed.

A custom ERP built around your unit fixes the order of things. You enter raw material rates as they come in, and every batch costs itself against the rate you paid, not last quarter’s. Each product carries its bill of materials, so the system knows how much should have gone in and shows you when a batch used more. Running a batch takes raw material out of the godown and adds finished goods, so stock stays honest, and work in progress on the floor shows up as a number instead of a guess.

The system costs each batch against the day’s raw-material rates, so you know what a run cost the day it finished, not weeks later. Because it is built around how your unit already works, in your own terms, it goes live in weeks, and you keep the words your shop floor uses, godown, batch, dispatch, and scrap, instead of learning someone else’s.

The usual challenges.

  • Costing lags behind rates. Raw material prices move, but the batch cost and the price you quote are still based on an older rate, so the margin slips without anyone seeing it.
  • The real cost of stock in the godown is unclear, because the same material came in at different rates through the month and it all sits together.
  • Batch tracing is hard. When a customer complains, working out which batch it came from and what material went into it means digging through registers.
  • Wastage and scrap are not captured, so the material that went into a batch and the finished goods that came out never quite match, and the gap gets guessed.
  • Planning what to run next is guesswork when orders, finished stock, and raw material on hand all sit in different places.
  • Physical stock and the register drift apart, so purchase decisions get made on numbers that are already wrong.

What we'd suggest.

  • Keep daily raw material rates in one place, so every new batch is costed against the rate you paid and not an old one.
  • Cost each batch as it runs, with material, wastage, and labour, so you know the true cost per unit before you quote the next order.
  • Give each product a bill of materials, so expected consumption is set and you can see when a batch used more than it should.
  • Link production to stock, so running a batch takes raw material out of the godown and adds finished goods on its own.
  • Put work in progress and finished stock on one screen, so the money tied up on the floor is visible.
  • Track scrap and rejects as their own number, so what you are losing is out in the open.

What a KPI dashboard should show.

The numbers a manufacturing owner should be able to see every morning.

Cost per batch

Shows what a run cost, so you price it to cover it.

Batch yield

How much finished goods you got from the material you put in.

Scrap and wastage rate

The material lost in production that eats into your margin.

Raw material rate trend

Where your material cost is heading, so you can raise your quote before the cost goes up.

Work in progress value

The money tied up on the floor right now.

On-time dispatch

Whether batches leave when you promised the customer.

Stock cover on key materials

Whether you have enough material to keep the lines running.

Margin by product

Which products make money once the real cost is counted.

Manufacturing we've built for.

Manufacturing

Packaging unit

The problem
Costing lagged behind daily raw-material rates, so margins were a guess.
What we built
Production batches costed against daily raw-material rates, so the real margin shows on every batch.
Live in 6 weeks Read the full story →

Insights on manufacturing.

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