ERPs are fantastic in that they help with your business’s efficiency, forecasting, cost savings, productivity, and in most cases reporting. However, in our experience in working with many customers that utilize an ERP, they often ask us where they can find the information they really need to maximize their ROI. They ask things like:
Can my ERP tell me my Material Shortages?
Does my ERP allow me to track and manage my works orders across the entire manufacturing process?
Does my ERP come with an Earned Hours Report?
Where can I find a good report that tells me about my supply chain?
Where’s a report that tells me where things have been shipped?
What is the value of our material if we use a First In, First Out (FIFO) method?
With some ERPs, these reports do exist and we can steer our customer in the right direction of those very valuable reports. However, some ERPs do not come with these reports, or the reports that come with the ERP is not detailed or tailor-made enough to our business process. Some ERPs don’t have any canned reporting at all!
Probably the most common question from above with ERPs such as Fourth Shift, is in regards to a good Earned Hours report. In other words, what is my actual process percentage for a period of a week or month? What are my labor hours planned vs. actual? This report is beneficial in that it tells you how many dollars have been earned for a manufacturing order per workcenter or department.
Inventory: First In First Out (FIFO)
Another common report request is, “what is the actual value of my inventory especially since we use a First In, First Out (FIFO) method?” This may seem like a report almost all ERPs should provide but unfortunately most do not. If you are a manufacturer and purchase material, the price of that material can fluctuate from month to month due to such things as surcharges and/or changing freight costs. What you bought in January can be cheaper than what you bought in February. The challenge is that most reports that are developed evaluate your inventory by the most recent purchase price, not taking into account what you spent on previous invoices. They also do not take into account the surcharges and freight costs because of how the ERP has you enter you invoices. So how do you find the true value of your inventory when it is pushed to the floor? This is a challenge that has faced some of our clients and with some process changes and the help of SSRS (SQL Server Reporting Services) reporting, we can tell you what the actual value of the material you put out on the floor based on what you paid in the past.
So for example: You paid $1 per pound for 1,000 pounds of Material A in January. Then you paid $2 per pound for 1,000 pounds of Material A in February. In March you put 500 pounds of Material A on the floor, but the ERP says the cost of that material is $2 per pound because it evaluates at the last purchase price.
The solution is that we were able to create a report that evaluates the inventory in a FIFO manner and takes into account what inventory is on-hand and what you paid for it. Then as you use up that material, it is evaluated by what you paid for it. So in the above example, our report says that you bought Material A for $1,000 in January and when you put out those 500 pounds of material to the floor in March, it is evaluated at $1 per pound until January’s inventory is exhausted. Once those 1,000 pounds from January are used up, THEN the value of your material is based on what you paid in February at $2 a pound.
If you are not getting the most out of your ERP as far as reports, let’s have a free evaluation of what we can do to help get you the information you need to run your company and get that maximum ROI that you are looking for. Use the contact form below and we will schedule that free evaluation.